CFS Retail Property Trust (CFX)
Quarterly update to 30 September 2011
7 November 2011
Highlights
3.1% 99.7% $225m retail specialty sales growth1 occupancy maintained forward solved FY12 debt expiries
Emporium top score 4 works continue in disclosure for our CFX assets received ahead of schedule 2011 submission to the funding from the Carbon Disclosure Project Green Building Fund
1. For the nine months to 30 September 2011 compared to the nine months to 30 September 2010 2
1 Capital management
Achievements – Forward solved all FY12 debt expiries – Negotiated $225 million of new bank debt facilities to replace the December 2011 and February 2012 facilities
Future focus – Forward solve the FY13 debt expiries – Alternative funding for remaining FY15 $295 million convertible note expiry (investor put option August 2012)
QueensPlaza, QLD
3
Capital management Current position1
At 31 October 2011 At 30 June 2011 Debt funding sources
Weighted average interest rate2 6.7% 7.0% 29% Weighted average duration of debt 3.5 years 3.5 years 35% Proportion of debt hedged 92% 92% Undrawn debt facilities $233 million $360 million 22% 4% 10%
Debt maturity profile Bank debt Convertible notes 1,000 US Private Placement Short term notes Medium term notes 800
600 475 200 400 $ million 38 178 50 295 200 150 440 225 300 160 100 38 0 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 US private placement Bank debt Convertible notes^ Medium term notes
1. Unaudited accounts as at 31 October 2011 adjusted for the capital management activities undertaken post the September quarter. 2. Including line fees and margins. ^ The $295 million of August 2014 convertible notes have an investor put option in August 2012. The $300 million of July 2016 convertible notes have an investor put option in July 2014. 4
2 Portfolio update Total sales by category
Growth in Moving Annual Turnover (MAT) - rolling 12-month period Comparable1 Actual
MAT MAT 30 Sep Annual 30 Sep Annual 2011 growth 2011 growth Category $m % $m % Department stores2 256.0 (5.7) 654.7 (5.8) Discount department stores 609.9 (2.3) 787.9 (1.7) Supermarkets 1,223.6 2.9 1,538.8 4.2 Mini majors 420.0 0.1 752.6 2.2 Retail specialty 1,383.1 1.2 2,685.9 3.9 Other retail3 362.4 3.4 477.4 3.3 Shopping centre portfolio 4,255.0 0.8 6,897.3 2.2 DFO centres 406.4 (1.1) 538.4 3.3 Total portfolio 4,661.4 0.6 7,435.7 2.2 Specialty stores sales (MAT / sqm) 4 7,996 9,002
1. Shopping Centre Council of Australia definition of comparable centres refers to those centres that are not undergoing or have not undergone substantial redevelopment in the past 24 months. 2. Department stores and total growth variances exclude David Jones Chadstone, which was impacted by the substantial upgrade works undertaken between January and October 2011. 3. Other retail includes cinemas and sales reporting tenancies under 400 sqm including travel agents, auto accessories, Lotto and other entertainment and non-retail stores. 4. Shopping centre portfolio, excluding DFO centres. 5
Portfolio update Sales performance by category – September nine-monthly sales
September 2011 nine-monthly comparable1 sales – Major redevelopments (nine months to 30 September 2011 compared to nine months to 30 September 2010) completed in 30 Sep 30 Sep Annual November 2009 2011 2010 growth2 – Entire portfolio Category $m $m % excluding Bayside Department stores2 408.1 456.9 (8.2) Shopping Centre is Discount department stores 494.0 500.8 (1.4) comparable Supermarkets 1,070.5 1,042.8 2.7 Mini majors 490.7 491.2 (0.1) Retail specialty 1,775.5 1,722.0 3.1 Other retail3 350.4 346.0 1.3 Shopping centre portfolio 4,589.2 4,559.7 1.0 DFO centres 377.9 376.7 0.3 Total portfolio 4,967.1 4,936.4 1.0
1. Comparable centres refer to those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison. 2. Department stores and total growth variances exclude David Jones Chadstone, which was impacted by the substantial upgrade works undertaken between January and October 2011. 3. Other retail includes cinemas, travel agents, auto accessories, Lotto and other entertainment and non-retail stores. 6
3 Portfolio update Retail specialty stores by category – September nine-monthly sales
September 2011 nine-monthly comparable1 sales (nine months to 30 September 2011 compared to nine months to 30 September 2010)
30 Sep 30 Sep Annual 2011 2010 growth Retail specialty category $m $m % Food retail 126.8 117.8 7.7 Food catering 270.5 254.8 6.2 Apparel 637.1 620.6 2.7 Jewellery 134.6 134.8 (0.2) Leisure 112.7 123.9 (9.1) General retail2 152.5 150.3 1.5 Homewares 136.6 132.7 2.9 Mobile phones 72.9 60.5 20.5 Retail services 131.8 126.6 4.1 Total retail specialty 1,775.5 1,722.0 3.1
1. Comparable centres refer to those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison. 2. General retail comprises giftware, pharmacy and cosmetics, pets, discount variety, florists and toys. 7
Portfolio update Retail observations and leasing environment
– Retail sales environment remains challenging but consumers are spending – Consumer spending is focused on take-home food, restaurants/cafes, technology (ie mobile phones, laptops, tablet computers) entertainment and offshore travel – Mixed leasing demand – Strong demand from fresh food and food catering tenancies – Continued demand from international retailers at quality centres – More cautious demand from fashion retailers, with a focus on quality centres – CFX portfolio occupancy remains unchanged at 99.7% reflecting the quality of the centres
DFO Homebush, Homebush, NSW DFO Homebush, Homebush, NSW 8
4 Portfolio update Responsible property investment (RPI)
– Highly recognised for 2011 Carbon Disclosure Project submission – Included in Carbon Disclosure Leadership Index for second consecutive year – Joint highest score for disclosure with Commonwealth Property Office Fund – CFX was recognised as one of the top Australian performers in the 2011Global Real Estate Sustainability Benchmark survey – Received two merit awards, recognised as best Australian submission, in the 2011 Asia Pacific Real Estate Association’s (APREA) best practices awards – In August 2011, CFX was awarded funding from the Federal Government’s Green Building Fund for four assets:
Predicted greenhouse Grant gas savings
($000) (tonnes CO2-e pa) Clifford Gardens Shopping Centre 325 821 Myer Centre Brisbane 333 1,999 Grand Plaza Shopping Centre 115 882 QueensPlaza 69 1,073 Total 842 4,775
9
Development update Emporium Melbourne
Emporium Melbourne, Vic - site works under way Artist’s impression of the completed Emporium Melbourne, Vic
10
5 Development update Emporium Melbourne
– Demolition is well advanced – Over 150 lease offers sent – Negotiating terms on three flagship stores
Key development metrics
Total cost $1.12 billion
CFX share (50% interest) $560 million
Target initial yield1 >6%
Target IRR >9%
Leased 5% (to Myer)
Project commenced February 2011
Project to be complete late 2013
Artist’s impression of Emporium Melbourne, Vic
1. Yield based on forecast first year income after development completion. 11
Development update Roxburgh Shopping Centre
Key development metrics
Total cost $64 million
Board approval Received
Target initial yield1 >8%
Target IRR >10%
Project to commence 2012
Expected completion 2013
– $64 million project to include two new supermarkets and 40 new specialty stores
Roxburgh Park Shopping Centre, Vic
1. Yield based on forecast first year income after development completion. 12
6 Development update Chadstone Shopping Centre – Stage 35
Key development metrics
Total cost $520 million
CFX share (50% interest) $260 million
Target initial yield1 7% - 8%
Target IRR >10%
Project to commence On development approval
– Comprises a complete refurbishment of the northern end of the new West Mall creating an additional 25,000sqm of lettable area Artist’s impression of Stage 35, Chadstone Shopping Centre, Vic – Anchored by flagship stores and a revitalised entertainment precinct over four levels around a central atrium
1. Yield based on forecast first year income after development completion. 13
Summary and outlook
– We will continue to add value for unitholders through – Intensive asset management – Driving further results from the DFO centres – Delivering on our redevelopment pipeline – Active capital management – We expect retail sales growth to recover in the second half of the financial year – Distribution1 guidance remains at 13.0 – 13.1 cents per unit for the 12 months ending 30 June 2012
Chadstone Shopping Centre, Vic 1. Assuming performance fees are payable for the full 12-month period and there is no unforeseen material deterioration to existing economic conditions. 14
7 Appendix 1 Australian retail property market
Australian retail property market Relatively strong growth outlook at odds with consumer caution
– Historically, sentiment has only been this weak during recessions – If GDP strengthens as forecast, sentiment should recover
Economic growth and consumer sentiment Annual rests, GDP forecast for 2011 and 2012 Forecast 7 125
6 120
5 115
4 110
3 105
2 100 Index Percentage
1 95
0 90
-1 85
-2 80 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011
Gross domestic product Financial situation next 12 months* (RHS)
Source: Australian Bureau of Statistics, Westpac and Melbourne Institute, CBA and CFSGAM Research. * Latest data to August 2011. 16
8 Australian retail property market Despite solid income growth, poor sentiment is flowing through to retail trade
– Retail sales growth has slowed with consumer confidence, while income has grown – With continued economic growth, retail trade should recover
Australia retail turnover and gross disposable income Nominal growth, annual percentage change on quarterly rests to June 2011
16%
14%
12%
10%
8%
6% Annual change (%) Annual change 4%
2%
0% 1983 1987 1991 1995 1999 2003 2007 2011 Australian retail turnover* Gross disposable income * Latest data to August 2011.
Source: Australian Bureau of Statistics and CFSGAM Research. 17
Australian retail property market Higher savings and overseas travel have diverted some spending
– The Australian savings rate has moved above the long-term average – Savings rates may now stabilise or move a little higher, though the main move is likely to have been made – The stronger Australian dollar has led to increased overseas travel
Household savings rate Short-term resident departures Quarterly rests to June 2011 Monthly departures, monthly rests to Aug 2011, 000s
25 370 800
20 320 700 Latest 10.5% 600 15 270 500 220 10 400 170 300 Savings rate (%) Savings 5 120 200 0 70 100 -5 Latest 4.9% 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Aust household savings rate Aust average Asia Europe Americas Total (RHS) US personal savings rate US average Source: Australian Bureau of Statistics, Federal Reserve Bank of St Louis and CFSGAM Research. Source: Australian Bureau of Statistics and CFSGAM Research. 18
9 Australian retail property market Over the long-term, nominal retail trade growth should be in line with nominal GDP
– Over the long-term, nominal retail sales growth has generally been in line with nominal GDP – Nominal GDP growth for 2011/12 and 2012/13 is forecast at 6.4% and 6.8% respectively – This suggests retail trade should recover from the current weak patch
Nominal retail turnover and Gross Domestic Product (GDP) Annual growth, GDP forecasts for 2011/12 and 2012/13
25%
20%
15% Forecast
10%
5% Annual growth Annual growth (%)
0%
-5% 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 Australian retail turnover Gross domestic product Year ended June
Source: Australian Bureau of Statistics and CFSGAM Research. 19
Appendix 2 CFX additional information for September 2011 quarterly update
10 CFX portfolio update Intensive asset management outcomes
CFX has driven growth in net rental income CFX has sold/acquired $695 million of assets over Sales turnover vs net rental income the past 3 years CFX portfolio at 100% 8 800 7 700 Number Value 6 600 5 500 Divestments 2 $127 million 4 400 3 300 2 200 Acquisitions 5 $568 million
Sales turnover ($billion) turnover Sales 1 100 Net rental income ($million) income rental Net - - 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sales turnover Net rental income Year ended 30 June
CFX has demonstrated returns from redevelopments CFX retains a high quality Australian portfolio
Redevelopment completions 2005 to 2011 CFX share CFX1,2 Peer 13 Peer 22
Number of projects completed 38 Number of shopping centres 24 42 17 Specialty store sales (MAT$/sqm) 9,002 9,727 8,930 Total cost $1.7 billion Occupancy costs (%) 17.3 18.54 17.5 Average year one yield 7.6% Occupancy (%) 99.7 >99.5 99.9
Average internal rate of return (IRR) 12.5% 1. CFX shopping centre portfolio excluding Myer Melbourne, DFO centres and 15 Bowes Street, Woden. 2. As at 30 September 2011. 3. As at 30 June 2011. 4. Including New Zealand shopping centres. 21
CFX portfolio update Specialty sales by category
Growth in Moving Annual Turnover (MAT) - rolling 12-month period Comparable1 Actual
MAT MAT 30 Sep Annual 30 Sep Annual 2011 growth 2011 growth Retail specialty category2 $m % $m %
Food retail 119.0 4.8 185.7 8.5
Food catering 240.7 5.1 390.2 5.7
Apparel 380.8 0.5 962.9 4.0
Jewellery 120.1 (0.6) 221.4 2.8
Leisure 108.4 (12.6) 184.8 (7.8)
General retail3 149.3 2.1 240.3 2.5
Homewares 63.9 (7.0) 204.1 2.8
Mobile phones 75.2 18.7 105.7 22.2
Retail services 125.7 3.1 190.8 3.2
Total retail specialty 1,383.1 1.2 2,685.9 3.9 1.Comparable centres are those centres that are not undergoing or have not undergone substantial redevelopment in the past 24 months. 2.Shopping centre portfolio retail specialty store sales, which is excluding DFO centres. 3.General retail comprises giftware, pharmacy and cosmetics, pets, discount variety, florists and toys. 22
11 CFX development update Key development projects1 as at 30 September 2011
Dec 2009 Jun 2010 Dec 2010 Jun 2011 Dec 2011 Jun 2012 Dec 2012 Beyond
Myer Bourke Street store $165 million
Bayside $36 million
Forest Hill Chase $25 million Runaway Bay $5 million Emporium Melbourne2 $560 million
Roxburgh Park $64 million
Brimbank $33 million
Castle Plaza $140 million
Chadstone (Stage 35) $260 million
Eastlands $50 million
Projects completedProjects in progress Projects planned
1. CFX share. 2. Emporium Melbourne is expected to be completed by late 2013. 23
CFX development update
Development pipeline breakdown as at 30 September 2011
CFX total CFX cost to Development pipeline cost complete $m $m
Projects in progress 565 250
Likely to proceed - current 255 185
Current projects 820 435
Planning and concept stages 400
Total development pipeline 1,220
24
12 CFX development update Current projects
Current projects as at 30 September 2011 CFX CFX cost Target Expected Leased Current projects total cost to complete yield completion % $m $m % date Projects in progress Emporium Melbourne 560 224 > 6.0 51 late 2013
Runaway Bay Shopping Village 5 2 8.2 100 Nov 2011 Likely to proceed - current Roxburgh Park Shopping Centre 64 61
Castle Plaza Shopping Centre 140 140
Total current projects 769 427
1. Myer tenancy on level four represents 5% of income already secured. 25
CFX - intensive asset management Bayside Shopping Centre
Before After
26
13 CFX - intensive asset management Broadmeadows Shopping Centre
Before After
27
CFX - intensive asset management Chadstone Shopping Centre
Before After
28
14 CFX - intensive asset management DFO Essendon
Before After
29
Further information
For further information please contact:
Michael Gorman Darren Steinberg Fund Manager Managing Director, Property CFS Retail Property Trust Colonial First State Global Asset Management Phone: +612 9303 3448 or +61 410 401 178 Phone: +612 9303 2328 or +61 417 262 980 Email: [email protected] Email: [email protected]
Investor and media contacts: David Yates Mathew Chandler Head of Investor Relations and Corporate Affairs Investor Relations and Corporate Affairs Manager Colonial First State Global Asset Management Colonial First State Global Asset Management Phone: +612 9303 3516 or +61 418 861 047 Phone: +612 9303 3484 or +61 407 009 687 Email: [email protected] Email: [email protected]
About CFS Retail Property Trust CFS Retail Property Trust (CFX or the ‘Trust’) is a retail sector-specific Australian Real Estate Investment Trust (A-REIT) which invests in high quality retail assets including superregional, regional, sub-regional and retail outlet shopping centres across Australia. Its stock market trading code is CFX. The Trust is managed on behalf of more than 18,000 investors from 24 countries.
30
15 Disclaimer
Neither Commonwealth Bank of Australia (the ‘Bank’) ABN 48 123 123 124 nor any of its subsidiaries guarantees or in any way stands behind the performance of the CFS Retail Property Trust ARSN 090 150 280 (CFX) or the repayment of capital by CFX. Investments in CFX are not deposits or other liabilities of the Bank or its subsidiaries, and investment-type products are subject to investment risk including possible delays in repayment and loss of income and principal invested.
The information contained in this presentation (the ‘Presentation’) is intended to provide general advice only and does not takeinto account your individual objectives, financial situation or needs. You should assess whether the Presentation is appropriate for you and consider talking to a financial adviser or consultant before making an investment decision.
All reasonable care has been taken in relation to the preparation and collation of the Presentation. Except for statutory liability which may not be excluded, no person, including Commonwealth Managed Investments Limited (the ‘Responsible Entity’) ABN 33 084 098 180, Colonial First State Property Retail Pty Limited ABN 19 101 384 294 or any other member of the Bank’s group of companies, accepts responsibility for any loss or damage howsoever occurring resulting from the use of or reliance on the Presentation by any person. Past performance is not indicative of future performance and no guarantee of future returns is implied or given.
Copyright and confidentiality The copyright of this Presentation and the information contained therein is vested in the Responsible Entity, the Bank and the Bank’s group of companies. This Presentation should not be copied, reproduced or redistributed without prior consent.
31
16