Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2023 Earnings Presentation
40 slides from Charter Hall Retail Reit's earnings presentation, Aug 15, 2023
Slide 1: Charter Hall Retail REIT 2023 Full Year Results
Charter Hall Social Infrastructure REIT Charter Hall Retail REIT 2023 Full Year Results 2023 Full Year Results
Slide 2: Acknowledgement of Country
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 recognise their continued care and contribution to Country. CharterHall Charter HallRetail RetailREIT REIT 2023Full 2022 FullYe
Slide 3: Agenda
Agenda 1. Highlights and Strategy 2. Financial Performance 3. Operational Performance 4. Outlook and Guidance 5. Annexures Ben Ellis Joanne Donovan Retail CEO and Executive Head of Retail Finance Director Charter Charter Hall Hall Retail Retail REIT REIT 2023 2023 Full Full Year Year Results Results
Slide 4: Highlights and Strategy
1 Highlights and Strategy Campbellfield Plaza, Campbellfield Vic Charter Hall Charter Hall Retail Retail REIT REIT Charter Hall Retail REIT 2023Full 2023 FullYear YearResults Results 2023 Half Year Results
Slide 5: Portfolio Highlights
Highlights and Strategy Portfolio Highlights Key metrics FY22 FY23 Movement Operating earnings per unit Distributions per unit Operating earnings 28.71 cents 25.80 cents $164.4m $166.9m +1.5% 1.1% from FY22 5.3% from FY22 Operating earnings per unit 28.40 cents 28.71 cents +1.1% Distributions pe
Slide 6: CQR Convenience Strategy
Highlights and Strategy CQR Convenience Strategy Providing a resilient and The leading owner growing income stream for our investors from of convenience retail property convenience shopping centres and long WALE retail KEY DRIVERS Enhance Active asset Prudent capital portfolio quality management man
Slide 7: Delivering on Convenience Strategy
Highlights and Strategy Delivering on Convenience Strategy Active portfolio curation driving major tenant income growth FY18 FY23 Long Term Stable 4% of major tenant rent reviews 38% of major tenant rent reviews Forecast CPI based and 0% NNN leases CPI based and 35% NNN lease % of income Growth % of
Slide 8: Delivering on Strategy
Highlights and Strategy Delivering on Strategy Off-market acquisitions of quality Gull (New Zealand) Z Energy (New Zealand) LWIP2 (Australia) convenience long WALE retail portfolios - Off-market acquisitions, leveraging the relationships of the Charter Hall platform - Established and extended partne
Slide 9: CQR ESG Leadership
Highlights and Strategy CQR ESG Leadership Achievements in FY23 Focus areas in FY24+ Environment Net Zero Carbon by 2025 Investing in clean energy 4.9 Star NABERS Energy for Retail Partnering with tenant customers to increase Commitment to net zero Scope 1 and 20.2MW1 of installed solar across 38 po
Slide 10: Tenant Customer Relationships
Operational Performance Tenant Customer Relationships - Delivered annual CentreSAT survey in March 2023 through Monash Business School’s ACRS Top ranked landlord by our tenants (NPS) Research unit 1 - Participation from 1,173 Retail tenant customers 2021 2022 2023CQR achieving a 97% participation ra
Slide 11: Financial Performance
Charter Hall Charter Hall Retail Retail REIT REIT Charter Hall Retail REIT 2023 Full 2023 FullYear YearResults Results 2023 Half Year Results 2 Financial Performance Bass Hill Plaza, Bass Hill NSW
Slide 12: Earnings and Distributions
Financial Performance Earnings and Distributions - Total net property income growth of 7.2% Look through basis $m FY22 FY23 % change - Same property portfolio NPI growth of 3.3% Net property income from convenience shopping centre retail 183.8 190.6 3.7% - Same property convenience shopping centre r
Slide 13: Balance Sheet
Financial Performance Balance Sheet - Total property portfolio value changed by $15m Look through basis $m Jun 22 Jun 23 over FY23 due to: Convenience shopping centre retail investment properties 3,339 3,217 - off-market acquisitions including: Z Energy portfolio, NZ for $118m; Convenience long WALE
Slide 14: Property Valuations
Financial Performance Property Valuations Convenience Convenience - Income growth driving portfolio valuation $m shopping centre long WALE Total portfolio retail retail resilience with a movement of -0.4% or -$16m - Convenience shopping centre retail valuation June 2022 portfolio value 3,339 960 4,2
Slide 15: Capital Management
Financial Performance Capital Management Diversified and well balanced, long-term debt maturity profile1 - Available investment capacity of $239m1 - Diversified funding sources with no debt 11 164 maturing until March 2026 109 93 205 - Additional $375m of hedging taken out in FY23 48 177 370 - Recen
Slide 16: Operational Performance
3 Gateway Plaza, Leopold Vic Charter Hall Retail REIT Charter Hall Retail REIT 2023 Full Year Results 2023 Half Year Results Operational Performance Charter Hall Retail REIT 2023 Full Year Results
Slide 17: Portfolio Summary
Operational Performance Portfolio Summary – Convenience shopping centre retail occupancy improved from 98.5% to 98.6% Portfolio snapshot Jun 22 Jun 23 – 5.9% total MAT growth1,2 Number of convenience shopping centre retail assets 51 49 Number of convenience long WALE retail assets 521 597 – Portfoli
Slide 18: Portfolio Tenant Customer Composition
Operational Performance Portfolio Tenant Customer Top 10 tenant customer groups1 Composition 14.7% - Major tenants Woolworths, Coles, bp, Wesfarmers2, Ampol, Endeavour, Aldi and Gull 13.0% represent 57% of portfolio income - Following the off-market acquisitions, Ampol, 12.3% Endeavour and Gull are
Slide 19: Convenience Long WALE Retail Portfolio
Operational Performance Convenience Long WALE Retail Portfolio Portfolios Value $’m Cap rate WALE yrs Rent review – Convenience long WALE retail represents 25% of total portfolio by value and 19.5% of total portfolio bp Australia 517 4.7% 16.5 CPI income bp New Zealand 169 4.8% 17.5 CPI (0.5%-4%) –
Slide 20: Supermarket Anchors
Operational Performance Supermarket Anchors – Supermarkets continued to demonstrate resilience with 4.3% MAT growth1 Supermarket performance Jun 22 Jun 23 – Supermarkets in turnover have experienced stronger 4.9% MAT growth1 MAT growth1 3.2% 4.3% – Agreed terms at 11 supermarket locations for licenc
Slide 21: Specialty Tenants
Operational Performance Specialty Tenants – 420 specialty leases completed in the period Specialty performance Jun 22 Jun 23 – Leasing spreads over the period were +2.5% MAT growth1 (3.7%) 9.0% – 161 new leases (+1.7% leasing spread) Sales productivity (per sqm) $9,894 $10,489 – 259 renewals (+2.7%
Slide 22: Asset Enhancement Projects
Operational Performance Asset Enhancement Projects Active portfolio curation Investing alongside our – Stage 1 of the $30m Rosebud Plaza redevelopment delivered including new major tenants to deliver Woolworths and specialty tenants in conjunction with centre ambience upgrade improved shopper amenit
Slide 23: Outlook and Guidance
Charter Hall Retail REIT Charter Hall Retail REIT 2023 Full Year Results 2023 Half Year Results 4 AMPOL, Dee Why NSW Outlook and Guidance
Slide 24: 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 with an increased focus on convenience long WALE retail will continue to improve por
Slide 25: Annexures
Charter Hall Charter Hall Retail Retail REIT REIT Charter Hall Retail REIT 2023Full 2023 FullYear YearResults Results 2023 Half Year Results 5 Annexures Albany Plaza, Albany WA
Slide 26: Annexures
Annexures Annexures 1 6 FY24 guidance (cpu) Lease expiry profile 2 7 Reconciliation of statutory profit to operating earnings Property valuations 3 8 Investment in property joint ventures Portfolio MAT by state and category 4 9 Debt maturities and covenants Convenience shopping centre retail portfol
Slide 27: FY24 guidance (cpu)
Annexures Annexure 1 FY24 guidance (cpu) 0.7 (0.8) 0.4 0.9 (2.5) 28.7 27.4 FY23 Stable Stable Net convenience Net convenience Finance FY24 EPU convenience convenience long WALE shopping centre costs EPU shopping centre long WALE retail acquisitions retail divestments retail net retail net net proper
Slide 28: Reconciliation of statutory profit to operating earnings
Annexures Annexure 2 Reconciliation of statutory profit to operating earnings $m FY23 Statutory profit 37.8 Investment property revaluation1 83.6 Net gain on foreign exchange (1.0) Net loss on derivative financial instruments 19.9 Other (including straight-lining of rental income and amortisation of
Slide 29: Investment in property joint ventures FY23
Annexures Annexure 3 Investment in property joint ventures – operating earnings and balance sheet breakdown FY23 Convenience Convenience bp Ampol Gull LWIP2 $m CQR RP1 RP2 RP6 Other shopping CDC4 long WALE Total portfolios portfolios1 portfolio2 portfolio3 centre retail retail Ownership interest 100
Slide 30: Investment in property joint ventures FY22
Annexures Annexure 3 continued Investment in property joint ventures – operating earnings and balance sheet breakdown FY22 Convenience Convenience bp Ampol Gull LWIP2 $m CQR RP1 RP2 RP6 Other shopping CDC long WALE Total portfolios portfolios1 portfolio portfolio centre retail retail Ownership inter
Slide 31: Debt maturities and covenants
Annexures Annexure 4 Debt maturities and covenants as at 30 June 2023 ICR LVR Limit Drawn ICR LVR Debt facility (ownership interest) Maturity covenant covenant ($m) ($m) covenant covenant actual actual CQR bank debt facilities 100 Mar-26 200 Jul-26 75 Nov-26 95 Nov-26 75 Jul-27 50 Jul-28 150 Jul-28
Slide 32: Convenience focused shopping centre portfolio
Annexures Annexure 5 Convenience focused shopping centre portfolio 26 Convenience assets Convenience Convenience – Single supermarket and complementary convenience specialty compared Plus compared to neighbourhood1 to sub-regional1 – Specialty productivity across the convenience portfolio outperform
Slide 33: Lease expiry profile
Annexures Annexure 6 Lease expiry profile as at 30 June 2023 Major tenant expiry profile (by income) 80% 67.2% 10.5 years 60% Major tenant WALE 40% 7.4 years 20% 3.4% 5.6% 9.6% 5.4% 7.1% Portfolio WALE 0.2% 1.7% 0% FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31+ 3.6 years Specialty and mini-major tenant ex
Slide 34: Property valuations as at June 2023
Annexures Annexure 7 Property valuations as at 30 June 2023 State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 24.6 4.88% Manuka Terrace Manuka 100.0% 60.3 6.13% ACT Total 84.9 NSW Bass Hill Plaza Bass Hill 20.0% 28.4 5.25% Bateau Bay Square
Slide 35: Property valuations continued
Annexures Annexure 7 continued Property valuations as at 30 June 2023 State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW continued Singleton Square Singleton 100.0% 115.0 6.38% Sunnyside Mall Murwillumbah 100.0% 62.0 6.00% Tamworth Square Tamworth 100.0% 71.3 5.75% Tumut Col
Slide 36: Property valuations continued
Annexures Annexure 7 continued Property valuations as at 30 June 2023 State Property Location Ownership interest (%) Book Value ($m) Cap Rate WA Albany Plaza Albany 100.0% 71.6 6.38% Butler Central Butler 100.0% 51.5 5.75% Esperance Boulevard Esperance 100.0% 40.4 6.38% Kalgoorlie Central Kalgoorlie
Slide 37: Portfolio MAT by state and category
Annexures Annexure 8 Portfolio MAT by state and category as at 30 June 2023 Specialty sales Proportion of MAT growth1 Sales by category MAT growth1 by state specialty sales New South Wales & ACT 58% 10.9% Supermarket 4.3% Western Australia 14% 2.6% DDS 14.4% Victoria 11% 12.6% Majors 5.8% South Aust
Slide 38: Convenience shopping centre retail portfolio historical performance
Annexures Annexure 9 Convenience shopping centre retail portfolio historical performance +/- 5yr Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 average6 -5 Number of properties 66 58 58 58 55 51 50 50 51 51 51 49 Occupancy 97.8% 98.1% 98.1% 98.1% 98.1% 97.3% 97.8
Slide 39: Glossary
Annexures Annexure 10 Glossary 1H FY23 JV Six-months from 1 July 2022 to 31 December 2022 Joint venture 2H FY23 MAT Six-months from 1 January 2023 to 30 June 2023 Moving annual turnover calculated as a sum of rolling 12-month sales WALE NPI Weighted Average Lease Expiry calculated based on income Ne
Slide 40: 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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