Region Group · ASX:RGN
Region — SCA Property Group — H1 FY14 Earnings Presentation
33 slides from Region's earnings presentation, Feb 14, 2014
Slide 1: SCA Property Group First Half FY14 Results Presentation
For personal use only SCA PROPERTY GROUP First Half FY14 Results Presentation 14 February 2014 Coles, Sorrell TAS
Slide 2: Agenda
AGENDA For personal use only 1 Overview of First Half FY14 Results 2 Financial Performance 3 Operational Performance 4 Key Priorities and Outlook 5 Questions 6 Appendices 2
Slide 3: Overview of First Half FY14 Results
For personal use only 1 OVERVIEW OF FIRST HALF FY14 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: First Half Highlights
FIRST HALF HIGHLIGHTS For personal use only Financial Capital Active Portfolio Performance Management Management $43.0m 33.5% 97.1% Statutory net profit after tax 1 Gearing 2 Portfolio occupancy 2 $39.5m $1.59 8.0% Distributable earnings 1 NTA per unit 2 Portfolio weighted average cap rate 2 5.4 cen
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY For personal use only • Leasing team brought in-house during the half year period Specialty Leasing • Specialty vacancy has decreased to 11.1% (from 19.2% in December 2012) On Track • We continue to achieve rent/sqm and incentive levels in line with our expe
Slide 6: Financial Performance
For personal use only 2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer
Slide 7: Distributable Earnings
DISTRIBUTABLE EARNINGS For the Six Months Ended 31-Dec-2013 For personal use only $m 1H14 • Anchor gross rental includes $0.4m in turnover rent Anchor gross rental 47.6 Specialty gross rental 26.4 • Other property income includes direct recoveries and Other property income 1.8 casual mall leasing Gr
Slide 8: Balance Sheet
BALANCE SHEET As at 31-Dec-2013 For personal use only $m 31-Dec-2013 30-Jun-2013 Change • Value of investment properties is up by $133.9m, due to: – Acquisitions ($146.3m)(1); Cash 11.8 15.4 (3.6) – Work in progress on DMAs ($12.2m); Investment properties 1,638.3(2) 1,504.4 133.9 – Positive re-valua
Slide 9: Capital Management
CAPITAL MANAGEMENT As at 31-Dec-2013 For personal use only • Gearing of around 33.5%(1) is within target range of 25% to 40% $m 31-Dec-2013 30-Jun-2013 • We expect gearing to reduce following the sale Facility limit 600.0 550.0 settlements for Bright and Mildura, before increasing to Drawn debt (net
Slide 10: Operational Performance
For personal use only 3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 11: Portfolio Overview
PORTFOLIO OVERVIEW Average age now 5.1 years For personal use only Assets Number of Number of GLA Occupancy Value Weighted average As at 31-Dec-2013 centres specialties (sqm) (% GLA) (A$m) WALE (yrs) cap rate (%) Freestanding 14 4 52,535 99.8% 174.2 16.0 7.88 Neighbourhood 53 553 273,653 97.1% 951.8
Slide 12: Supermarket Sales Growth
SUPERMARKET SALES GROWTH For personal use only • Strong growth from both the Australian and New Zealand Australian Supermarket Sales Growth (%) (1) , (3) supermarket tenants continues 31-Dec-2013 30-Jun-2013 • Supermarket sales growth is a key determinant of centre Number of Number of health, helpin
Slide 13: Turnover Rent Thresholds
TURNOVER RENT THRESHOLDS For personal use only • As a result of strong sales growth, we are starting to see TURNOVER RENT THRESHOLDS (Number of Australian some anchor tenants achieve turnover rent thresholds Supermarkets)(1) % of Turnover Threshold • Once turnover rent thresholds are achieved, renta
Slide 14: Speciality Leasing Progress
SPECIALITY LEASING PROGRESS We remain on track to achieve normalised occupancy levels prior to the end of the Woolworths Rental Guarantee period For personal use only • During the six months to 31 December 2013, we have agreed terms on 40 leasing deals over 4,107 sqm of space, reducing our specialty
Slide 15: Specialty Leasing Strategy
SPECIALTY LEASING STRATEGY Four centres account for around 40% of our specialty vacancy For personal use only Specialty Vacancy Across the Portfolio (% of GLA) • Good progress has been made at our higher vacancy 19.2% centres: – Kwinana has had solid leasing progress, however Kwinana, 5.3% 14.0% Sta
Slide 16: Specialty Key Metrics
SPECIALTY KEY METRICS For personal use only Specialty sales performance • Specialty sales continue to grow strongly across the Specialty sales growth (MAT) % 7.9% portfolio, driven mainly by non-discretionary spend (Tenancies open for > 24 months) • The performance reflects the location of our centr
Slide 17: Tasmanian Acquisition - November 2013
TASMANIAN ACQUISITION - NOVEMBER 2013 Represents SCA’s entry into the Tasmanian market For personal use only Largest quality portfolio of Riverside Greenpoint Plaza • neighbourhood shopping centres in Tasmania Launceston • Greater geographic diversity • 8% yield Claremont Plaza(1) Sorrell Plaza Hoba
Slide 18: Key Priorities and Outlook
For personal use only 4 KEY PRIORITIES AND OUTLOOK Anthony Mellowes Chief Executive Officer
Slide 19: Strategy
STRATEGY Defensive, resilient cashflows to support secure distributions For personal use only Focus on convenience- Weighted to non-discretionary Long leases to quality anchor based retail centres retail segment tenants Appropriate capital Growth structure opportunities 19
Slide 20: Potential Earnings Growth Trends
POTENTIAL EARNINGS GROWTH TRENDS Solid earnings growth expected over time For personal use only Indicative Contribution to Earnings Growth Rate Description and Assumptions (% pa) Longer Near Term (FY14 - FY17) Term (FY18 +) • Anchor rental income represents about 60% of overall gross property income
Slide 21: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK For personal use only Specialty Leasing • Target is to reduce specialty vacancy to a range of 3% to 5% by December 2014 Remains Key Priority • If this is achieved, the structural vacancy allowance will be sufficient to offset the run-off of the Woolworths rental guarantee
Slide 22: Questions
For personal use only 5 QUESTIONS
Slide 23: Appendices
For personal use only 6 APPENDICES
Slide 24: Statutory Earnings Reconciliation
STATUTORY EARNINGS RECONCILIATION Six Months to 31-Dec-2013 For personal use only Statutory Income Straight-lining of rental Rental Distributable $m Fair value adj Statement income reimbursements earnings Revenue Rental income 75.8 (4.5) - 7.0 78.3 Other property income 2.1 - - - 2.1 77.9 (4.5) - 7.
Slide 25: Property Value
PROPERTY VALUE For personal use only 1,800 1,700 12.2 4.8 (43.9) 146.3 15.4 1,638.3 (0.9) 1,600 1,504.4 1,500 A$m 1,400 1,300 1,200 30 June 2013 Acquisitions DMA Fair Value Disposals Other FX 31 December 2013 • Acquisitions includes the Tasmanian acquisition (excluding Claremont) and the remaining b
Slide 26: Debt Facilities & Hedging
DEBT FACILITIES & HEDGING For personal use only Debt Facilities as at 31-Dec-2013 Facility Limit Drawn Debt All-in debt cost Maturity $m (A$m) (A$m) (% pa) Unsecured bank facility – 3 year 150.0 150.0 Dec-16 Unsecured bank facility – 4 year 225.0 220.0 Nov – 17 Jul 18 – Dec 18 Unsecured bank facilit
Slide 27: Long Term Leases to Woolworths and Wesfarmers Group
LONG TERM LEASES TO WOOLWORTHS AND WESFARMERS GROUP For personal use only Portfolio Lease Expiry Profile Key Themes 31-Dec-2013 Wale (Years) Portfolio WALE 13.8 • 61% of gross rent generated by Woolworths, and Anchor WALE 17.2 Wesfarmers Group subsidiaries (on a fully leased basis) Overall Lease Exp
Slide 28: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Six months to 31 December 2013 For personal use only Specialty Total Completion Anchor Total GLA % GLA Centre type GLA purchase Cap rate date GLA (sqm) (sqm) commited (sqm) price ($m) Woolworths Completed Centres Lilydale, VIC Neighbourhood Jul-2013 12,791 9,280 22,071
Slide 29: Divestments During the Period
DIVESTMENTS DURING THE PERIOD Six months to 31 December 2013 For personal use only Specialty Completion Anchor Total GLA % GLA Total sale Centre type GLA Cap rate date GLA (sqm) (sqm) commited price ($m) (sqm) Divested Properties Emerald Park, VIC Freestanding Nov-2013 2,915 - 2,915 100.0% 12.5 6.50
Slide 30: Portfolio List
PORTFOLIO LIST For personal use only Valuation Completion Total GLA Occupancy Number of WALE Valuation Property State Property Type Dec-13 Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Completed Portfolio Australia Lilydale VIC Sub-Regional Jul-13 22,071 96% 53 14.9 7.50% 80.5 Pake
Slide 31: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only Valuation Completion Total GLA Occupancy Number of WALE Valuation Property State Property Type Dec-13 Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Langwarrin VIC Neighbourhood Oct-04 5,087 98% 14 8.4 7.75% 17.2 Ocean Grove VIC Neigh
Slide 32: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only Valuation Completion Total GLA Occupancy Number of WALE Valuation Property State Property Type Dec-13 Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) New Zealand Kelvin Grove NZ Neighbourhood Jun-12 3,611 100% 5 17.5 7.75% 10.4 Newtown
Slide 33: Management Team
MANAGEMENT TEAM For personal use only Anthony Mellowes, Chief Executive Officer • Mr Mellowes is an experienced property executive. Prior to joining SCA Property Group, Mr Mellowes was employed by Woolworths since 2002 and held a number of senior property related roles including Head of Asset Manage