Stockland · ASX:SGP
Stockland — H1 2008 Earnings Presentation
34 slides from Stockland's earnings presentation, Feb 6, 2008
Slide 1: Agenda
* Review & Commentary + 1H08 Financial Results + Capital Management + Business Unit Commentary + Growth Strategy + Summary & Outlook Optus HO, Macquarie Park, NSW
Slide 2: Review & Commentary / Group Results in Summary
Review & Commentary + Unprecedented volatility in debt and equity markets + Key market themes are emerging: — Risk was mispriced ~ Financial engineering with excessive debt has had its day ~ Businesses with strong fundamental property skills and solid balance sheets will prevail + Our business model
Slide 3: Business Unit Financial Results
Business Unit Fi cial Results Operating Profit: Recurring (rent) Trading Profits Comparable rental income growth Revaluation Gain:* F Income Growth ( Pltorm Yield Change id (EE eiie'simmay 7) Total Portfolio (45 centres) Total MAT** MAT Growth*** Specialty Occupancy Costs Vacancy (11 shops) Average
Slide 4: Business Unit Financial Results
Business Unit Financial Results Industial Revenue $497m Operating Profit 7% A $124.6m Net Margin % (ea) Gross Assets No of Projects Lots Controlled End Value of Projects Business Unit Fi ncial Results Industial Revenue $128m Operating Profit Net Margin % 10% / Panotio Summany | Gross Assets $670m No
Slide 5: Business Unit Financial Results
Business Unit Financial Results Operating Profit New units sold* 125 Turnover of existing units 8% Existing units (20 villages) 3,400 Occupancy 99% Development pipeline (22 villages) 3,800, Residential 4 owes Pin tamale om Operating Profit Gross Assets* Saas Investments So4m Halladale Inventory —cos
Slide 6: Capital Management
Capital Managemen Hugh Thorburn — Finance Director + No material impact from credit crunch * Solid balance sheet — Debt maturity profile ~ Capacity + Business as usual — No change to policies Capital Managemen 1H08 ‘S&P Rating - Gistabid alll. Po | sbilon |= Bank Facilities Domestic MTNS ENTNs ausPP
Slide 7: Market Outlook - Retail
John Schroder - CEO * Quality portfolio — operating upside 5) + Disposal of non core assets + Development pipeline progressed = 4 + Mixed use focus capitalises on (9) } a ‘Stockland’s diversified model HER) Stockland Se Market Outlook - Retai *+ Retail outlook positive due to: ~ Steady consumer dema
Slide 8: Strategy for Growth - Operations and Development Pipeline
Strategy for Growth - Operations + Strong rental growth supported by healthy sales growth + Further upside from low occupancy costs oLanee Upside from low 1% inconRenewas 1% Inc onNew Leases wie aH ‘ah Speciaty Sales ccupaney Coats sae 0s 1H08 ‘Ho? 1108 Strategy for Growt! velopment Pipeline + Compl
Slide 9: Case Study - Sub Regional to Regional Conversion: Stockland Shellharbour
Case Study — Sub Re: | to Regional Conver: Stockland Shellharbour *+ GLA from 40,000m? to 70,000m? + Estimated total cost $220m + Estimated value on completion circa $700m + DA submitted in October 2007 + Estimated completion 2014 + Est. yield on cost - 7.8% + Key major tenants:~ + Department Store
Slide 10: Office & Industrial - Office Market Outlook
Office & Industrial Steve Mann - CEO * Very favourable office market conditions: + Strategic focus on “resource rich’ states is paying off + Well positioned to deliver rental growth ‘8 Castloroagh Streot, Sydney Office Market Outloo! * Office market vacancies at record lows + Rental growth in Perth
Slide 11: Office Market Outlook - Growth; Intermodal Case Study
Office Market Outlook — Growth + Strong 1H08 performance driven by Brisbane and Perth + Office portfolio average 10% under rented + Reversions available on 55% of the portfolio over the next 2.5 years Stockland Lease Expiries + Market Rent Reviews Case Study — Intermodal Growth Strategy Defence Dist
Slide 12: Strategy for Growth - Development Pipeline
Strategy for Grow Development Pipelin + Development pipeline increased with acquisition and development scope + 4 projects commenced ~ $140m Noot | Estimated | Forecast | Current | 40 Year Project Status" pregcts | TotalCost | Yieldon | Average | Forecast S (ASbn) Cost Cap Rate IRR ‘Under Constructi
Slide 13: Residential - Market Overview
Residential Denis Hickey - CEO + Residential markets in good shape —No oversupply ~ Steady demand + Solid operating performance + High level of contracts on hand ‘The Islands, South Bosch, WA, Allis's impression Market Overview Positives: Residential markets are still performing well + GDP Growth +
Slide 14: Market Outlook - Residential Sector
Market Outlook — Residential Secto Each market has its own characteristics Last 6 months Next 12 months Se Tight supply and population growth coula od piesa coecoore reas 20 trigger improvement in late 2008 ‘Sound market due to favourable conditions Wc | beand stented (etany and opaeton ge @ Wa.__|
Slide 15: Strategy for Growth - Residential Communities and Apartments
Strategy for Grow Residential Communities + Growth through wider product choice + Continue to unlock future pipeline ~ 8 projects to launch in next 12 months + Broaden distribution channels + Strategic focus on affordable solutions Strategy for Growth - Apartments + Deliver pipeline of projects unde
Slide 16: Strategy for Growth - Retirement; Residential Outlook
Strategy for Growth — Retirement * Drive price growth in existing villages * Roll out development pipeline: * 22 projects on hand + 3,800 units + $1.6bn end value + Continue to assess new acquisitions as the industry consolidates Camoron Close, ic Residential Outlook + Market conditions generally po
Slide 17: Stockland Halladale
Stockland Halladale + Integration completed successfully + Strong team and platform + Market conditions very tough, expected to bottom in mid-late 2008 Downside = Pre-sales of several of our projects have been deferred ~ We will carry them on balance sheet until completion ~ They remain profitable U
Slide 18: Case Study - Redevelopment, St Andrew Square Edinburgh
Case Stud edevelopmen ‘St Andrew Square, Edinburgh + Premium location + Planning consent — Grade A office accommodation — 8,500m? ~ Prime retail space — 6,000m? ~ 6 penthouse apartments * Acquisition price ~ €21.25m. + Est. total value -£100m + Estimated completion - Dec 2010 Stockland’s Strategy Fu
Slide 19: Summary & Outlook
Summary & Outlook + Excellent result in 108 * Strong property and capital management skills + Solid financial position + Our strategy is sound and well proven + On track for 5% EPS growth in FY08 ‘The Vilage, Balgowah, NSW Artist's impression 7. Hears Ps,
Slide 20: Consistent Delivery of Strategy; Summary of Results 1H08
Consistent Delivery of Strategy EBIT 1Hos ‘Asset 31 December 2007 ‘Actual Strategic Weighting ‘Actual Strategic Weighting Recurring Income Retirement Living 3% 2% Retail 29% 35% Office & Industrial 33% 37% Stockland Halladale 3% 0% Subtotal 68% 60-80% 74% 70-80% Trading Property Development 31% 23%
Slide 21: Total P&L Effect of Interest; Capital Management
tal P&L Effect of Interest — 1H08 [Profit and Loss Effect 1H0B. asm inerest paid 140.4 interest capitalised: Development assets (79.5) Investment assets (6.0) (85.5) Finance costs 549 [Capitalised interest expensed via COS. 237, Total P&L effect 786 Capital Managemen ef & PEPE PEE oeeee ee SS Bank F
Slide 22: Balance Sheet; Portfolio Sales
Balance Sheet 73 (0) | (194) ‘Net Impact of movement in Financial instruments (52) (30) (173) + As dfn by AASB129-nanilnauments: Recon & Messmer Portfolio Sales Tota MAT NAT % Comparable (Sm) Growth ‘Growth Supermarkets 1878 78 35 Dos 366 a7 37 Specialties 18 80 70 Mini MajorsiGinemasiOther 738 12 7
Slide 23: Retail Sales - Portfolio Summary
Retail Sales - Portfolio Summary : ne Taye | gam | tage | otro aa a aoa oe on =e site iar} |} af = a VT — a — oo eo Unb pan tn pr (9) Retail Sales - Portfolio Summary (continued) % Property, Toaluat | SMAT | Spaces | Ocaupancy Karinyup 3763 114 ‘8870 172 Liydale 24 NA NA NA Merrjlands* 7508 NA NA NA
Slide 24: Retail - Development Pipeline
Retail - Development Pipeline UNDER CONSTRUCTION | Forecast | Forecast Gosttsm | Yield) ue Rockhampton 39 8s Merrylands (Stage 1 & 2) 108.5 75 Balgowiah 1278 60 Cammeray Fria Forecast | Forecast {ase hie) Gost(sm)_| Yield (%) ret Nowa 1700 70 Riverton 150 a Retail - Development Pipeline (continued)
Slide 25: Retail - Revaluations
Retail - Revaluations Property Vatuagon | (ausiedor | x merement | cap Rate ca Sochend Weel Pak wa 03 38 a Soca Shelter 2500 235 708 37 Sockand Reekhampion a0 Tas 108 650 Second Bava ls 720 Tas 72 B75 Stecland Gendle 200 7208 38 00 Stocking Wendouee 7130 aa 20 28 Stockland Forster 7300 77 784 875 St
Slide 26: Office and Industrial - Market Commentary
Office — Market Commentary oP Poco vata| eS ne Cotatuion | x recom | resin Syeney C80 wow | etme | waza | 115205 2 2 NnSyereye Siteonads | ow | toswo | ate 2ete0 2 3 Macquarie Park toe | san8 | waste | tears 2 %0 Taoawrne GBD om “emo | 100500 | 7.050 @ @ Brisbane CBD vee | ene | aren 302800 2 7 ‘aed
Slide 27: Office and Industrial - Revaluations
Office and Industrial - Revaluations Property Natuaion | (aged tor capex) | airroment Gol Gm} Ofte 195 King St Syaray (0%) NSW is oy 2a = 234 Sinton Seo, Syhey, NSW oH Ea az oo 77 Posi Hy eh Syn NSW 50 307 a 70 18-120 Pacii ghey, NSW 258 25 24 700 acai Toohey Cave, Macquarie Park NSW ry) 402 26 700
Slide 28: Revaluations (continued); Lease Expiry Profile - Office
Office and Industrial — Revaluations (continued) Previous BV Property Valuation | (adjusted for Capex) | %increment | Cap Rato % (sm) (sm) Tevet 2050 Filo Dr & 10 Stubb St, Somerton, IC aa 87 ea) 72 7682 Filo Dr, Somerton, VIC. 70 168 32 605 17 McNaughton Ra, Cayton, iC 23 123 00 750 Port Adelaide D
Slide 29: Lease Expiry Profile - Industrial; 1H08 Acquisitions
Lease Expiry Profile — Industrial June 2007 December 2007 Vacant v ee pn WALT: 4.0 Years WALT: Expiry by NLA 10% 74.0 Years Office & Industrial — 1H08 Acquisi im ‘Acquisition Cost ‘nial Yield - Before (sm costs Office 78 Waterioo Re, Macquarie Park, NSW 727 64% £255 8 267 St Georges Terrace, Perth,
Slide 30: Office & Industrial - Development Pipeline
Office & Industrial - Development Pipeli INDER CONSTR Forecast | Forecast | _Buldinal | yop 7 E venom] Seth [a8 | aaesten | Fee [ee [eve [rvs [re Lot25 & 42 Searion Dr, Epping, VC 16 32 22.400 “Tieit Business Campus (A+ 6) NSW 72 Ta 76594 Ta Wateroo Ra, Nacauare Park NSW % 64 71300, 6 0 ‘3676 Ipswic
Slide 31: Residential Geographic Diversity
Resident Geographic Diversity National Queensland TOTAL Lots: 49,500* NSW & ACT 31 December 2007 st. WosRe Prise arg ore Ly Cate Do (2 Courtyard ame: Th (081 & Retail 1% ‘Townhouses 10% Conventional 20% ‘Small Lots 12%
Slide 32: Residential Communities - Lots Sold
Residential Communities - Lots Sold 70% 0% 50% 40% 30% 20% 10% 0% Average Age of Lots Sold - 1H08 Eve (Ravenhurst), VIC ‘Sierra (Rossiters Hil), VIC Hidden Grove, VIC Darcy's Peak, NSW Monterey Central, VIC Higheroft, NSW The Sanctuary, WA 32
Slide 33: Residential Communities - Restocking
Residential Communities — Restocking Deferred. State! Off Location aoe market | Pufchase Murwillumbah ao | is8 Nov-07 Y N ‘Cranbourne North vic 32 Nov.a7 y Y Settlers Hill East warsa | 516 ctor y N Brookdale West warsa | 225 Dee-07 Y N Ocean Drive a | sz Deco Y N 1Ho8 407 No.tots | Avgprice | No.tot
Slide 34: Strategy for Growth - Apartments
Strategy for Growth - Apartments "iste UNDER CONSTRUCTION War | resort | aime | even | revo | eve | evze ‘Norman Reach, GLO $106m | 7% ‘South Beach, WA (lage lure) Siam | 86% “Asoo Siage2, AD Siz | 35% Prince Henry, NSW (stage Guneh) Stim_| 6mm Hyde, NSW re ‘Wage, Bagowah, NSW 25m | WA Rises" DEVELO