Charter Hall Retail REIT Annual Report 2021

FY21 saw CQR expand its bp portfoliopartnership to another 70 properties inNew Zealand, taking the total portfoliosize to 295 properties.This resilience has been reflected in the strong valuation gainson these assets, with both valued significantly higher than atacquisition. We are pleased to have expanded our partnershipswith two high quality, long-term tenants and continue to growour exposure to CQR’s major tenant customers.Partnering with our majorsCQR’s strategy is to provide investors with a resilient and growingincome stream by being the leading owner of property forconvenience retailers. Central to this strategy is partnering withmajor convenience retailers to meet their property needs acrosstheir value chain. Our major tenants include market leadingbusinesses Coles, Woolworths, bp, Wesfarmers, and ALDI.We continue to actively manage the portfolio to increase thepercentage of CQR’s earnings and extend WALE with our majortenants, thereby improving the resilience and dependability ofincome for CQR unitholders. We’ve been active in re-shaping theportfolio to deliver this objective by increasing the percentageof major tenants’ income from 51.4% of portfolio income inFY20 to 53.5% in FY21 with a majors WALE of 11.4 years. Colesare now the equal largest portfolio tenant customer at 16.6%of rental income following the acquisition of the Coles AdelaideDistribution Centre.During the year we completed ten supermarket new leasesand term extensions. Additionally, 14 supermarkets or 20% ofsupermarkets in the portfolio were refurbished over the periodby Coles, Woolworths and Aldi.Above: bp, Forestville NSWAdditionally, Target store conversions are now all re-leased totenants including Woolworths, Aldi, Kmart, Dan Murphy’s, HarveyNorman and The Reject Shop with openings to progressivelyoccur.Click and Collect and Direct to Boot facilities, a key serviceproviding customer amenity during the COVID-19 pandemic, areoperating at 49 Coles and Woolworths supermarkets across theportfolio, with another five planned.Strong performanceSupermarkets remain the foundation of our portfolio. Thenumber of supermarkets in the portfolio remained constantat 70 this year.Our portfolio of supermarkets continued to demonstrateresilience with MAT sales growth of 4.3% over the period and10.3% over the two years to 30 June 2021. The total numberof supermarkets paying turnover rent was 66%, up from61% in FY20 and a result of our centres being the dominantconvenience centres within their catchments. In addition, afurther 17% of supermarkets are within 10% of their turnoverthreshold, indicating good potential for future rental growth.Despite the challenging retail conditions, we completed arecord 457 specialty tenant leases during the year and sawpositive leasing spread of 1.6%, with new leases 3.8% higherthan the previous year, and renewing leases 0.2% higher thanexpiring leases.Sales productivity of our specialty tenants improved from 9,557to 10,213 per sqm, a 7% gain in productivity, while occupancycosts decreased from 11.8% to 11.2% of sales.ESG highlightsPortfolio occupancy has risen from 97.3% to 98.3% this year,with total like-for-like portfolio MAT sales growth of 5.4%reflecting the defensive nature of CQR’s assets, their dominancewithin their catchments, customer preference to shop closer tohome and the quick recovery in sales and trading activity postCOVID-19 mandated closures and trading restrictions.Sustainability remains a critical part of enhancing our portfolioquality and is central to our approach to property management.We continue to explore opportunities to introduce sustainabilityinitiatives to deliver long-term outcomes that are positive to ourunitholders, tenants and the communities in which our assetsare located.Financial performance andcapital managementIn FY21, CQR achieved a statutory profit of 291.3 million withrental income being supplemented by positive valuationmovements. Our operating earnings of 156.2 million includes 6.7 million of COVID-19 tenant support. Our distribution of23.40cpu reflects an 85.7% payout ratio and takes account ofCOVID-19 tenant support provided.Prudent capital management remains a core focus of CQR andensures we can successfully execute our growth strategy anddeliver a secure and growing income stream to unitholders.Due to refinancing activity during the year, there are no debtmaturities until FY24.As at 30 June 2021, total portfolio gearing was 33.1% at the lowerend of the 30%-40% target range. This strong balance sheetand available liquidity of 308 million, means we are well placedto enhance portfolio quality and fund future activity.Valuations remain resilientThe portfolio valuation increase over FY21 was 188 million,with 100% of our portfolio externally revalued at least once overthe year and 64% of the portfolio externally revalued in the sixmonths to 30 June 2021.The shopping centre portfolio valuation increased by 92 millionor 3.3%, including 57 million in capital investment duringthe period.The Long WALE convenience retail portfolio valuation increasedby 96 million or 14.2%, primarily driven by cap rate compression.The portfolio cap rate firmed from 6.03% to 5.81% over the year.The cap rates on our shopping centre portfolio compressed7 basis points in FY21, from 6.19% to 6.12% and the cap ratescompressed on our Long WALE convenience portfolio by30bps from 5.00% to 4.70%. These revaluation outcomes for30 June 2021 reflect the quality, defensive nature and the incomegrowth attributes of our portfolio and reinforce the active assetmanagement strategy undertaken by management.Environmental - Net Zero by 2025In this regard, we are pleased to announce that we have broughtforward our commitment to 100% net zero carbon emissions(Scope 1 and 2) across our portfolio to 2025, with electricitysupply across the portfolio to be 100% renewable by 2025. Wecontinued to make significant progress towards this goal overthe last 12 months.To date, we completed 16.7MW of solar installations across23 assets and pleasingly, 2.9MW of solar installations werecompleted by Coles and Woolworths.We also continue to focus on improving our ratings across anumber of sustainability benchmark measures, including GRESBand DJSI. We have a 4.6 Star average NABERS energy rating and4.1 Star NABERS water rating across our assets over 15,000sqmand are committed to expanding our NABERS footprint to over80% of assets in FY22.We are proud to complete net zero developments at two newchildcare centres at Secret Harbour and Wanneroo Square,both in WA. To offset the construction and embodied carbonemissions from these developments, we secured carbon offsetsfrom the Paroo River Native Forest Regeneration project in Qldwhich is restoring native forests on degraded agricultural landas well as generating income for landholders and TraditionalOwners.SocialOur tenant customers are at the heart of our business. Ourengagement, service levels and communication with themis critical to achieving our strategic objectives. Annually, wecontinue to undertake the industry recognised Net PromoterScore (NPS) survey with Monash University, to provide us withkey customer insights.Over the past 12 months, the retail management team hasactively partnered with our tenant customers during thischallenging period and pleasingly, it is our people and the waywe communicate that continues to be our greatest strengths,particularly our response to COVID-19. “Likely to recommend”as a preferred Retail partner increased for the fifth consecutiveyear. This results in strong retention of tenant customers andassists with securing new partnerships.Our commitment to our local communities is predicated onour philosophy of mutual success as expressed through themembership of the Pledge 1% philanthropic movement. Thishas seen our teams continuing to actively partner with charitiesand social organisations during the period, giving both timeand resources.Chair and Fund Manager's Message 11

We are proud to complete net zerodevelopments at two new childcarecentres at Secret Harbour andWanneroo Square, both in WA.Community support was particularly important this year in lightof the persistent impacts of COVID-19. This included providingrent relief, safety initiatives, as well as 500,000 in communitysites donated across the portfolio for local communityfundraising.To this end, we also supported 16 local community initiativesand had 670 students across 60 schools participate in ourNAIDOC Community Story ‘Dancing for country’.GovernanceWe are committed to ensuring that our people, systems andpractices reflect a high standard of corporate governance and,as such, are constantly looking at what more we can and shouldbe doing to ensure we are meeting best practice.To achieve this, our ESG Committee drives business-widealignment on our climate governance roadmap in line with therecommendations of the Taskforce for Climate-related FinancialDisclosures (TCFD). We are also working with Deloitte onassurance for CQR’s FY21 environmental performance data.We also recognise the importance of scrutinising and activelymanaging modern slavery risk across our entire supply chain.We have adopted the Modern Slavery Statement and haveestablished a working group to monitor our modern slaveryand human rights risk. All employees have completed trainingin our obligations under the Modern Slavery Act.Our operational and financial strength over FY21 wasdemonstrated through strong sales performance, positiveleasing outcomes, active asset management and valuationuplift. We enter FY22 in a strong and resilient position.We saw our speciality sales, foot traffic and trading conditionsrecover quickly after COVID-19 mandated closures or tradingrestrictions ended and our expectation is that this pattern willcontinue in FY22.As such, we remain committed to shaping the portfolio to deliverresilient and defensive earnings growth for our unitholders whilstactively managing any operational challenges associated withthe COVID-19 pandemic.I would like to extend, on behalf of the Board, our thanks tothe dedicated team that manages our portfolio on a day today basis. I am proud to see how the team has continued tonavigate the challenges that the pandemic has presented andthe support that they have shown to our tenant customers, ourcommunities and each other.Finally, I would like to thank our unitholders for your continuinginvestment in CQR. Our dedicated team, along with the Board,are here to protect and enhance your investment by deliveringlong-term sustainable growth in earnings.We remain committed to this goal.In line with our efforts to ensure a robust modern slaverystrategy, we participated in the pilot of the Property Councilof Australia’s supplier prequalification tool with our top 100suppliers, with a further 100 to be added in CY21.OutlookCQR’s portfolio continues to offer defensive and resilientearnings through its focus on meeting the property needs ofconvenience retailers. Notwithstanding some of the uncertaintycreated by COVID-19 and subsequent lockdowns, ouroperational and financial performance in FY21 has put us in astrong position heading into FY22. As we commence FY22, ourexpectation is that supermarket sales will continue to be strong,driven by customers' preference to continue shopping closerto home and focus on everyday needs. Our strategy remainsfocused on partnering with non-discretionary convenienceretailers and providing income resilience and growth througha continuation of our acquisition and divestment strategy.Roger DavisIndependent ChairGreg ChubbRetail CEO, Charter HallExecutive Director and Fund Manager, CQROur strategy of owning property for convenience retailers, aresilient nationally diversified portfolio, will continue to deliverlong-term sustainable growth in earnings for our unitholders.This growth is underpinned by the scale, scope and size of oursupermarket activities, our ongoing partnerships with our majorconvenience retailers and the resilience in our corenon-discretionary retail offerings.Wanneroo Central, Wanneroo WAChair and Fund Manager's Message 13

Charter Hall Retail REITAnnual Report 2021PortfolioPerformanceShopping centresLong WALE assetsValue ( m)502963,647Total MAT growth1,2GLA (000sqm)1Occupancy15.4%62598.3%Weighted averagecap rateWALE (total)WALE (majors)7.5yrs11.4yrs5.81%Top 10 tenant customer groups1Portfolio value by regionNew W44%1.9%1.7%1.1%WA14%0.9%0.8%1. Calculated by rental income as at June 30 20212. Includes Endeavour Group at 0.6%Right: Secret Harbour Square, Secret Harbour WA.Qld16%Portfolio Performance 15

23ACT and NSW portfolio24PropertyLocationOwnershipInterest %Book Value( m)Cap Rate%ACT portfolio715181620 21131441285 263 17191062522912111. Dickson WoolworthsDickson100.022.55.252. Manuka TerraceManuka100.058.86.00ACT Total81.3NSW portfolio3. Bass Hill PlazaBass Hill20.024.05.754. Bateau Bay SquareBateau Bay49.9110.06.255. Carnes Hill MarketplaceHorningsea Park50.071.85.506. Cootamundra WoolworthsCootamundra100.020.05.007. Dubbo SquareDubbo100.054.26.508. Gordon Village CentreGordon100.0141.84.959. Goulburn SquareGoulburn100.087.06.2550.043.55.7510. Highlands MarketplaceMittagong11. Jerrabomberra VillageJerrabomberra100.029.86.0012. Kings Langley Shopping CentreKings Langley100.048.35.7513. Lake Macquarie SquareMount Hutton100.0125.06.2514. Morisset Shopping CentreMorisset100.043.06.5015. Mudgee MetroplazaMudgee100.030.86.0016. Orange Central SquareOrange100.053.96.5017. Pacific SquareMaroubra20.042.05.2518. Parkes MetroplazaParkes100.024.66.2519. Rockdale PlazaRockdale100.0151.05.7520. Rutherford MarketplaceRutherford50.021.35.7521. Salamander Bay SquareSalamander Bay50.584.96.2522. Singleton SquareSingleton100.0120.06.5023. Sunnyside MallMurwillumbah100.048.16.5024. Tamworth SquareTamworth100.056.06.5025. Tumut ColesTumut100.013.85.00NSW TotalLeft: Aerial view of Bateau Bay Square, Bateau Bay NSW.1,444.8Portfolio Performance 17

7WA, SA and Vic portfolioPropertyLocationOwnershipInterest %Book Value( m)Cap Rate%WA portfolio3946852110111. Albany PlazaAlbany100.060.46.502. Esperance BoulevardEsperance100.035.26.503. Kalgoorlie CentralKalgoorlie100.045.36.754. Maylands ColesMaylands100.018.85.005. Narrogin ColesNarrogin100.014.85.506. Secret Harbour SquareSecret Harbour100.0100.76.257. South Hedland SquareSouth Hedland100.075.57.258. Swan View Shopping CentreSwan View100.023.35.759. Wanneroo CentralWanneroo50.060.56.00WA Total14434.51213 15SA portfolio10. Brickworks MarketplaceTorrensville11. Southgate SquareMorphett Vale50.036.56.25100.080.66.25SA Total117.1Vic portfolio12. Campbellfield PlazaCampbellfield100.080.26.0013. Gateway PlazaLeopold50.068.56.0014. Lansell SquareBendigo100.094.37.0015. Rosebud PlazaRosebud100.0119.56.19Vic TotalLeft: Butler Central, Butler WA.362.5Portfolio Performance 19

Qld and Long WALE portfolio9Property3LocationOwnershipInterest %Book Value( m)Cap Rate%Qld portfolio1014687 521. Allenstown SquareRockhampton100.051.87.002. Arana Hills Shopping CentreArana Hills100.070.06.003. Atherton SquareAtherton100.040.86.004. Bay PlazaHervey Bay100.029.16.005. Bribie Island Shopping CentreBribie Island100.067.16.256. Currimundi MarketsCurrimundi100.047.55.507. Gatton SquareGatton100.026.95.758. Highfields VillageHighfields100.043.95.759. Mareeba SquareMareeba100.022.06.25Mackay100.038.16.1510. Sydney Street MarketsQld Total437.2Long WALE portfoliobp Australia portfolioAustralia wide47.5468.44.71bp New Zealand portfolioNew Zealand wide50.0166.14.57CDCEdinburgh, SA52.0135.34.75Long WALE TotalLeft: Arana Hills Shopping Centre, Arana Hills Qld.769.8Portfolio Performance 21

Charter Hall Retail REITAnnual Report 2021SustainabilityThree things drive us. Mutual success underpins ourgoals; active partnership governs our relationships; andour insistence on being a sustainable business over thelong term shapes our strategy and actions.We focus our sustainability actions on where we have thegreatest impact and influence – acting on climate change,building the resilience of communities and operating as aresponsible investment manager.We benefit from Charter Hall Group's sustainability initiativesand achievements, as Charter Hall Group is the manager ofCQR. Charter Hall Group manages all of its funds, includingCQR, with the same sustainability goals.Sustainability is integrated into how we think and workand is the lens used to assess, manage and achieve ourenvironmental, social and governance (ESG) goals. It’s also partof how we work in partnership with our customers, to createlong-term risk adjusted returns for investors and healthierplaces for our communities.The 17 United Nations Sustainable Development Goals (SDGs)are the blueprint to achieve a better and more sustainablefuture. Charter Hall Group seeks to align our responses andtargets to the UN Sustainable Development Goals.Environment:Climate ResilienceFocus areasCarbon and climatechangeResilienceand adaptationProgress this year– Met FY25 targets early by achieving 4.6 Star NABERSEnergy weighted average rating for the Retail portfolio.– Achieved Green Star Performance ratingacross 50 assets, covering 75% of FUM.– Expanded its coverage of NABERSratings for retail sites 15,000sqm.Establish new NABERStargets at portfolioand asset level.Clean energy– The REIT installed 16.7MW of Solar PV and Colesand Woolworths installed 2.9MW. This 19.6MW ofSolar PV has the potential to generate 28.4GWh ofelectricity, equivalent to powering 4005 homes.Continue Solar PVinstallation where it iscommercially feasible.– Met FY25 targets early by achieving4.1 NABERS Water weighted averagerating for sites 15,000sqm.Establish new NABERStargets at portfolioand asset level.Looking forward– Achieved 2%1 reduction in carbon emission intensity(Scope 1 and 2) since FY17, despite 3% increase in area.– Completed net zero developments at twonew childcare centres at Secret Harbourand Wanneroo Square, both in WA.– Charter Hall Group became a signatory to the WGBCNet Zero Carbon Commitment. This is aligned withCharter Hall Group's net zero target for Scope 1 and2 emissions by 2030 and CQR's target by 2025.– Charter Hall Group was recognised in 2020 PRILeaders Group for climate related disclosure.Develop a localnature-based offsetstrategy for residualemissions.– Commenced Climate Change and AdaptationPlans (CCAP) for assets under managementusing RCP8.5 as worst case.Continueimplementation ofCCAP and incorporateCCAP in onboardingof new assets.1. As at FY20, noting FY21 environmental data will be reported in the FY21 Sustainability Report.Looking forwardEnergy efficiencyWe are working in partnership with our customers to deliver meaningful action on climate change.Focus areasProgress this yearWaterDevelop a Scope3 emissionstarget aligned toscience-based targetmethodology.Achieve 100% onsiterenewables by FY25.Charter Hall Groupintends to:Prepare a waterstrategy to addressfuture climatescenarios.Waste– Implemented waste management plans at 100%of assets.– Piloted Anaerobic digestion systems at select centres.Above, from left: NAIDOC week, Albany Plaza WA; Gateway Leopold, Vic.Prepare a wastestrategy aligned tocircular economyprinciples.Sustainability 23

Charter Hall Retail REITAnnual Report 2021Focus areasSocial:Strong CommunitiesProgress this yearLooking forwardHealth, safety andwellbeing– Cared for tenant customers through COVID withrent relief, hygiene initiatives, adaptation of digitalengagement and support with returning to workplace.– Recorded a lost time injury and lost timeinjury frequency rate of zero, and a totalrecordable injury frequency rate of 1.11.Implement newincident managementsoftware forconsistency of datacapture used acrossCharter Hall Group.First Nations engagement– Partnered with indigenous author Maree Yoelu(McCarthy) and 670 students from 60 schools acrossour Retail communities to create a children’s storybook,‘Dancing for Country’ in celebration of NAIDOC Week.– Charter Hall Group submitted its inaugural ReconciliationAction Plan (RAP) for review with Reconciliation Australia.Launch a RAP in earlyFY22. Focus thenshifts to bringing RAPto life in a meaningfuland purposeful way.We are always looking for ways to increase the strengths of the communities in which we operate.Focus areasSocial value: Throughpartnership, deliver positiveimpacts for the communitiesin which we operateEmployment opportunitiesEmployee: Create a diverseand inclusive culture andenvironmentProgress this yearLooking forward– Charter Hall Group continued to lead with purposein its quest to lift the futures of communities. This ismeasured through ongoing participation in the Pledge1% initiative:– 739,000 total donations to social enterprises andcharitable organisations.– 41,000sqm of space, valued at over 1.8 million,provided to community groups, including over 500,000 through our Retail Centres.– 35% of Charter Hall Group employees volunteereda total 1,200 hours in the community, in a yearimpacted by COVID-19 restrictions.– Delivered 16 local community initiatives across itsRetail centres, including Quiet Hour, Home TweetHome (raising fund for injured wildlife), and c

tenant support program tapered to June 2021 as business stabilised for our tenant customers. We provided 6.7 million, or 2.3% of FY21 rent in tenant support during the year, down from 10.7 million of tenant support in the 4th quarter of FY20. Only 1.8 million or 0.6% of FY21 rent remained outstanding as at 30 June 2021.