CFS Retail Property Trust (CFX)
Half-year results to 31 December 2011
21 February 2012
Angus McNaughton
Managing Director, CFSGAM Property
1 Agenda
• Overview • Highlights • Financial results • Capital management • Portfolio overview • Development update • Australian retail property market • Strategy • Summary and outlook • Questions
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Overview CFS Retail Property Trust (CFX)
Disciplined growth
4
2 Michael Gorman
Fund Manager, CFS Retail Property Trust (CFX)
Highlights
6.5¢ 2.9% 99.7% distribution per unit Growth in comparable1 portfolio occupancy retail specialty MAT2
2.7% 28.1% c.3% Average rental increase on Gearing Retail sales growth retail specialty store outlook retained re-leasing3
1. Comparable centres refer to those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison. 2. Moving Annual Turnover. 3. Renewals and replacements. 6
3 Financial results Highlights for the six months ended 31 December 2011
Key metrics Change
Net profit $201.7 million -41.8%
Distributable income1 $184.6 million 9.5%
Net property income2 $278.5 million 11.1%
Like-for-like net property income3 4.1%
Distribution per unit of 6.5 cents 3.2%
Total assets $8.7 billion 2.4%
Net tangible asset backing (NTA) $2.06 per unit 0.5%
Gearing4 at 31 December 2011 28.1%
1. Distributable income is a key financial measure used by management to assess the performance of the Trust. Distributable income equals profit excluding: net gains on revaluations of investment properties, associate and derivatives; the effect of straight-lining fixed rental increases; the movement in fair value of unrealised performance fees; non-cash convertible notes interest expense; adjustments for convertible notes buy-back expense; and adjustments for project and other items. 2. Including DFO centres and excluding flowback. 3. Including those assets owned for both six-month periods and excluding the impact of developments. 4. Gearing equals borrowings to total assets. For this calculation, total assets exclude the fair value of derivatives and borrowings is the amount drawn down as per Note 5 of the Interim report, adjusted for the fair value of cross currency swaps. 7
Financial results Composition of distribution per unit
Six months ended CFS Retail Property Trust 31 December 2011 $m cpu
Net profit 201.7
Adjustments
deduct net gain from properties and associates revaluations (112.7)
add back net loss from derivatives revaluations 68.3
deduct straight-lining rental revenue (0.9)
add back movement in the fair value of unrealised performance fees 5.6
add back non-cash convertible notes interest expense 3.5
add back convertible notes buy-back expense 4.9
add back amortisation of project items 10.9
add back adjustments for other items 3.3
Distributable income/Distribution 184.6 6.5
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4 Capital management Activities and outcomes
Capital management activities during the period Outcomes
• Refinanced $225 million of bank debt facilities, due to 9 Maintained the Trust’s credit rating expire December 2011 and February 2012 - S&P credit rating of ‘A/A-1’ • Raised $300 million in new 5.75% July 2016 convertible notes 9 Improved the Trust’s weighted average cost of debt • Used to fund the buy-back of $300 million convertible notes maturing in August 2014 9 Further staggered the debt maturity profile • Put in place $300 million of new bank debt facilities 9 Debt remains senior and unsecured • Initiated a buy-back of the outstanding August 2014 convertible notes 9 Maintained gearing within the Trust’s target gearing range of 25% - 35% • Resulted in the buy-back of $4.2 million of (28.1% at 31 December 2011) convertible notes • Terminated and replaced a number of interest rate swaps
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Capital management Debt profile
Diversified debt funding sources1 At 31 Dec 20111 At 30 Jun 20112
Weighted average interest rate3 6.5% 7.0% Weighted average duration of debt 3.3 years 3.5 years 34% 36% Proportion of debt hedged4 91% 92% Undrawn debt facilities $601 million $360 million 8% 3% 19%
1 Debt maturity profile Bank debt Convertible notes 1,200 US Private Placement Short term notes 1,000 Medium term notes 800 575 600 300 38 178 $ million 400 50 150 100 200 291 440 225 260 300 38 0 100 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. Adjusted for $100 million of medium term notes, issued in February 2012. 2. Adjusted for the issue of $300 million of July 2016 convertible notes and buy-back of $300 million of August 2014 convertible notes, which settled post 30 June 2011. 3. Including line fees and margins. 4. Including convertible notes and fixed-rate medium term notes. ^ The $291 million of August 2014 convertible notes have an investor put option in August 2012. The $300 million of July 2016 convertible notes have an investor put option in July 2014. 10
5 Capital management FY12 objectives and focus
FY12 objectives and focus Capital recycling • Continue to investigate potential sales, including: • 100% interests in smaller non-core assets, or • 50% interests in fully developed regionals or CBD assets • Investigate options for potential reallocation of capital • fund other capital management initiatives such as a unit buy-back • reinvest into accretive developments • fund opportunistic acquisitions, or • repay existing debt facilities
Maintain diversity of debt
Take advantage of low interest rates to reduce debt costs
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Portfolio overview
Shoppers across the CFX portfolio 12
6 Portfolio overview Key portfolio metrics
• Occupancy remains stable at 99.7%
Shopping centre portfolio metrics Including DFO centres
31-Dec-11 30-Jun-11 Change 31-Dec-11
Number of retail assets 25 25 29
Investment properties ($m) 8,045 7,878 8,582
Number of retail tenants 3,640 3,645 4,139
Occupancy1 (%) 99.7 99.7 99.7
Number of vacancies 28 31 29
1. By gross lettable area. 13
Portfolio overview Sales performance by category
• Shopping centres provide diverse sources of income
Comparable1 Actual Approximate category contribution to income vs sales for a regional MAT MAT shopping centre 31 Dec Annual 31 Dec Annual 2011 growth 2011 growth Category $m % $m % 25% Department stores2 619.0 (6.1) 653.4 (7.8) 60% Discount department stores 736.0 (1.9) 782.3 (1.9) Supermarkets 1,482.7 2.1 1,563.2 3.0 75% Mini majors 708.1 0.2 758.0 1.7 40% Retail specialty 2,563.5 2.9 2,710.6 2.4 % of sales Other retail3 462.8 3.3 481.9 3.6 % of income Majors Shopping centre portfolio2 6,572.1 1.1 6,949.4 1.0 Retail specialty DFO centres 537.0 0.2 537.0 0.2 Total portfolio2 7,109.1 1.0 7,486.4 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 Comparable 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. 14
7 Portfolio overview Retail specialty stores by category
December 2011 comparable1 Moving Annual Turnover Actual shopping centre portfolio (12 months to December 2011 compared to 12 months to December 2010) Specialty Specialty 31 Dec 31 Dec Annual occupancy sales per 2011 2010 growth costs sqm Retail specialty category $m $m % Dec 20113 17.2% $9,269 Food retail 179.7 165.2 8.8 Jun 2011 17.1% $8,991 Food catering 373.9 352.7 6.0 Dec 2010 17.2% $8,788 Apparel 914.8 899.5 1.7 Jun 2010 16.8% $8,558 Jewellery 209.3 210.0 (0.3) Leisure 169.4 183.0 (7.4) General retail2 226.3 224.6 0.7 Homewares 201.7 193.4 4.3 Mobile phones 103.7 85.0 22.0 Retail services 184.7 177.2 4.2 Total retail specialty 2,563.5 2,490.6 2.9
Actual specialty MAT/sqm ($) 9,086 8,788 3.4
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. 3. Excluding Bayside Shopping Centre as the centre was development impacted during the period. 15
Portfolio overview Retail observations and leasing environment
• Consumers benefitting from low unemployment and solid wages growth • Retail sales environment remains challenging with some discretionary spending being diverted to non-retail areas like travel • Leasing was strong in the lead-up to Christmas • Food and services retailers continue to perform strongly while apparel sales have tempered
• CFX occupancy at 99.7%, while defaults and Queues outside Ralph Lauren, VIP day at Chadstone Shopping Centre arrears remain low • Achieved a 2.7% increase on retail specialty store re-leasing1 with standard fixed 5% annual increases • Retailers continue to benefit from being located in well-managed shopping centres • Retailers who have invested in their brand are benefitting most in current environment
New Coach store at DFO Homebush 1. Renewals and replacements. 16
8 Portfolio overview DFO update
Strategy Status Outcomes
126 leasing deals completed since acquisition Improve tenant mix 9 Strong international and domestic leasing demand Circa 37% uplift in passing income and 23% above acquisition budget income Increase income from assets Downtime for re-letting and new fit-outs has resulted in 9 flat MAT growth to 31 December 2011, but increased future rental income Over $2 million of unbudgeted income identified since Identify new income sources 9 acquisition Launched a new marketing campaign in July 2011 Improve marketing initiatives Multi-platform integrated youth-oriented campaign 9 Across television, radio, print, outdoor and social media
Newly introduced tenants to the DFO centres Occupancy costs – Jun-10 – Dec-11 – Coach – Osh Kosh – United Colors of Benetton – Lacoste Homebush 7.4% 8.0% Outlet – G-Star Raw – Lee – Forever New Essendon 8.7% 10.3% – Fossil – Skechers – Oakley – Karen Millen Moorabbin 10.2% 11.4% – Seafolly – Typo – Oporto – Sunglass Hut – Ksubi South Wharf n/a1 14.4%
1 Trading for less than 12 months at this time, so data not available. 17
Portfolio overview Online marketing strategy
• Revamped DFO online presence launched • Faster and more accessible • Smart phone and tablet device technology adopted • c.12,000 online offers have been uploaded by 966 retailers across centre websites • Enhanced customer relationship management leading to more targeted campaigns
DFO website 18
9 Portfolio overview Revaluations for six months to 31 December 2011
• 16 of the Trust’s assets were revalued during the period • $112.7 million net revaluation gain • Contributed to NTA increase of 0.5% to $2.06 per unit • Portfolio weighted average capitalisation rate remained stable at 6.49%
Movement in valuation metrics
Period ending 31 Dec 09 30 Jun 10 31 Dec 10 30 Jun 11 31 Dec 11
Weighted average 6.59% 6.57% 6.52% 6.49% 6.49% capitalisation rate1
NTA per unit $1.99 $2.02 $2.05 $2.05 $2.06
1. Shopping centre portfolio. 19
Portfolio overview Flowback
• The asset management division of CFSGAM Property provides dual benefits - it continues to add value across the CFX portfolio - it provides the Trust with a share of its distributable income • Distributable income relating to flowback up 29.3% on the previous corresponding period as a consequence of the leasing and management of the enlarged portfolio, and increased development fee-related income
CFSGAM Property CFX asset management division 31 Dec 2011 31 Dec 2011
Retail assets under management ($ billion) 13.7 8.6
Development pipeline ($ billion) 2.3 1.2
Distributable income ($ million) 15.9 5.3
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10 Portfolio overview Responsible property investment (RPI)
• On track to have 10 centres rated for NABERS Energy and Water • On track to have absolute targets in place and improvement plans developed for those 10 centres • CFX awarded $0.8 million by Australian Federal Government Green Building Fund to contribute to efficiency improvement schemes over four centres
Recent recognition • Carbon Disclosure Project • Joint leading score for disclosure in Australia and New Zealand • Global Real Estate Sustainability Benchmark • One of the top performing Australian funds • Asia Pacific Real Estate Association • Two merit awards and best country submission
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Tony Gilchrist
Head of Development, CFSGAM Property
11 Development update
Artist’s impressions of developments across the CFX portfolio 23
Development update
Development pipeline breakdown as at 31 December 2011
CFX total CFX cost to Development pipeline cost complete $m $m
Projects in progress 620 266
Likely to proceed - current 129 129
Current projects 749 395
Planning and concept stages 437
Total development pipeline 1,186
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12 CFX development update Key development projects1 as at 31 December 2011
Dec 2010 Jun 2011 Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013 Beyond
Forest Hill Chase $25 million Bayside Shopping Centre $36 million Emporium Melbourne $560 million
Roxburgh Park $60 million
Forest Hill Chase $20 million
Brimbank Central $34 million
DFO Homebush $75 million
Eastlands $35 million
Castle Plaza $130 million
Chadstone (Stage 35) $260 million
Projects completedProjects in progress Projects planned (estimated timing)
1. CFX share. 25
Development update Emporium Melbourne
Emporium Melbourne, Vic - demolition and excavation under way Artist’s impression of the completed Emporium Melbourne, Vic
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13 Development update Emporium Melbourne
• Demolition and excavation well advanced • Met with over 1,000 retailers • Leasing program on schedule
Key development metrics
Total cost $1.12 billion
CFX share (50% interest) $560 million
Target initial yield1 >6%
Target IRR >9%
Leased 12%2
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. 2. Myer tenancy on level four represents 5% of income already secured plus 7% from flagship and specialty tenancies. Leasing program is on schedule to secure 20% (by income) by 31 March 2012. 27
Development update Roxburgh Park Shopping Centre
Key development metrics
Total cost $60 million
Target initial yield1 >8%
Target IRR >10%
Leased 46%
Project commenced January 2012
Expected completion June 2013
• Project to include a new large format Coles supermarket, an Aldi supermarket and 40 new specialty stores • 700 new car spaces
Artist’s impressions of Roxburgh Park Shopping Centre, Vic
1. Yield based on forecast first year income after development completion. 28
14 Development update DFO Homebush
Key development metrics
Total cost $75 million
Target initial yield1 > 8.0%
Target IRR >10.0%
Project to commence On planning approval
Construction duration 14 months
• Addition of 500 new car spaces, with improved access • Remix DFO tenancies An artist’s impression of DFO Homebush, NSW • New food court • New bulky goods retailers
1. Yield based on forecast first year income after development completion. 29
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 25,000 sqm 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 • Making good progress with development approval
1. Yield based on forecast first year income after development completion. 30
15 Michael Gorman
Fund Manager, CFS Retail Property Trust (CFX)
Australian retail property market Headwinds and tailwinds
Spending has been diverted away from retail Savings are high Short-term resident departures Savings rate comparison (less than one year) Australia versus the US 370 800 20 320 700 15 270 600 500 220 10 400 170 300 5 120 200 0 Savings rate (%) Monthly departures(000s) Monthly depatures(000s) 70 100 20 0 -5 2003 2005 2007 2009 2011
Headwinds 1991 1995 1999 2003 2007 2011 Asia Europe Americas Total (RHS) AUS household savings rate US personal savings rate
Source: Australian Bureau of Statistics and CFSGAM Research. Source: Australian bureau of statistics , Federal Reserve Bank of St Louis & CFSGAM Research. Interest rate outlook has improved Retail sales growth has historically tracked GDP Interest rate expectations Australian retail turnover versus economic growth 3-month overnight indexed swap less official cash rate Annual nominal growth rates 0.3 12% Rate increase expected 0.2 10% 0.1 8% 6% 0.0 4% -0.1 Growth (%)Growth 2% Spread (%) -0.2 0% -0.3 Rate cut expected -2% 1991 1995 1999 2003 2007 2011
Tailwinds -0.4 Jan 10 Jun 10 Nov 10 Apr 11 Sep 11 Feb 12 Australian retail turnover GDP Forecast GDP Source: Reserve Bank of Australia and CFSGAM Research. Australian Bureau of Statistics, Commonwealth Bank & CFSGAM Research. 32
16 Strategy Forward focus
• Continuing focus on prudent capital management • Particular emphasis on capital recycling through potential asset sales • Evaluating best use of capital • Proceeding with developments where there is high tenant demand and deferring those where demand is weaker • Investigating a unit buy-back or resetting interest rate swaps • Driving our existing asset base • Remixing tenancies to optimise performance • Supporting retailers by advancing online and social media strategies • Delivering disciplined growth
Myer Melbourne department store, Vic
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Summary and outlook
• While the retail property market still faces headwinds, the tailwinds now coming through support our view that retail sales growth will recover in the second half of the financial year • Maintain our expectation for retail sales growth of 3% for the remainder of the 2012 year • Confident of distribution guidance of 13.1 cents per unit for the 12 months ending 30 June 20121
Shoppers in the CFX portfolio
1. Assuming performance fees are payable for the full financial year and there is no unforeseen material deterioration to existing economic conditions. 34
17 Questions
Overview State of the market
• European sovereign debt crisis adding to global uncertainty Headwinds • Continued volatility in the Australian sharemarket • Australian travellers taking advantage of strong Australian dollar
• Offshore travel expected to reduce, with evidence of lower sales from travel agencies • Unusually high level of savings expected to decrease Tailwinds • Flow-through effects of major resource projects yet to be realised • Low levels of unemployment and strong wages growth • Strong Australian dollar assisting retailer margins • Low vacancy rates Retail outlook • Higher transactional volumes supporting asset valuations • Maintain expectation for retail sales growth of 3% for the remainder of 2012
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18 Overview CFS Retail Property Trust (CFX) performance
CFX cumulative total return1 Total cumulative returns since December 2001 250%
200%
150%
100%
Cumulative returns 50%
0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year ended December
CFS Retail Property Trust (CFX) UBS Retail 200 Accumulation Index S&P/ASX 200 Property Accumulation Index • Over 10 years: • CFX has delivered a total unitholder return of 178% (10.8% p.a.) • The Trust’s benchmark2 index return was 39% (3.3% p.a.) • The S&P ASX 200 Property index return was 8% (0.8% p.a.) Note: Past performance is not indicative of future performance. 1. Assuming the reinvestment of distributions. 2. The Trust’s benchmark is the UBS 200 Retail Accumulation Index. Source: UBS Australia 2012. 37
Financial results Reconciliation of profit to distribution
Six months ended Six months ended CFS Retail Property Trust 31 December 2011 31 December 2010 $m cpu $m cpu
Net profit 201.7 346.5
Adjustments
deduct net gain from properties and associates revaluations (112.7) (158.7)
add back net loss from derivatives revaluations 68.3 (26.8)
deduct straight-lining rental revenue (0.9) (1.2)
add back movement in the fair value of unrealised performance fees 5.6 (3.8)
add back non-cash convertible notes interest expense 3.5 5.6
add back convertible notes buy-back expense 4.9 -
add back amortisation of project items 10.9 9.6
add back adjustments for other items 3.3 (2.6)
Distributable income 184.6 168.6
add transfer from reserves - 9.41
Distribution 184.6 6.5 178.0 6.3
1. An amount of $9.4 million was transferred from undistributed reserves for the new units issued in October 2010 and November 2010 which ranked equally with existing 38 units and were entitled to the full 6.3 cents per unit distribution for the six months to 31 December 2010.
19 Financial results Reconciliation of net property income to distribution
Six months ended Six months ended CFS Retail Property Trust 31 Dec 2011 31 Dec 2010 $m cpu $m cpu
net property income1 282.7 254.4
interest and other income 1.2 0.9
Total operating income 283.9 255.3
net interest expense 72.6 62.4
base fee 19.7 17.8
performance fee 5.3 4.8
other expenses 1.7 1.7
Total operating expenses 99.3 86.7
Distributable income 184.6 168.6
transfer from undistributed reserves -9.42
Distribution 184.6 6.5 178.0 6.3 1. Net property income includes alignment fee income, share of net profit from associate before fair value adjustments, adjustments for project and other items and excludes straight-lining rental revenue. 2. An amount of $9.4 million was transferred from undistributed reserves for the new units issued in October 2010 and November 2010 which ranked equally with existing units and were entitled to the full 6.3 cents per unit distribution for the six months to 31 December 2010.
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Capital management
Gearing history
40%
28.1% 26.7% 28.3% 28.3% 29.5% 30% 25.0% 27.3% 27.3% 27.0% 20.7% 20%
10%
0% FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 HY12
Key debt covenants Threshold As at 31 Dec 2011
Loan to value ratio (LVR)1 50% or less 33%
Interest cover ratio2 1.8 times or greater 2.9 times3
1. Calculated as total liabilities divided by total assets. 2. Calculated as earnings before interest divided by net interest expense. For the purposes of this calculation, earnings represents net profit excluding all fair value adjustments, straight-lining revenue, borrowing costs and net interest expense on interest rate swaps. Interest expense is the sum of borrowing costs, net interest expense on interest rate swaps, and capitalised interest; less non-cash convertible notes interest expense and adjustments for convertible notes buy-back expense. 3. Interest cover ratio (ICR) including capitalised interest expense (excluding capitalised interest ICR is 3.3 times). 40
20 Capital management Hedging profile1
At 31 Dec 2011 At 30 Jun 2011
Proportion of debt hedged2 91% 92% Weighted average interest rate on hedged debt3 5.9% 6.1% Weighted average duration of hedged debt 3.9 years 4.5 years
Hedge maturity profile
2,500 7.0%
2,000 6.0%
1,500 5.0%
$ million 1,000 Swap rate (%) rate Swap 4.0% 500
0 3.0% FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY2018 FY2019
Face value of hedges Weighted average interest rate on hedged debt 1. Including convertible notes and fixed-rate medium term notes. 2. Hedging percentage reduces over time. 3. Excluding line fees and margins. 41
Capital management Hedging profile1
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19
Face value 2,194 2,217 1,633 1,127 949 577 358 350 of hedges ($m)
Weighted average interest 5.49% 5.57% 5.56% 5.73% 5.82% 4.90% 3.94% 3.73% rate on hedged debt
Average 89% 87% 65% 47% 42% 26% 16% 16% % hedged over FY
1. Adjusted for capital management activities post the period. 42
21 Portfolio overview Trend for capitalisation rates
• Independent valuers are now factoring in the buyer demand for quality retail assets • Transactional activity is supporting the tightening of valuation metrics
CFX historical capitalisation rates Regional, sub-regional centres and total shopping centre portfolio1
8.5%
8.0% Sub-regional
7.5%
7.0% Shopping centre portfolio 6.5%
6.0% Regional
5.5%
5.0% Jun 04 Dec 04 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11
Regional Sub-regional Shopping centre portfolio
1. Excluding DFO centres and Myer Melbourne. 43
Portfolio overview Diversification
Portfolio geographic diversification (by value) Portfolio by centre type (by value)
1.4% 2.9% 3.2% 0.5%
15.2% 6.6% 6.3% 19.9% 13.1%
21.9%
50.5% 58.5%
Super-regional Regional Sub-regional NSW VIC QLD SA WA TAS Neighbourhood Retail outlet Other
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22 Portfolio overview Lease expiry profile as at 31 December 2011
Retail specialty store lease expiry (by gross lettable area)
50%
45%
40% 36.3% 35%
30%
25% 20.9% 20%
% gross lettable area 14.6% 14.6% 15% 13.6%
10%
5%
0% FY 2012 FY 2013 FY 2014 FY 2015 BEYOND
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Portfolio overview Top 15 tenants by income
Tenant % of income • 3,640 retail tenants across the shopping centre 1. Wesfarmers1 7.7 portfolio 2. Myer 4.3 • 4,201 tenants including the DFO centres 3. Woolworths2 4.3 4. David Jones 3.2 5. Premier Investments 1.7 6. Hoyts 1.1 7. Commonwealth Bank Group 1.0 8. Luxottica Retail 1.0 9. Angus & Coote 0.9 10. Specialty Fashion Group 0.9 11. Priceline 0.9 12. BB Retail Capital 0.8 13. Westpac 0.8 14. Country Road 0.8 15. Best & Less 0.8 Top 15 30.2
1. Including Coles, Target and Kmart and subsidiary brands. 2. Including Big W, Dick Smith and subsidiary brands. 46
23 Development update Track record
• Demonstrated track record of delivering on developments • Development expenditure over the past six years has provided over $380 million in additional value in excess of costs
Redevelopment completions 2005 to 20111 CFX share
Number of projects completed 39
Total cost $1.7 billion
Average initial yield1 7.6%
Average internal rate of return (IRR) 12.5%
Development targets
Target initial yield2 7% - 8%
Target internal rate of return (IRR) >10%
Chatswood Chase Sydney, NSW 1. Includes Myer Bourke Street store. 2. Yield based on forecast first year income after development completion. 47
Development update Current projects
Current projects as at 31 December 2011 CFX CFX cost Target Expected Leased Current projects total cost to complete yield completion % $m $m % date Projects in progress Emporium Melbourne 560 212 > 6.0 121 late 2013
Roxburgh Park Shopping Centre 60 54 > 8.0 46 April 2013 Likely to proceed - current DFO Homebush 75 75
Brimbank Central Shopping Centre 34 34
Forest Hill Chase 20 20
Total current projects 749 395
1. Myer tenancy on level four represents 5% of income already secured plus 7% from flagship and specialty tenancies. Leasing program is on schedule to secure 20% (by income) by 31 March 2012. 48
24 Australian retail property market
Australian retail turnover versus household consumption • Subdued retail sales Annual growth rates, quarterly rests to September 2011 growth environment • Household 14% 8% consumption is 7% around trend 12% 6% 10% 5% 4% 8% 3% 6% 2%
4% 1% 0% 2% -1% 0% -2% 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 Australian retail turnover (3mth avg) Household consumption (rhs)
Source: Australian Bureau of Statistics & CFSGAM Research.
Source: Australian Bureau of Statistics and CFSGAM Research. 49
Australian retail property market Regional vacancy rates and occupancy costs
Specialty occupancy costs vs centre vacancy rates Regional shopping centre averages
20 18 16 14 % 12 10 8 6 4 2 - 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year ended 30 June Specialty store occupancy costs (% of turnover) Centre vacancy rates (%)
Source: Urbis. 50
25 Australian retail property market Outlook
Metrics for quality retail assets 12-month outlook
Capitalisation rates Stable
Asset values Increasing
Buyer demand Increasing
Tenant demand Stable
Supply Limited
Vacancy rates Stable
Retail sales Improving
QueensPlaza, QLD
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Further information
For further information please contact:
Michael Gorman Angus McNaughton 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 3765 or +61 427 263 238 Email: [email protected] Email: [email protected]
Investor contact: Media contact: 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 comprises 29 assets with a total asset value of $8.7 billion and is managed on behalf of more than 18,000 investors from 21 countries.
About Colonial First State Global Asset Management (CFSGAM) CFSGAM is the consolidated asset management arm of Commonwealth Bank of Australia (the ‘Bank’), and sits within the Bank’s Wealth Management division. Entities within CFSGAM provide management services to the Fund. CFSGAM Property is a fully integrated real estate investment business with approximately $18 billion in funds and assets under management, employing more than 850 people across Australia and New Zealand.
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26 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 (CFX) ARSN 090 150 280 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 take into 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. 53
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