Slide 1: FY18 Results Presentation
For personal use only FY18 Results Presentation Creating sustainable communities 30 June 2018 Stockland FY18 Results Presentation Vale, WA
Slide 2: Agenda
Agenda For personal use only Topic Speaker Page Group update Mark Steinert, Managing Director and CEO 03 Group Finance Tiernan O’Rourke, CFO 08 Communities Andrew Whitson, Group Executive and CEO, Communities 14 Commercial Property Louise Mason, Group Executive and CEO, Commercial Property 23 Summar
Slide 3: Communities strategy delivering strong results
Communities strategy delivering strong results Leveraging our diversified business model For personal use only FY18 Results FY19 Guidance3 7.5% Funds from operations1 $863m 6.6% FFO per security1 35.6c 5.0 – 7.0% 4% 9.1% AFFO per security1 31.2c FFO Distribution per security growth per security grow
Slide 4: How we do business
How we do business Creating Stockland Communities and streamlining our business to deliver greater operational alignment For personal use only Optimise and innovate Corporate culture $8m pa savings from FY20 Streamline business structure and systems transformation 83% Employee engagement – above Aus
Slide 5: Active returns benefitting from communities focus
Active returns benefitting from communities focus Grow asset returns and customer base For personal use only Communities (31%)1 Willowdale community, Sydney Residential Retirement Living +24.3% Change in Operating profit -16.7% Change in operating profit 93% Customer satisfaction2 90% Customer satis
Slide 6: Delivering secure recurrent income
Delivering secure recurrent income Grow asset returns and customer base For personal use only Commercial Property (69%)1 Warwick Farm, Sydney Retail Town Centres Workplace & Logistics3 +1.3% Comparable FFO growth +6.0% Logistics Comparable FFO growth 2.0% Workplace Comparable specialty sales/sqm +
Slide 7: Strong financial results
Strong financial results Continuous improvement in key financial metrics For personal use only FFO per security (¢) Distribution per security (¢) Payout ratio (%) Five year CAGR 10.8% Five year CAGR 2.0%, +3.9% in FY18 At lower end of target range of 75-85% of FFO FY18 35.6 FY18 FY18 26.5 FY18 75 FY
Slide 8: Group Finance
For personal use only Group Finance Tiernan O’Rourke Stockland Shellharbour, NSW
Slide 9: Maintaining strong balance sheet
Maintaining strong balance sheet WACD continuing to trend lower For personal use only Capital strength Fixed/hedged rates declining1 $bn Lower end of 22.2% Gearing 20-30% range 4.0 Forecast Hedge Rate - RHS 4.4% Expected to be 3.5 5.2% Weighted average cost of debt ~4.8% in FY19 4.2% 4.1% 3.0 6.2 ye
Slide 10: Strong FFO growth
Strong FFO growth For personal use only Funds from operations FY18 $m FY17 $m Change Comp growth Modest growth impacted by higher outgoings Retail Town Centres1 428 419 2.2% 1.3% and retail remixing Logistics 152 143 6.2% 6.0% Full year of high occupancy Reflects vacancy in Perth and Canberra, W
Slide 11: Statutory Profit to FFO and AFFO reconciliation
Statutory Profit to FFO and AFFO reconciliation Strong growth in AFFO For personal use only FY18 $M FY17 $M Change Statutory Profit 1,025 1,195 (14.2%) Adjust for: Amortisation of lease incentives and lease fees 76 69 Straight-line rent (5) (6) Non-recurring dividend revenue - (71) Commercial Prop
Slide 12: Valuation results mixed
Valuation results mixed Commercial Property valuations For personal use only Valuation movements in FY18 • Net valuation uplift of $139m1 in FY18 with 76% of assets revalued • Retail Town Centre valuation decline concentrated in Central and North Qld $m assets impacted by weaker economic conditions
Slide 13: Strong operating cash flows
Strong operating cash flows Cash Flow Summary ($M) For personal use only Key areas of capital employed 1,800 • 66% of land payments relate to capital efficient acquisitions 1,600 Improved • Residential development expenditure liquidity of ~$1b, remaining around these levels 374 1,400 • Commercial Pr
Slide 14: Communities
For personal use only Communities Residential and Retirement Living Andrew Whitson Cloverton, Melbourne Stockland FY18 Results Presentation
Slide 15: Delivering strong growth
Delivering strong growth Residential Communities For personal use only Residential FY18 FY17 Change • Increased ROA as we deliver on strategy Total lots settled 6,438 6,604 (2.5%) • FY18 revenue growth reflects 5.2% increase in sales price per sqm settled, and higher Townhome settlements Total reve
Slide 16: Well positioned in the most resilient markets to deliver growth
Well positioned in the most resilient markets to deliver growth Residential Communities For personal use only • FY18 margins reflect an increased proportion of higher margin settlements, Orion, Melbourne particularly in Sydney • Still good demand for house and land despite Sydney and Melbourne marke
Slide 17: Strong earnings visibility from Community Creation
Strong earnings visibility from Community Creation Residential Communities For personal use only • Solid demand for house and land packages in Cumulative land price growth1 relative affordable, liveable communities to our standard 3.5% pa price growth assumption 120% • Over 75% of our customers are
Slide 18: Strong demand for our projects in moderating market
Strong demand for our projects in moderating market Our market share in NSW has grown to 14.4% from 9.4% one year ago1 For personal use only Elara, Sydney Willowdale, Sydney Altrove, Sydney Market share leader in its corridor Market share leader in its corridor Adjoins train station and early for th
Slide 19: Retirement Living
For personal use only Retirement Living North Lakes, Queensland Stockland FY18 Results Presentation
Slide 20: Challenging period with momentum improving
Challenging period with momentum improving Retirement Living For personal use only • Results impacted by lower sales volumes, reflecting: Total portfolio FY18 FY17 Change • Adverse sector media coverage EBIT $56m $69m (19.4%) Operating Profit $53m $63m (16.7%) • Reduced development settlements d
Slide 21: Enquiries now converting to higher sales
Enquiries now converting to higher sales Retirement Living For personal use only • Commencing FY19 with increased net reservations and improving sentiment towards the sector Change in quarterly sales over prior corresponding period • Large increase in development completions towards the end of FY18
Slide 22: The leading creator of communities in Australia
The leading creator of communities in Australia Communities For personal use only We are Australia’s leading community creator with a land bank of: Willowdale, Sydney • Around 82,000 residential lots • Over 3,000 future Retirement Living dwellings on land we control We are well placed for growth: •
Slide 23: Commercial Property
For personal use only Commercial Property Louise Mason Stockland Shellharbour, NSW Stockland FY18 Results Presentation
Slide 24: Sustainable recurrent earnings
Sustainable recurrent earnings Commercial Property For personal use only Retail Town Logistics Workplace Centres Stockland Green Hills | NSW Oakleigh Industrial Estate | Vic Piccadilly Complex | NSW Creating town centre destinations Developing a market leading portfolio Optimising returns Heart of t
Slide 25: Active management
Active management Enhancing customer experience and forging tenant relationships For personal use only Commercial Property key metrics Wetherill Park, Sydney Asset FFO comp Occupancy WALE WACR values change (years) ($m) Retail Town Centres 7,403 1.3% 99.4% 6.3 5.8% Logistics1 2,228 6.0% 98.7% 4.
Slide 26: Our Retail Town Centre strategy
Our Retail Town Centre strategy For personal use only We create community places Metro Markets: Regional Markets: Our Objective Unique, convenient Leading destinations destinations Curated to our Our Focus Community Convenient customers “It’s your place” Stockland FY18 Results Presentation 26
Slide 27: Improving specialty sales productivity
Improving specialty sales productivity Retail Town Centres For personal use only • 4.2% growth in comparable specialty sales to $9,378 per square metre1, 9.7% above Urbis benchmark Total Comparable centres3 • Sustainable specialty occupancy costs of 14.9%, reflecting improved sales and tenant remi
Slide 28: Making our assets more resilient
Making our assets more resilient – growing food, services, entertainment and health For personal use only Retail Town Centres specialty income Stockland URBIS Benchmark2 • Continuing to remix our Retail Town Centres to growth categories that are more resilient to online sales 6% Leisure and cinemas
Slide 29: Positioned for sustainable rental growth
Positioned for sustainable rental growth Retail Town Centres For personal use only Actively managing our assets Retail leasing activity2 FY18 FY17 • Continued positive growth on lease renewals Occupancy3 99.4% 99.5% • Reversion on new leases largely reflects tenant remixing Specialty retail leasing
Slide 30: Active management delivering improving sales
Active management delivering improving sales Retail Town Centres For personal use only Upgrading well located assets and enhancing customer experience driving sales productivity Green Hills, NSW • Highly successful $421m development Wetherill Park, Sydney • Specialty sales above $10,000/sqm, with gr
Slide 31: Enhancing portfolio and growing recurring earnings
Enhancing portfolio and growing recurring earnings Retail Town Centre development For personal use only Under Total Total income Completion Stockland Birtinya, Qld construction spend ($m) leased Stabilised yield IRR2 Date Birtinya, Qld ~86 74% 6.5% ~9.0% 2H19 TOTAL ~86 Total Total income Completion
Slide 32: Optimising Returns
Optimising Returns Workplace For personal use only • Strong leasing activity in Sydney Workplace FY18 FY17 • Average rental growth on new leases of 6.3% Leases executed 20,500 sqm 6,700 sqm • Progressing leasing in Perth Leases under HOA1 7,300 sqm 4,600 sqm • Sale of 77 Pacific Highway, North Sydne
Slide 33: New developments fully leased, delivering recurring income
New developments fully leased, delivering recurring income Logistics For personal use only • Leasing demand remains strong in Sydney and Melbourne, at 98.7% Logistics FY18 FY17 occupancy • Strong comparable FFO growth of 6.0% Leases executed 324,400 sqm 411,800 sqm • High customer satisfaction score
Slide 34: Accretive development pipeline, repositioning portfolio
Accretive development pipeline, repositioning portfolio For personal use only Under Total Gross Stabilised IRR Completion Ingleburn, Sydney construction spend ($m) lettable area Yield date (sqm) Yennora, Sydney ~26 22,600 7.4% ~10.9% 1Q19 Ingleburn Stage 2, Sydney ~50 36,850 7.7% ~10.4% 1Q19 Willawo
Slide 35: Transforming the portfolio
Transforming the portfolio Logistics For personal use only Upgrading well located assets and introducing new customers Coopers Paddock, Ingleburn Logistics Park, • $77m greenfield development • $33m greenfield development Warwick Farm, Sydney Sydney (Stage 1) • 100% leased prior to completion • 100%
Slide 36: Outlook
For personal use only Outlook Community Creation drives profit growth Mark Steinert Willowdale, Sydney Stockland FY18 Results Presentation
Slide 37: Our business is leveraged to key customer trends
Our business is leveraged to key customer trends For personal use only Key Australian trends1 Stockland’s competitive advantage Liveable/affordable/ Community Aging connected communities National land connection population market share2 increased 310bp Early delivery of amenities to 14.5% enhances c
Slide 38: Strategic priorities
Strategic priorities For personal use only Altrove, Sydney Elara Aspire, Sydney Residential Communities Retirement Living • Maintain sales and enhance customer experience • Asset recycling and developments to improve quality • Grow Townhomes to 15%+ of residential profit • Embed new contract choice
Slide 39: Strategic priorities
Strategic priorities For personal use only Wetherill Park, Sydney Macquarie Technology Park, Sydney Artist impression Retail Town Centres Workplace & Logistics • Increase Retail Town Centre quality and resilience; • Grow towards 25% of our portfolio over time food, services, entertainment and health
Slide 40: Target portfolio allocation
Target portfolio allocation For personal use only Capital Allocation as June 2018 Indicative Target Capital Allocation Disciplined Capital Allocation Framework Capital Strength Communities Communities 31% 20 - 30% Targets • Optimise WACC • 70:30 recurring income/active assets Workplace & Logistics W
Slide 41: FY19 outlook
FY19 outlook Portfolio remains well positioned for sustainable long term growth For personal use only • Targeting FFO per security growth of 5.0 - 7.0% for FY19, assuming no material change in market conditions. Underpinned by: • Residential settlements over 6,000 lots, with mix and townhomes liftin
Slide 42: Important Notice
For personal use only Important Notice While every effort is made to provide accurate and complete information, Stockland does not warrant or represent that the information in this presentation is free from errors or omissions or is suitable for your intended use. This presentation contains forward-