Slide 1: 2014 Half Year Results
© FEDERATION —" CENTRES 2014 Half Year Results
Slide 2: Outline
Outline 1. Introduction Steven Sewell, Managing Director & CEO 2. Financial Results Tom Honan, Chief Financial Officer 3. Operational Performance Mark Wilson, EGM - Property Operations 4. Redevelopment Business Jonathan Timms, EGM - Development & Asset Strategy 5. Strategy and Outlook Steven Sewell
Slide 3: Introduction
Introduction Steven Sewell
Slide 4: 1H14 Key Financial Highlights
1H14 Key Financial Highlights Key Metrics 1H to Dec 13 1H to Dec 12 % change Statutory Net Profit/(Loss) $226.7m $115.9m 95.6% Underlying Earnings $118.8m $106.2m 11.9% Underlying Earnings per Security 8.3 7.5 10.7% (cents) Distribution per Security (cents) 7.5 6.6 13.6% 31 Dec 13 30 June 13 Total T
Slide 5: FY14 YTD Achievements
FY14 YTD Achievements Growth driver activity - six months to Dec 13 • Comparable NOI growth of 2.2% Organic NOI • Occupancy 99.5%, consistent with historical averages Growth • Sales growth of 2.1%, reflecting non discretionary skew • Completed $28.0m on smaller projects, returning 10.2% blended yiel
Slide 6: Financial Results
Financial Results Tom Honan
Slide 7: Segment Income Statement
Segment Income Statement Segment Income Statement1 for year ended: 31-Dec-13 31-Dec-12 $m $m Direct property investment income 149.1 148.4 Syndicate investment income 7.9 11.3 • Syndicate investment and Investment Income 157.0 159.7 management income declining as Property management, development and
Slide 8: Segment Balance Sheet
Segment Balance Sheet Segment Balance Sheet1 as at: 31-Dec-13 30-June-13 Assets $m $m Cash 87.6 72.2 Direct Property (Held for Sale) - 371.4 • Balance Sheet Gearing of 22.9% as at 31 Direct Property 4,290.1 3,774.1 December 2013 Managed Fund Investments 150.7 344.1 Intangible Assets 199.7 199.7 Othe
Slide 9: Capital Management
Capital Management FY14 key financing initiatives to date Hedge Profile • A$MTN of $150 million issued in Dec 2013 of 6 Swap notional Debt Capital Markets - fixed rate Weighted hedge rate year duration Notional A$m Hedge Rate 4.5% 1,000 • Weighted Ave cost of debt as at 31 Dec of 5.24% 4.0% 800 3.5%
Slide 10: Review of Capital Transactions
Review of Capital Transactions 10 syndicate assets and 1 on-market acquisition 1H14 Dispositions Settlement Interest FDC Share WACR • Involved in transactions $m totalling almost $800 million Into Co-ownership Arrangements during first half ISPT July 2013 50% (371.4) 7.3% 1H14 Acquisitions FDC Share
Slide 11: Revaluations
Revaluations FDC Owned Portfolio Revaluations as at 31 December 2013 Regional Sub-regional Convenience Other Total No. Of Properties 5 35 16 1 57 December 2013 Valuation (A$m)1,2 1,166.0 2,557.3 425.9 46.9 4,196.1 Prior Book value at June 2013 (A$m) 1,161.4 2,488.9 396.9 46.9 4,094.2 Movement in boo
Slide 12: Financial platform
Financial platform •Conservative gearing level of 22.9% •Approximately 75% of debt hedged •Yardi Voyager program on track for and ICR of 5.5X second half 2014 •First AUD MTN note issued providing •Simplified business model with initial steps in diversifying and •Procurement initiatives: syndicate eq
Slide 13: Operational Performance
Operational Performance Mark Wilson
Slide 14: FDC National Operational Achievements
FDC National Operational Achievements FDC Portfolio Dec-13 Dec-12 No. of Shopping Centres 57 47 Comparable NOI Growth – Stabilised1 2 2.2% 3.0% Occupancy2 99.5% 99.5% Annual Retail Sales Growth (SCCA)2 2.1% 2.0% Specialty Occupancy Cost2 3 14.7% 14.7% Capitalisation Rate (weighted average) (%)1 7.43
Slide 15: FDC Sales Review
FDC Sales Review FDC Sales Category Analysis Category Annual Sales Portfolio MAT Trend vs Comment ($m) Composition Change1 Dec-12 Strong performing category Supermarkets 3,148.5 40% 3.2% Note: 53wk vs 52wk reporting period Food & services categories Specialties 2,891.6 37% 2.0% exhibiting growth Onl
Slide 16: FDC National Leasing
FDC National Leasing Renewals (6 months to Dec 13) New Leases (6 months to Dec 13) Sub- Sub- Operating Metrics1 2 Convenience Regional Total Convenience Regional Total regional regional Total Leasing Transactions 39 181 104 325 8 66 29 103 Gross Income ($m) $2.5m $11.0m $5.5m $19.0m $0.5m $3.6m $1.3
Slide 17: Portfolio Fundamentals
Portfolio Fundamentals Strong elements of diversification provide base for stability • Portfolio diversification by size and geography • Population growth and density of population in catchments • 4,300 tenancies, WALE of 6.1yrs • Occupancy costs remain below industry benchmarks • Retailers respondi
Slide 18: Redevelopment Business
Redevelopment Business Jonathan Timms
Slide 19: Development Update
Development Update Returns achieved on initial remixing initiatives • 5 smaller projects totalling $28m completed in the period, delivering a blended forecast yield of 10.2% • Incorporated the addition of high quality national retailers, enhancing quality of retail mix (eg. CBA, JB Hi-Fi, Aldi & Dan
Slide 20: Bankstown and Roselands remixing
Bankstown and Roselands remixing Before After 20
Slide 21: Current Development Update
Current Development Update Warnbro ($43.4m total cost) Cranbourne ($109.5m total cost) • Warnbro redevelopment comprising Big W and 28 • Heads of Agreement for all majors executed new specialty tenancies on track to open in late (Coles, Kmart, Target) with building works having September 2014 commen
Slide 22: Market Pipeline & Spend
Market Pipeline & Spend Redevelopment pipeline gathering momentum Regional Sub-regional Convenience Bankstown ($6.5m)1 Roselands ($5.7m)1 Completed Lennox ($2.7m)1 Developments Monier Village ($4.8m) ($3.2m Stirlings ($8.3m)2 Warnbro ($43.4m) Under Cranbourne ($109.5)1 Construction Warriewood ($57.0
Slide 23: Strategy & Outlook
Strategy & Outlook Steven Sewell
Slide 24: Growth Levers
Growth Levers Key drivers of EPS in future years Organic NOI Growth Portfolio Enhancement and Redevelopment Ongoing Corporate Simplification and Efficiency Conservative Balance Sheet and Capital Management Syndicate Rationalisation 24
Slide 25: Corporate Readiness
Corporate Readiness Four other key areas of focus • Innovation and Technology • Yardi Voyager on track for second half 2014 • Wireless strategy for centres • Social media strategies in place • Consumer engagement and loyalty • Sustainability & Safety • Focus on workplace, public areas and constructi
Slide 26: FY14 Outlook
FY14 Outlook • FY14 EPS guidance range lifted to between 16.7 and 17.0 cents per security, subject to any unforeseen events following benefits from: • Debt savings • Timing and Yield of Acquisitions • Corporate Overhead reductions • Payout ratio expected to be in the range of 95%-105% of AFFO 26
Slide 27: Appendices
Appendices
Slide 28: Reconciliation of AFFO
Reconciliation of AFFO • 90% pay out ratio on Reconciliation from Underlying Earnings to AFFO1 1H14 1H13 Underlying Earnings, reflecting $m $m 99% of AFFO Reported Underlying Earnings 118.8 106.2 Adjusting for FFO: Rent Free Amortisations 0.7 1.0 • Maintenance capex of $5.1 Reported Funds from Opera
Slide 29: Summary of Syndicates
Summary of Syndicates External Year Syndicate GAV Liabilities FDC Equity Comment Equity $m $m $m $m FY14 RDP37 71.5 24.1 28.1 19.3 (Albury, Monier Village) FEM to FDC in Aug 2013 RDP34 42.8 8.7 16.5 17.6 (Emerald Village (50%)/Emerald Market(50%)) FDC acquired in Dec 13 RDP27 95.4 60.5 21.6 13.3 Mai
Slide 30: Expansive Retail Management Platform of Shopping Centres
Expansive Retail Management Platform of 70 Shopping Centres $6.7 billion Regional Centres - 1 Sub-regional Centres - 4 Convenience Centres -1 Sub-regional Centres - 6 assets under Convenience Centres - 9 Convenience Centres - 8 Other - 2 management 1 <1% by Value 17 14% by Value 13 24% by Value Over
Slide 31: Portfolio Overview
Portfolio Overview FDC Portfolio Syndicate & As at 31 December 2013 Externally Managed Total Managed1 Wholly Owned Co-Owned Total Portfolio No. of Centres 38 19 57 16 70 GLA (000’s sq.m) 620.6 733.4 1,354.0 163.8 1,427.4 Number of Tenancies 1,982 2,303 4,285 590 4,636 Annual Retail Sales $3.7bn $4.2
Slide 32: Key FDC Portfolio Retailers
Key FDC Portfolio Retailers Top 10 Retailers Top 10 Retail Groups Rank Retailer Retailer Type Number of % of total Rank Retailer Number of % of total Credit stores income stores income rating A- / A3 1 Supermarket 37 7.2% 1 86 14.8% A- / A3 2 Supermarket 32 6.0% 2 72 10.8% Discount Department 3 19 5
Slide 33: FDC Expansive and Diversified Retail Mix
FDC Expansive and Diversified Retail Mix Extensive Retail Mix with Circa 3,900 Leases1 Lease Expiry Profile by Income Other, 7% Circa 77% of income secured to leases expiring in FY16 and Apparel & 90% beyond Mini Majors, Jewellery, 23% 79% 12% 80% 70% 60% Home, 8% 50% 40% 37% 30% 18% 20% 16% 15% 11%
Slide 34: FDC Portfolio Information
FDC Portfolio Information Sales Analysis Dec-13 vs Jun-13 Sales Analysis by State1 Category Sales Volume MAT Change1 MAT Change1 4.0% ($m) Dec-13 Jun-13 3.5% Dec-13 3.0% Supermarkets 3,148.5 3.2% 4.0% 2.5% 2.0% Specialties 2,891.6 2.0% 2.9% 1.5% Discount Department Stores 1,092.5 -0.1% 2.4% 1.0% 0.5
Slide 35: FDC Property Portfolio – December 2013
FDC Property Portfolio – December 2013 FDC Share of Valuation ($m) Capitalisation Rate Annual Retail Sales ($m) Centre Specialty Specialty Occupancy Sales Sales Occupancy Centre State Centre Type FDC Ownership Dec-13 Jun-13 1 Dec-13 Jun-13 GLA sqm Rate Dec-13 Jun-13 ($psm) ($psm) Cost 2 Bankstown Ce
Slide 36: FDC Property Portfolio – December 2013 cont.
FDC Property Portfolio – December 2013 cont. FDC Share of Valuation ($m) Capitalisation Rate Annual Retail Sales ($m) Centre Specialty Specialty Occupancy Sales Sales Occupancy Centre State Centre Type FDC Ownership Dec-13 Jun-13 1 Dec-13 Jun-13 GLA sqm Rate Dec-13 Jun-13 ($psm) ($psm) Cost 2 Colonn
Slide 37: FDC Performance by State
FDC Performance by State WA Portfolio Regional Sub-regional Convenience Total No. Of Shopping Centres 1 4 6 11 Valuation ($m) $334.0 $430.8 $213.2 $988.0 23% of Portfolio1 Weighted Average 5.75% 7.40% 8.07% 6.97% Capitalisation Rate Key Operating Metrics Dec-13 Dec-12 Occupancy 99.7% 99.9% Annual Re
Slide 38: FDC Performance by State
FDC Performance by State NSW Portfolio Regional Sub-regional Convenience Total No. Of Shopping Centres 2 11 1 14 Valuation ($m) $458.5 $649.2 $26.2 $1,133.9 Weighted Average 7.00% 7.90% 8.00% 7.53% Capitalisation Rate 27% of Portfolio1 Key Operating Metrics Dec-13 Dec-12 Occupancy 99.6% 99.5% Annual
Slide 39: FDC Performance by State
FDC Performance by State QLD Portfolio Sub-regional Convenience Other Total No. Of Shopping Centres 6 7 1 14 16% of Valuation ($m) $498.8 $148.2 $46.9 $693.9 Portfolio1 Weighted Average 7.60% 8.72% 9.00% 7.94% Capitalisation Rate Key Operating Metrics Dec-13 Dec-12 Occupancy 99.3% 99.1% Annual Retai
Slide 40: FDC Performance by State
FDC Performance by State VIC Portfolio Regional Sub-regional Convenience Total No. Of Shopping Centres 1 10 1 12 Valuation ($m) $215.8 $714.0 $12.3 $942.1 Weighted Average 6.00% 7.73% 8.50% 7.34% Capitalisation Rate 22% of Key Operating Metrics Dec-13 Dec-12 Portfolio1 Occupancy 99.2% 99.7% Annual R
Slide 41: FDC Performance by State
FDC Performance by State Amalgamated SA/TAS/NT/ACT Portfolio Regional Sub-regional Convenience Total No. Of Shopping Centres 1 4 1 6 Valuation ($m) $147.7 $353.0 $26.0 $526.7 Weighted Average 7.25% 7.62% 9.00% 7.59% Capitalisation Rate Key Operating Metrics Dec-13 Dec-12 12% of Portfolio1 Occupancy
Slide 42: Our Ethos
Our Ethos At Federation Centres, we believe in partnering with our stakeholders to provide engaging consumer experiences for our local communities. At the heart of our success is our team at Federation Centres who are passionate about delivering on our brand promise and helping to drive sustainable
Slide 43: Disclaimer
Disclaimer This document is a presentation of general background information about the activities of Federation Centres (ASX:FDC) current at the date of lodgement of the presentation (20 February 2014). It is information in a summary form and does not purport to be complete. It is to be read in conj