Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2024 Earnings Presentation
38 slides from Charter Hall Retail Reit's earnings presentation, Aug 16, 2024
Slide 1: Full Year Results 2024
Charter Hall Retail REIT Full Year Results 2024 ASX:CQR Charter Hall Retail REIT 2024 Full Year Results
Slide 2: Agenda
Agenda 1. Highlights and Strategy 2. Financial Performance 3. Operational Performance 4. Outlook and Guidance 5. Annexures Acknowledgement of Country Charter Hall acknowledges the Traditional Custodians of the lands on which we work and gather. We pay our respects to Elders past and present and reco
Slide 3: Highlights and Strategy
1 Highlights and Strategy Carnes Hill Marketplace Horningsea Park, NSW Charter Hall Retail REIT 2024 Full Year Results 3
Slide 4: Portfolio Highlights
Highlights and Strategy Portfolio Highlights Key metrics FY23 FY24 Movement Same property NPI growth Total MAT growth1 Operating earnings $166.9m $159.0m (4.7%) 3.6% 3.7% Operating earnings per unit 28.7 cents 27.4 cents (4.7%) from 3.3% for FY23 Supermarket MAT growth 4.3% Distributions per unit
Slide 5: Convenience Retail Strategy
Highlights and Strategy CQR Convenience Retail Strategy Convenience Retail Every day needs focused goods and services in highly accessible locations Providing a resilient and growing income stream for our investors from Shopping Centre Retail Net Lease Retail convenience retail property − Strategic
Slide 6: Delivering on Convenience Strategy
Highlights and Strategy Delivering on Convenience Strategy Active portfolio curation driving major tenant income growth FY18 FY24 Long Term Stable 4% of major tenant rent reviews 38% of major tenant rent reviews Forecast CPI based CPI based Rental Income Rental Income % of income % of income Rental
Slide 7: Delivering on Strategy
Highlights and Strategy Delivering on Strategy Strategic portfolio curation and asset recycling into accretive higher quality assets Divestments Acquisitions Active Asset Management - Five non-core assets1 divested for $315m in - $25m acquisition in RP6 with our wholesale - Completed Dan Murphys pad
Slide 8: 4-Year Valuation Cycle
Highlights and Strategy 4-Year Valuation Cycle CQR 4-year like-for-like cap rates and valuations1 - On a like-for-like basis1 weighted average cap rates have expanded over the past two years 8.00% LFL portfolio $3.5bn by the same amount they compressed from valuation growth 30 June 2020 to 30 June 2
Slide 9: Tenant Customer Relationships
Highlights and Strategy Tenant Customer Relationships Top ranked landlord by our tenants (NPS) - Delivered annual CentreSAT survey in March 1 2024 through Monash Business School’s ACRS 2021 2022 2023 2024 Research unit CQR - Participation from 1,214 Retail tenant customers achieving a 99% participat
Slide 10: Financial Performance
2 Financial Performance Butler Central Butler, WA Charter Hall Retail REIT 2024 Full Year Results 10
Slide 11: Earnings and Distributions
Financial Performance Earnings and Distributions Look through basis - Total net property income growth of 3.2% $m FY23 FY24 % change - including the impact of divestments Net property income from convenience shopping centre retail 190.6 190.1 (0.3%) - Same property portfolio NPI growth of 3.6% Net p
Slide 12: Balance Sheet
Financial Performance Balance Sheet - Convenience shopping centres decrease Look through basis $m Jun 23 Jun 24 attributed to divestment of five non-core assets Convenience shopping centre retail investment properties 3,217 2,868 - Convenience net lease retail increase predominantly driven by HPI in
Slide 13: Property Valuations
Financial Performance Property Valuations Convenience Convenience Total portfolio $m shopping centre net lease retail retail - Convenience shopping centre retail valuation June 2023 portfolio value 3,217 1,067 4,284 movement of -1.9%1 or -$61m including capital investment of $65m for FY24 Net transa
Slide 14: Capital Management
Financial Performance Capital Management Diversified and well balanced, long-term debt maturity profile - Available investment capacity of $408m1 251 - Diversified funding sources with no debt maturing until March 2026 101 304 - Moody’s affirmed the Baa1 issuer rating and 110 - 57 senior unsecured r
Slide 15: Operational Performance
3 Operational Performance Rye Hotel Mornington Peninsula, Vic Charter Hall Retail REIT 2024 Full Year Results 15
Slide 16: Portfolio Summary
Operational Performance Portfolio Summary – Convenience shopping centre retail occupancy improved from 98.6% to 98.8% Portfolio snapshot Jun 23 Jun 24 – 3.7% total MAT growth1,2 Number of convenience shopping centre retail assets 49 45 Number of convenience net lease retail assets 597 596 – Portfoli
Slide 17: Portfolio Tenant Customer Composition
Operational Performance Top 10 tenant customer groups1 Portfolio Tenant Customer Composition 14.3% - Major tenants Woolworths, Coles, bp, Wesfarmers2, Ampol, Endeavour, Aldi and Gull 13.4% represent 57% of portfolio income - Largest mini-major and specialty tenant 12.2% represent 1.6% and 1.0% of po
Slide 18: Convenience Net Lease Portfolio
Operational Performance Convenience Net Lease Portfolio Portfolios Value Number of Cap rate WALE Rent $’m assets (years) review – Convenience net lease retail1 represents 28% of bp Australia 537 220 4.8% 15.5 CPI total portfolio by value and 22% of total portfolio bp New Zealand 168 70 5.0% 16.5 CPI
Slide 19: Supermarket Anchors
Operational Performance Supermarket Anchors – Supermarkets continued to demonstrate resilience with 4.3% MAT growth1 Supermarket performance Jun 23 Jun 24 – Highest percentage of supermarkets in or within 10% of turnover at 86% MAT growth1 4.3% 4.3% – 22 supermarkets with base rent uplifts in FY24 S
Slide 20: Specialty Tenants
Operational Performance Specialty Tenants Specialty performance Jun 23 Jun 24 – 313 specialty leases completed in the period MAT growth1 9.0% 2.5% Sales productivity (per sqm) $10,489 $11,077 – Leasing spreads over the period were +2.7% Average gross rent (per sqm) $1,191 $1,267 – 108 new leases (+2
Slide 21: ESG Leadership
Highlights and Strategy ESG Leadership Achievements in FY24 Looking Forward Net Zero by 2025 Clean energy 4.9 Star NABERS Energy Scope 3 emissions Environment Remained on track to achieve Net Zero 17.5MW of solar installed to date will portfolio rating for Retail assets. Increase diversion from land
Slide 22: Outlook and Guidance
4 Outlook and Guidance Gateway Plaza Leopold, Vic Charter Hall Retail REIT 2024 Full Year Results 22
Slide 23: Outlook and Guidance
Outlook and Guidance Outlook and Guidance – Strategy remains consistent and focused on non-discretionary convenience retail, providing resilient income growth – Portfolio curation and active asset management will continue to improve portfolio quality – Positive leasing spreads, high occupancy levels
Slide 24: Annexures
5 Annexures Secret Harbour Square Secret Harbour, WA Charter Hall Retail REIT 2024 Full Year Results 24
Slide 25: Annexures
Annexures Annexures 1 6 FY25 Guidance Property valuations 2 7 Reconciliation of statutory profit to operating earnings Convenience shopping centre MAT analysis 3 8 Investment in property joint ventures Convenience shopping centre retail portfolio historical performance 4 9 Debt maturities and covena
Slide 26: FY25 Guidance
Annexures Annexure 1 FY25 Guidance 0.7 0.2 (1.0) (1.8) 27.4 25.4 FY24 Like for like Shopping Centre Like for like Net Lease Retail Earnings impact of net Finance costs (higher cost of FY25 EPU NPI NPI divestments debt) EPU – FY25 guidance assumes no further transactional activity with portfolio perf
Slide 27: Reconciliation of Statutory Earnings
Annexures Annexure 2 Reconciliation of statutory earnings to operating earnings $m FY23 FY24 Statutory profit 37.8 17.2 Investment property revaluation1 101.6 102.2 Net loss on derivative financial instruments 19.9 28.3 Other (including foreign exchange movement) 7.6 11.3 Operating earnings 166.9 15
Slide 28: Investment in Property Joint Ventures
Annexures Annexure 3 Investment in property joint ventures – operating earnings and balance sheet breakdown FY24 Convenience Convenience shopping bp Ampol Gull LWIP2 Other Net $m CQR RP1 RP2 RP6 Other net lease Total centre portfolios portfolios portfolio portfolio Lease retail retail Ownership inte
Slide 29: Investment in Property Joint Ventures (FY23)
Annexures Annexure 3 continued Investment in property joint ventures – operating earnings and balance sheet breakdown FY23 Convenience Convenience shopping bp Ampol Gull LWIP2 Other Net $m CQR RP1 RP2 RP6 Other net lease Total centre portfolios portfolios1 portfolio2 portfolio3 Lease4 retail retail
Slide 30: Debt Maturities and Covenants
Annexures Annexure 4 Debt maturities and covenants as at 30 June 2024 Limit Drawn ICR ICR LVR LVR Debt facility (ownership interest) Maturity ($m) ($m) covenant actual covenant actual CQR bank debt facilities 100 Mar-26 200 Jul-26 75 Nov-26 95 Nov-26 75 Jul-27 50 Jul-28 130 Jul-28 150 Jul-28 100 Aug
Slide 31: Lease Expiry Profile
Annexures Annexure 5 Lease expiry profile as at 30 June 2024 Major tenant expiry profile (by income) 60% 51.4% 10.1 years 40% Major tenant WALE 20% 7.2 years 2.5% 7.7% 5.8% 8.4% 6.3% 8.7% 7.9% Portfolio WALE 0.3% 1.0% 0% FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34+ 3.4 years Specialty and mini
Slide 32: Property Valuations
Annexures Annexure 6 Property valuations as at 30 June 2024 Ownership interest State Property Location Cap Rate Book Value ($m) (%) NSW Bass Hill Plaza Bass Hill 20.0% Bateau Bay Square Bateau Bay 49.9% Carnes Hill Marketplace Horningsea Park 50.0% Cootamundra Woolworths Cootamundra 100.0% Dubbo Squ
Slide 33: Property Valuations Continued
Annexures Annexure 6 continued Property valuations as at 30 June 2024 continued Ownership interest State Property Location Cap Rate Book Value ($m) (%) Qld Arana Hills Plaza Arana Hills 100.0% Atherton Square Atherton 100.0% Bay Plaza Hervey Bay 100.0% Bribie Island Shopping Centre Bribie Island 100
Slide 34: Property Valuations Continued
Annexures Annexure 6 continued Property valuations as at 30 June 2024 continued State Property Location Ownership interest (%) Cap Rate Book Value ($m) Manuka Terrace Manuka 100.0% ACT Total 6.25% 58 Convenience shopping centre retail portfolio 6.13% 2,868 bp Australia portfolio Australia 23.3% 4.77
Slide 35: Convenience Shopping Centre MAT Analysis
Annexures Annexure 7 Convenience shopping centre MAT analysis as at 30 June 2024 % of Specialty sales by state MAT % of specialty sales MAT growth1 Sales by category portfolio growth2 sales New South Wales & ACT 63% 1.6% Supermarket 64.2% 4.3% Western Australia 15% 4.9% DDS 11.2% 3.9% Queensland 14%
Slide 36: Convenience Retail Portfolio Historical Performance
Annexures Annexure 8 Convenience shopping centre retail portfolio historical performance Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 Dec 23 Jun 24 Number of properties 58 55 51 50 50 51 51 51 49 49 45 Occupancy 98.1% 98.1% 97.3% 97.8% 98.3% 98.4% 98.5% 98.6% 98.6% 98.7% 98.8% 5 5
Slide 37: Glossary
Annexures Annexure 9 Glossary FY23 JV Twelve months from 1 July 2022 to 30 June 2023 Joint venture FY24 MAT Twelve months from 1 July 2023 to 30 June 2024 Moving annual turnover calculated as a sum of rolling 12-month sales WALE NPI Weighted Average Lease Expiry calculated based on income Net proper
Slide 38: Further Information
Further information Investor Relations Tel 1300 365 585 (within Australia) +61 2 8651 9000 (outside Australia) Email reits@charterhall.com.au Presentation authorised by the Board charterhall.com.au/cqr IMPORTANT NOTICE & DISCLAIMER This presentation ("Presentation") has been prepared by and is the s
Charter Hall Retail REIT — FY2024 Earnings Presentation on 6ix