Ladies and gentlemen, thank you for standing by, welcome to the Charter Hall Social Infrastructure REIT 2023 full year results briefing. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to queue for a question, you will need to press Star, followed by 1, 1 on your telephone keypad and wait for your name to be announced. Please note that this conference is being recorded today, Friday, August 11th, 2023. I would now like to hand the conference over to your host today, Mr. Travis Butcher, Fund Manager. Thank you, sir. Please go ahead. Good morning, everyone. Welcome to CQE's results presentation for the full year ended June 30, 2023. Presenting with me today is Scott Martin, Head of Social Infrastructure REIT Finance. I'd like to commence today's presentation with an acknowledgment of country. Charter Hall acknowledges the traditional custodians of the lands in which we work and gather. We pay our respects to elders past and present, and recognize their continued care and contribution to country. Before starting the results presentation, I'd like to pause and acknowledge that in April this year, we were greatly saddened by the sudden passing of CQE's Chair, Grant Hodgetts. Grant made a significant contribution to the Australian property industry over many decades and greatly contributed to the strategy and growth of CQE. We'll miss Grant's passion and leadership. Turning now to slide 5. Key highlights for the year were as follows: distributions paid to investors for the year were AUD 0.172 per unit, in accordance with the full-year distribution guidance. Acquisitions of AUD 184.2 million were made in social infrastructure assets across 6 properties on long leases with strong tenant covenants. Key transactions were the Geoscience Australia Complex in Canberra in October 2022, and the Innovation Quarter acquisition in Westmead, made in February 2023, both which significantly enhanced the quality of CQE's portfolio. During the year, we continued with our active portfolio curation, resulting in AUD 84.4 million of divestments being made, comprising 12 childcare property sales and the full sale of CQE's interest in Arena REIT. As a result of transactional activity, CQE's gross assets have increased by 8.9% during the year to AUD 2.3 billion. NTA per unit has remained relatively stable and as at 30 June 2023, was AUD 4.04 per unit. During the year, CQE was active with hedging initiatives, and has now hedged 80% of its variable interest rate exposure through to June 2025, providing protection against adverse interest rate movements and banking covenants. The portfolio is very well positioned in this current environment, with a strong WALE of 13.2 years, 100% occupancy, and achieving a weighted average rent review of 3.7% for the year. Moving to slide six and CQE's strategy. CQE's strategy remains unchanged. Our strategy is to provide investors with secure income and capital growth through exposure to a diversified social infrastructure portfolio. We do this by focusing on enhancing income sustainability and resilience to the assets we own, targeting ongoing capital growth and undertaking continual portfolio curation. Turning to slide 7. During the year, CQE continued to enhance and diversify its income, with acquisitions during the year amounting to AUD 184.2 million. In October 2022, CQE acquired a 25% interest in the Geoscience Australia Life Sciences Complex in Canberra for AUD 90.9 million. The property was acquired on a 7.4% yield, 9.6 year WALE, and 3% annual rental increases. In February 2023, CQE acquired a 49.9% interest in Innovation Quarter for AUD 66.9 million. A newly constructed healthcare, medical research, education, and training hub in Westmead, approximately 25 kilometers from Sydney's CBD. The property was acquired on a 4.7% yield and has an average annual rental increases of 3.6%. Childcare continues to be a critical social infrastructure asset class and integral to CQE's strategy. As such, CQE has continued to invest in high-quality childcare assets, with a further four assets acquired during the year, totaling AUD 26.3 million on an average yield of 4.9%. These acquisitions are all on new 15-year leases and located in metropolitan locations. With respect to development activity, CQE completed four childcare developments during the year, delivering brand-new assets with average lease terms of 15 years, valuation uplift of AUD 5.5 million, and yield on costs of 5.8%. As part of our active portfolio curation and capital recycling, during the year, CQE disposed of 12 freehold childcare assets for AUD 40.4 million at an average yield of 4.5% and a premium of 4% to book value. Despite the increasing interest rate environment, liquidity and demand for childcare assets has continued, providing CQE with the ability to dispose of assets above their prevailing book values. In addition, in January 2023, CQE fully divested its 3.5% holding in the unlisted Arena REIT, generating gross proceeds of AUD 44 million. Proceeds of both the childcare assets and Arena Securities have been utilized to reinvest into direct social infrastructure properties, providing unit holders with stronger income and capital growth prospects. Turning now to slide 8 and ESG. We remain focused on implementing sustainability initiatives across our portfolio, and consider ESG as a driver of long-term value for the fund. Key points to focus on from a CQE perspective are: continued partnership with our tenant customers to provide solar solutions across the CQE portfolio, of which 0.5 megawatts has been installed across the portfolio to date. This will support both clean and affordable energy for tenants, in addition to enabling CQE to better understand tenant operational performance through information sharing, which is currently not available under existing lease arrangements. Secondly, we're continuing to work with one of our tenant customers and the Green Building Council of Australia on the development of Australia's first social infrastructure rating tool for operational assets. Finally, FY23 was the second year of our partnership with major tenant customer, Goodstart, where we supported the Early Learning Fund, enabling at least 28 children from vulnerable families to access fee-free childcare. I'd like to now hand over to Scott, who will provide an overview of the financial performance of CQE. Thanks, Travis, and good morning to everyone on the call. A summary of CQE's earnings for the full year FY23 can be found on slide 10. Net property income has increased by AUD 16 million, or 18.9% compared to the prior reporting period, and has been driven by like-for-like growth of 3.4% and AUD 13.6 million generated from net acquisition activity. The increase in operating expenses has been driven by portfolio growth and new acquisitions. Finance costs have also increased year-on-year as a result of higher levels of drawn debt, together with a 1.8% increase in CQE's weighted average cost of debt from 2.3% in FY22 to 4.1% in FY23. CQE delivered operating earnings of AUD 59.2 million, representing a decrease of 5.9% on the prior year. Turning to slide 11, which provides a summary of CQE's balance sheet position at 30 June 2023. The AUD 184.5 million growth in total assets represents an increase of 8.9% since 30 June 2022, and has been principally driven by AUD 235.9 million of property acquisitions, AUD 36.7 million of childcare property divestments at or above prevailing book values, and the divestment of CQE's holding in Arena REIT in January 2023, for total gross proceeds of AUD 44 million. There has been minimal movement in NTA per unit, which reflects the continued strong demand for quality social infrastructure assets. NTA per unit, as at 30 June 2023, was $4.04 per unit, representing only a 1% decrease for the year. Turning to slide 12, which provides a summary of CQE's capital management initiatives. In September 2022, CQE increased its total facilities to $850 million, which were drawn to $739 million as at 30 June 2023. Balance sheet gearing was 32.2%, and look-through gearing was 32.8%, which remain within CQE's target gearing range of 30%-40% and provides considerable headroom to gearing covenants. CQE has diversified funding sources, with no debt maturity until January 2025, and a weighted average debt maturity of 2.9 years. CQE's weighted average cost of debt as at 30 June 2023, was 4.3%, which is calculated based upon drawn debt of AUD 739 million, and includes line fees on undrawn debt capacity. During FY23, CQE took out a further AUD 275 million of additional hedging. CQE's proactive approach to hedging has seen the level of hedging increase to AUD 600 million as at 30 June 2023, with a weighted average hedge maturity of 2.8 years. Importantly, CQE is 80% of its debt hedged for both FY24 and FY25, at an average hedge rate of 2.3%, which provides protection against rising interest rates and headroom to ICR covenants. I will now pass back to Travis to continue with the presentation. Thanks, Scott. On slide 14, we summarize CQE's portfolio. As detailed earlier in our strategy, we are focused on continual portfolio improvement and enhancement of income, sustainability, and resilience. As at 30 June 2023, CQE owns 366 operating properties with a total value of AUD 2.2 billion across a diversified social infrastructure portfolio. The portfolio continues to be 100% leased, with the portfolio WALE sitting at a very healthy 13.2 years. Lease expiries within the next five years remain low at 3.5%, highlighting the importance of the property and lease term to the tenant's business. It is also worth noting that of the 3.5%, only 0.7% are true expiries where there are no tenant options. Moving to slide 15. CQE's current portfolio is well positioned to deliver both income and capital growth, with the portfolio heavily weighted to metropolitan locations, comprising 82% of income, and a strong eastern seaboard weighting, also of 82%. As the pie graphs show on the right of this slide. CQE has diversified its income into broader social infrastructure subsectors, with childcare assets currently comprising 77% of the portfolio and other social infrastructure assets sitting at 23%. The broader strategy has also resulted in a diversification of CQE's tenant mix, with tenants now including both federal and state governments. Concentration risk has reduced, with our largest tenant, Goodstart, providing 34% of CQE's income as at June 2023, down from 47% as at June 2020. Fixed annual reviews comprise 77% of CQE's leasing income at an average rate of 3%, with the balance of lease income based on CPI reviews. Weighted average rental growth for the year to June was 3.7%, including a mix of fixed, market, and CPI-based annual rent reviews. During the year, eight market reviews were completed, with an average 5.4% increase across these properties. The market reviews range between 2% and 10%, with the varying outcomes driven by the individual property and lease parameters. Over the next 5 years, 47% of CQE's rental income is subject to market reviews. These reviews are all childcare properties, are typically capped at 7.5%. In terms of timing, there was 2% occurring in FY24, 15% in FY25, with the balance occurring over the following 3 years. This will allow CQE to capture rental growth from under renting across the portfolio, which has been independently assessed by the valuers at approximately 6%. Gross rent to revenue for the childcare operators, based on tenant data provided under the leases, sits at 12.2%, which is at the lower end of market parameters and is very important given the long lease terms. Turning to slide 16. During the year, CQE revalued 100% of the portfolio. The portfolio saw a like-for-like valuation increase of AUD 9.9 million, representing a 0.5% increase from 30 June 2022, with the average passing yield of these properties at 4.9%. The valuation uplift has been driven by portfolio rental growth during the year, offsetting a mild yield expansion. As can be seen from the graph on the right, the value of direct market childcare transactions recorded in the last year were approximately AUD 490 million. This is down from a record year in FY22, where there were transactions of approximately AUD 830 million. Transactions remain relatively consistent with the level in FY21. Transaction yields in the year have increased to 5.3%, up from 4.7% in FY22. It's important to note that an analysis of FY23 sales highlights that the transactions were of a lower quality and secondary stock with weaker tenant covenants. This analysis also shows there's approximately a 40 basis point spread between properties leased to Tier 1 tenant covenants, which we define as operators with over 50 centers, compared to properties leased to small private operators. As has been proven in previous property cycles, due to the asset size of childcare properties, there is still liquidity in the market, as purchasers are often not reliant on borrowings to make property purchases. Investors are continuing to be attracted by properties in essential sectors and long leases, with operators having favorable demographic and government funding tailwinds. During FY23, CQE disposed of 12 assets at an average yield of 4.5%. The disposal rationale for each varied, but was a combination of smaller centers with average places of 71, shorter WALEs, and smaller private operators. Recent sales completed at the Burgess Rawson auctions in August saw Sydney childcare properties transact in Putney at 3.5% and Maroubra at 4.9%, demonstrating the continued resilience of the childcare property market. Turning to slide 17, an update on the childcare industry. The key positive change to the industry occurred in July 2023, with the introduction of the federal government's Cheaper Child Care. This policy will increase the affordability of childcare through increased subsidy rates and higher family income eligibility. The improved childcare funding plan is the key driver of the increased government funding to the sector, with annual federal government spending forecast to increase by 41% to AUD 15 billion in FY27. During 2023, the childcare sector has been the focus of a number of government inquiries from both the ACCC and Productivity Commission. The ACCC interim report was released in July 2023 and focused on the price and availability of childcare services, selection of services, and the impact of government contributions. A consultation paper we published in September 2023, which will include discussion of the cost of providing childcare and also identify a preliminary view on potential draft findings and recommendations. A final report is due to the Treasurer by 31 December 2023. Separately, the Productivity Commission is undertaking a review of the childcare sector in Australia, with the terms of reference to make recommendations that will support affordable, accessible, equitable, and high-quality early learning. It's currently too early to assess the outcomes of these reviews. It's important to note that both of the reviews highlight that childcare is an essential and vital part of Australia's education system and is integral to increasing workforce participation. In terms of current operating performance, operators are seeing an initial positive occupancy response to the improved government funding. Based on trading data provided by our tenants, daily fees have increased by 6% during the year to AUD 127 per day. It's expected that the combination of improved funding, female labor force participation rates at record levels, and population growth will all provide occupancy tailwinds in the coming years. Turning to supply. Net center supply levels for the year grew by 3.5% or 298 centers, with 8,854 centers at 30 June 2023. The timing and supply of new centers has been disrupted during the COVID period, and is now being impacted by increased construction and funding costs. However, it's important to note that with new supply, childcare is a very localized industry, and that center catchments are typically 2-3 kilometers radius in size. Moving to Slide 19, and the outlook and guidance. We're focused on continuing to execute CQE strategy to actively manage the portfolio to maintain income security and capital growth. We see social infrastructure as a growing asset class, with long-term opportunities for future investment for CQE. Key thematics driving this are both the growing and aging population in Australia, with estimates of Australia's population increasing by 14% or 3.7 million people through to 2031, which will require significant social infrastructure investment. Today, we confirm that based on information currently available and barring any unforeseen events, the FY24 forecast distribution guidance is AUD 0.16 per unit. That concludes the formal component of our presentation. I'll now hand back to the operator and open up the line for your questions. Thank you. Thank you. As a reminder, to ask the question, simply press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. One moment while we compile the Q&A roster. One moment for our first question. It comes from the line of Lou Pirenc with Jarden. Please go ahead. Yes, thank you. Good morning, Travis and team. Thanks for the presentation. Two questions for me. First of all, can you talk a little bit about the payout ratio? I mean, it used to be 100%, and last year it was off quite significantly. What should we assume for your, your guidance in terms of payouts versus earnings? Yeah, thanks, Lou. For FY24, we've got forecast payout ratio between 98%-100%. We can't hear you. Lou, thanks for your question. In terms of forecast payout ratio for FY24, it's between 98%-100%. All right, I'm gonna move on to the next question. All right, it comes from the line of Murray Connellan with Moelis Australia. Please proceed. Morning, Travis. Morning, Scott. I was wondering whether you could just give us your or a bit more color around your base rates, interest assumptions, the, the going forward guidance, please. Good day, Murray. Scott here. Look, we've rolled our first quarter debt, floating debt at 4.4%. You know, we're not interest rate experts, we're just basing our guidance based upon the market curve. Just taking that. But yeah, 4.4 is the first roll, and we'll see where we get to with the balance. Sure. probably 4.25 to 4.5 type range? Yeah, that's a reasonable basis, based upon current curve, I'd expect. Thanks. Just around how you're thinking about asset sales and capital deployment, please. Is there a gearing level that, that you'd like to be targeting near term? Yeah, just on the gearing, obviously you can see it's at the lower end of our range, which we're very comfortable with. You know, to give you some color, like for, say, AUD 25 million of divestments, that, that takes gearing down by circa 1%. You know, certainly from, from my perspective, I'm, I'm comfortable where covenant, headroom is. Pass over to Travis now to finish that. Yeah, Murray, from an asset sale point of view, I think one of the strong points for the last 12 months has been the liquidity in the childcare space, in particular the sub AUD 5 million space, where a lot of the buyers are going to the bank to fund these purchases. They've identified childcare as one of their key. If they're seeking property exposure, they're seeking childcare, given its essential nature. There's been a lot of people leaving the resi property market. That's all playing. What that sort of means is there's a really strong market for childcare. We sold divested 12 assets during the period at sort of an average yield of 4.5%. Sort of as part of an active portfolio curation. If we could, we'll look to continue that. Obviously, it's dependent on market conditions, but if we could do something similar, I think that. Now where cost of debt is, the marginal cost of debt, it's actually puts you in a point where you're getting accretion from divesting your lower quality assets, which is a pretty good position to be in. Thanks. Then maybe just also how you're thinking about developments as well, please. The pipeline's obviously dropped off a bit around childcare developments in the past few years as construction costs have increased. You know, just given the new round of government funding that's hit the market from the 1st of July, are you seeing any fresh opportunities there? Yeah, just, Murray, on that, in terms of what we'll do from a development point of view, we won't do the developments ourselves. We've got four developments on our books at the moment, which we're sort of working through. In terms of future, we'd look to partner with developers and be their sort of end takeout partner. I think you're seeing now we are starting to see more opportunities from developers seeking capital because it's getting harder for them to fund those transactions. There will be more opportunities. Obviously, for developers, they've got the dealing with the construction costs increasing and holding costs increasing. I think there will be more opportunities there. It all comes down to pricing and ultimately, are you getting the product you want with the tenant you want, and the pricing makes sense. We'll keep on looking at those opportunities, and see down the track if, if, opportunities present themselves. Great. Thanks very much. Thank you. One moment for our next question. I'm gonna ask Lou to please move forward. One moment, please, while I open your line. We couldn't hear your second question for technical difficulties. Lou from Jarden, please go ahead. Your line is open. All right, I'm gonna move to the next question. One moment, please. It comes from the line of Solomon Zhang with JP Morgan. Please proceed. Morning, Travis and Scott. First question is on capital management. I mean, CQE is trading at a pretty deep discount to NTA and in high implied yields. As you noted earlier, childcare assets are still selling at or above book value. What would be your appetite to undertake a share buyback funded by asset sales? You know, be accretive to earnings, NTA, and also provide a bit of a good signal to the market. I think, Solomon, with that, any buyback needs to be in sort of material amount. I think if we were to sell a significant amount of childcare assets, it's something we may look at. I think it needs to be, just in order to do a buyback, you need to make it a meaningful amount. I think any asset sales we do, in the next 12 months will be sort of first, put to retiring debt and reducing gearing. Yeah, noted. Question for Scott, just on the like-for-like NPI growth. Just noticed that that slipped from 3.7% in the first half to 3.4% for the full year. It sort of implies that the second half is closer to 3%. Is there anything to call out there in terms of outgoings or the timing of rent reviews that would sort of explain that move? Yeah, look. Thanks, Solomon. Look, the 3.4 is, yeah, the like-for-like movement in net property income. Yeah, that you've hit the nail on the head. There's been some second half, you know, non-recoverable outgoings, yeah, which are largely around the land tax in Queensland that's non-recoverable. It's more a timing issue than a signal of anything longer term. All right. Final question, just on the swaps that you put on in FY23, I think it was some forward starts in the first half and then some additional ones in the second half. Could you just confirm the swap rates and as well as any capital, if they, they were paid? I just noticed that there is in the cash flow statement, there's a AUD 3.6 mil derivatives payment. Is, is that accounting for the payment of swaps or? That's correct. We'd put AUD 150 million of swap in place in December with a forward start in June this year. That was at a rate of 3%, so there was a small capital cost. All future swaps that have been put in place in the second half have all been at market rates. Got you. I I appreciate it. Thanks for your time. Thank you. As a reminder, ladies and gentlemen, if you do have a question, simply press star one, one to get in the queue. One moment, please. Our next question is from Steven Tjia with Barrenjoey. Please proceed. Hi, Travis and Scott. A couple of quick ones from me. Scott, just, if you could provide some more detail on what's the margin being paid on your debt facilities at the moment? Average of 160. 160. Okay, great. Also, just in regards to, I suppose, capital management, interest cover declined to 3.1 times for the full year, I assume. What's your ICR on a rolling six-month basis? The covenant's 2 times, and, you know, I've rolled forward our calculation now with hedging in place. Like, we've got to. We, we'd have to see double-digit floating rate interest rate to, to be anywhere near that 2 times covenant. We're very comfortable that, that we've got plenty of headroom. I reckon for the, for the upcoming year, we'll, we'll probably be in the range of 2.8-2.9 times coverage. Obviously coming back from that 3.1, but still miles of headroom. Great. Thanks for your time. Thank you. I'm not showing any further questions in the queue. I will pass it back to Travis Butcher for final comments. Thank you everyone for your time today and your interest in CQE. Look forward to catching up with a lot of you over the coming weeks. Thank you. Thank you all for your participation. This does conclude the program, and you may now disconnect.