Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2022 Earnings Presentation
44 slides from Charter Hall Retail Reit's earnings presentation, Aug 23, 2022
Slide 1: Charter Hall Retail REIT 2022 Full Year Results
Charter Hall Charter Hall Retail REIT 2022 FullRetail REIT Year Results
Slide 2: Acknowledgement of Country
Acknowledgement of Country Charter Hall is proud to work with our customers and communities to invest in and create places on lands across Australia. We pay our respects to the traditional owners, their elders past and present, and value their care and custodianship of these lands. Coming Together,
Slide 3: Agenda
Agenda 1. Highlights and Strategy 2. Financial Performance 3. Operational Performance 4. Outlook and Guidance 5. Annexures Christine Kelly Ben Ellis Head of Retail Finance and Retail CEO and Deputy Fund Manager Executive Director Charter Charter Hall Retail REIT Hall Retail REIT 2022 2022 Full Full
Slide 4: Highlights and Strategy
CharterHall Charter HallRetail RetailREIT REIT 1 Highlights and Strategy Secret Harbour Square, WA 2022Full 2022 FullYear YearResults Results
Slide 5: Portfolio Highlights
Highlights and Strategy Portfolio Highlights Key metrics FY21 FY22 Movement Operating earnings per unit Distributions per unit Operating earnings1 28.40 cents 24.50 cents $156.2m $164.4m +5.2% 4.0% from June 2021 4.7% from June 2021 Operating earnings per unit 27.30 cents 28.40 cents +4.0% Distr
Slide 6: CQR Convenience Strategy
Highlights and Strategy CQR Convenience Strategy Providing a resilient and The leading owner growing income stream for our investors of convenience retail property KEY DRIVERS Enhance Active asset Prudent capital portfolio quality management management − Active portfolio curation has − Maintain stro
Slide 7: Delivering on Convenience Strategy
Strategy Delivering on Convenience Strategy Active shopping centre portfolio curation to high quality and higher growth assets Since 2017 divested 281 non core assets for $611m Acquired eight2 high quality assets for $516m - Average supermarket sales at time of disposal <$40m pa - Average supermarke
Slide 8: Delivering on Convenience Strategy
Strategy Delivering on Convenience Strategy Active portfolio curation driving major tenant income growth FY17 / 18 FY22 / 23 4% of major tenant rent reviews CPI based and 0% NNN leases 31% of major tenant rent reviews CPI based and 28% NNN leases2 1.2% 2.5% Major tenant Major tenant income income gr
Slide 9: Delivering on Convenience Strategy
Operational Performance Delivering on Convenience Strategy Off-market acquisitions of Long WALE convenience retail portfolios Ampol (Australia) Gull (New Zealand) - Extending the Charter Hall and Ampol relationship - Long-term stable and growing income stream – expansion of convenience focus with a
Slide 10: CQR ESG Leadership Achievements in FY22
Highlights and Strategy CQR ESG Leadership Achievements in FY22 Partnering with tenant and investor customers to deliver meaningful change Climate Change Adaptation Partnering on renewables Active tenant engagement Climate action Plan CQR has 21MW of solar and 7MWh2 of 88% data coverage through acti
Slide 11: CQR ESG Leadership Achievements in FY22
Highlights and Strategy CQR ESG Leadership Achievements in FY22 Partnering with tenant and investor customers to deliver meaningful change Crisis support Community partnerships Engagement Strong communities $50k direct investment in flood Funded over 5,000 Two Good Global high performing level of De
Slide 12: Financial Performance
Charter CharterHall HallRetail RetailREIT REIT 2 Pacific Square, NSW Financial Performance 2022 2022Full FullYear YearResults Results
Slide 13: Earnings and Distributions
Financial Performance Earnings Look-through basis $m FY21 FY22 % change and Distributions Net property income from convenience retail 174.5 183.8 5.3% - Total net property income growth of 7.1% Net property income from Long WALE convenience retail 32.4 37.8 16.7% - Same property NPI growth of 3.5% T
Slide 14: Balance Sheet
Financial Performance Balance Sheet Look-through basis $m FY21 FY22 Cash 26 29 Convenience retail investment properties 2,877 3,339 - Total property portfolio value increased by $652m over FY22 due to: Long WALE convenience retail investment properties 770 960 - valuation movement of $498m, includin
Slide 15: Property Valuations
Financial Performance Property Valuations $m Shopping centre convenience retail Long WALE convenience retail Total portfolio June 2021 portfolio value 2,877 770 3,647 - 100% of the portfolio was externally revalued at Acquisitions 56 98 154 30 June 2022 Capital investment 69 2 71 - Portfolio valuati
Slide 16: Capital Management
Financial Performance Capital Management – Available liquidity of $245m1 Key metrics Jun 21 Jun 22 – FY22 weighted average cost of debt was 2.7%2 Weighted average cost of debt2 2.7% 2.7% Weighted average debt maturity 4.1 years 3.9 years – Forecast FY23 weighted average cost of debt of 3.2%2 assumin
Slide 17: Operational Performance
Charter CharterHall HallRetail RetailREIT REIT 3 Rockdale, NSW Operational Performance 2022 2022Full FullYear YearResults Results
Slide 18: Portfolio Summary
Operational Performance Portfolio Summary – Shopping centre occupancy improved from 98.3% to 98.5% Portfolio snapshot Jun 21 Jun 22 – 0.4% total MAT growth1,2 impacted by COVID-19 mandated store closures3 in FY22 Number of shopping centres 50 51 Number of Long WALE assets 296 521 – Q4 FY22 total sal
Slide 19: Portfolio Tenant Customer Composition
Operational Performance Portfolio Tenant Customer Top 10 tenant customer groups1 Composition 16.1% - Major tenants Coles, Woolworths, bp, Wesfarmers2, Aldi, Ampol and Gull represent 15.7% 56% of portfolio income - Following the off-market acquisitions, Ampol 11.6% and Gull are now the 6th and 8th la
Slide 20: Long WALE Convenience Retail Portfolio
Operational Performance Long WALE Convenience Retail Portfolio Portfolios Value $’m Cap rate WALE yrs Rent review – Long WALE portfolio represents 23.4% of total portfolio by value and 18% of total portfolio bp 704 4.3% 17.7 CPI income Ampol 106 4.4% 16.5 CPI – Long WALE portfolio WALE is 16.5 years
Slide 21: Supermarkets
Operational Performance Supermarkets – Supermarkets continued to demonstrate resilience with 3.2% MAT growth1 Supermarket performance Jun 21 Jun 22 – Completed nine new supermarket leases and term extensions in the period MAT growth1 4.3% 3.2% including: Supermarkets in turnover2 66% 62% – two new l
Slide 22: Specialty Tenants
Operational Performance Specialty Tenants – Strong levels of leasing activity with 480 specialty leases completed in the period Specialty performance Jun 21 Jun 22 – Leasing spreads over the period were +2.3% MAT growth2 7.1% (3.7%) – 169 new leases (+3.7% leasing spread) Sales productivity (per sqm
Slide 23: Asset Enhancement Projects
Operational Performance Asset Enhancement Projects Active portfolio curation Investing alongside our – New leases and terms extensions agreed in nine locations. Includes store major tenants to deliver expansions and additional works to facilitate enhanced home delivery and improved shopper direct to
Slide 24: Tenant Customer Relationships
Operational Performance Tenant Customer Relationships - Delivered annual CentreSAT survey in March 2022 through Monash University's research unit 1 - Participation from 1,038 Retail tenant customers maintaining our 95% participation rate 2 - Our centre based tenant customers ranked us 1st in likely
Slide 25: Outlook and Guidance
Charter CharterHall HallRetail RetailREIT REIT 4 Alexandria, NSW Outlook and Guidance 2022 2022Full FullYear YearResults Results
Slide 26: Outlook and Guidance
Outlook and Guidance Outlook and Guidance – Strategy remains consistent and focused on non-discretionary convenience retailers, providing income growth and resilience – Portfolio curation and active asset management will continue to improve portfolio quality – Positive leasing spreads, high occupanc
Slide 27: Annexures
Charter CharterHall HallRetail RetailREIT REIT 5 Marsden Park, NSW Annexures 2022 2022Full FullYear YearResults Results
Slide 28: Annexures
Annexures Annexures 01 07 Convenience focused portfolio FY22 guidance (cpu) 02 08 Reconciliation of statutory profit to operating earnings and AFFO Lease expiry profile 03 09 FY22 Financial Impact from COVID-19 Property valuations 04 10 NTA per unit reconciliation Portfolio MAT by State and category
Slide 29: FY23 guidance (cpu)
Annexures Annexure 1 FY23 guidance (cpu) 1.1 (0.8) 0.3 (1.2) 0.1 1.1 (0.3) (0.1) (2.9) 28.4 28.6 25.7 FY22 Stable Butler Long WALE Long WALE Finance Finance Other Impact of FY23 Capital FY23 EPU convenience Central, WA net property acquisitions costs costs expenses December EPU expenditure DPU net p
Slide 30: Reconciliation of statutory profit to operating earnings and AFFO
Annexures Annexure 2 Reconciliation of statutory profit to operating earnings and AFFO $m FY22 cpu 1H FY22 2H FY22 FY22 Operating earnings 14.22 14.18 28.40 Statutory profit 663.6 2 Less: COVID-19 tenant support (1.20) (0.10) (1.30) Revaluation increment on investment properties1 (450.7) Add: FY21 d
Slide 31: FY22 Financial Impact from COVID-19
Annexure Annexure 3 FY22 Financial Impact from COVID-19 – COVID-19 support reduced over FY22 as government restrictions eased and sales COVID-19 support Uncollected progressively improved $8.1m $1.0m 2.7% 0.3% – $8.1m or 2.7% of FY22 rent was provided as COVID-19 tenant support comprising $5.4m (66%
Slide 32: NTA per unit reconciliation
Annexures Annexure 4 NTA per unit reconciliation ($) 0.12 (0.25) 0.01 0.74 4.91 0.28 4.01 1 Jun 21 NTA Operating earnings Valuation movements Derivative movements Distribution Other Jun 22 NTA 1. Includes accounting adjustments Charter Hall Retail REIT 2022 Full Year Results 32
Slide 33: Investment in property joint ventures FY22
Annexures Annexure 5 Investment in property joint ventures – income and balance sheet breakdown FY22 Long WALE Gateway / Convenience bp Ampol $m CQR RP1 RP2 RP6 CDC convenience Total Salamander retail portfolio portfolio retail Ownership interest 100% 50% 49.9% 20% 50.3% 23.6% 5.5% 52% 41 wholly Bri
Slide 34: Investment in property joint ventures FY21
Annexures Annexure 5 continued Investment in property joint ventures – income and balance sheet breakdown FY21 Long WALE Gateway / Convenience bp Ampol $m CQR RP1 RP2 RP6 CDC convenience Total Salamander retail portfolio portfolio retail Ownership interest 100% 50% 49.9% 20% 50.3% 23.6% 52% 40 wholl
Slide 35: Debt maturities and covenants
Annexures Annexure 6 Debt maturities and covenants as at 30 June 2022 Limit Drawn ICR ICR LVR LVR Debt facility (ownership interest) Rate Maturity ($m) ($m) Covenant Actual Covenant Actual JV debt – CHRP1 95 86 Floating Jul-26 1.75x 5.4x 60.0% 32.9% JV debt – CHRP2 40 32 Floating Jul-24 1.75x 6.5x 6
Slide 36: Convenience focused shopping centre portfolio
Annexures Annexure 7 Convenience focused shopping centre portfolio 27 Convenience assets Convenience Convenience – Single supermarket and complementary convenience specialty compared Plus compared to neighbourhood1 to sub-regional1 – Specialty productivity across the convenience portfolio outperform
Slide 37: Lease expiry profile as at June 2022
Annexures Annexure 8 Lease expiry profile as at 30 June 2022 Major tenant expiry profile (by income) 80% 72.5% 10.9 years 60% Major tenant WALE 40% 7.4 years 20% 9.8% Portfolio WALE 3.5% 6.3% 5.6% 0.2% 0.2% 1.7% 0% 3.5 years FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30+ Specialty and mini-major tenant WA
Slide 38: Property valuations as at June 2022
Annexures Annexure 9 Property valuations as at 30 June 2022 State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 26.8 4.50% Manuka Terrace Manuka 100.0% 60.0 5.75% ACT Total 86.8 NSW Bass Hill Plaza Bass Hill 20.0% 27.8 5.00% Bateau Bay Square
Slide 39: Property valuations as at June 2022
Annexures Annexure 9 continued Property valuations as at 30 June 2022 State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW continued Rutherford Marketplace Rutherford 50.0% 25.8 5.00% Salamander Bay Square Salamander Bay 50.5% 94.9 5.75% Singleton Square Singleton 100.0% 134.5
Slide 40: Property valuations as at June 2022
Annexures Annexure 9 continued Property valuations as at 30 June 2022 State Property Location Ownership interest (%) Book Value ($m) Cap Rate Vic Campbellfield Plaza Campbellfield 100.0% 99.0 5.00% Gateway Plaza Leopold 50.0% 85.0 5.25% Lansell Square Kangaroo Flat 100.0% 111.0 5.75% Rosebud Plaza R
Slide 41: Portfolio MAT by state and category
Annexures Annexure 10 Portfolio MAT by state and category as at 30 June 2022 Specialty sales Proportion of MAT growth1 Sales by category MAT growth1 by state specialty sales New South Wales & ACT 54% (6.4%) Supermarket 3.2% Western Australia 15% (0.8%) DDS (6.6%) Victoria 9% (5.0%) Majors MAT Total
Slide 42: Shopping centre portfolio historical performance
Annexures Annexure 11 Shopping centre portfolio historical performance Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Number of properties 71 66 58 58 58 55 51 50 50 51 51 Occupancy 98.0% 97.8% 98.1% 98.1% 98.1% 98.1% 97.3% 97.8% 98.3% 98.4% 98.5% 5 5 5 5 5 Same propert
Slide 43: Glossary
Annexures Annexure 12 Glossary 1H FY22 JV 6 months from 1 July 2021 to 31 December 2021 Joint venture 2H FY22 MAT 6 months from 1 January 2022 to 30 June 2022 Moving annual turnover calculated as a sum of rolling 12 month sales WALE NPI Weighted Average Lease Expiry calculated based on income Net pr
Slide 44: 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
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