Stockland · ASX:SGP
Stockland — FY2006 Earnings Presentation
80 slides from Stockland's earnings presentation, Aug 9, 2006
Slide 1: FY06 Results Presentation
FY06 RESULTS PRESENTATION 9 AUGUST 2006
Slide 2: Highlights
Highlights FY06 Results Finance and Capital Management Divisional Performance Future Outlook and Strategy
Slide 3: Highlights
HIGHLIGHTS Record profits driven by excellent performance from all divisions Demonstrates our ability to consistently deliver through market cycles Strong balance sheet Recognised as a quality leading brand in each of our businesses Poised for the next phase of growth
Slide 4: Net profit before revaluations
mparis Net profit before DIAS T GROWTH $2,309.9m 34.9% $1,712.9m FY05 @ Revaluations $553.7m il Net Profit *
Slide 5: Net Profit
Net Profit Earnings per Security Distributions per Security NTA per Security Gearing (debt/total tangible assets) FY05 Comparison has been calculated under AIFRS Net profit and EPS befor i i S $553.7m 41.5 cents 41.4 cents $4.54 24.1%
Slide 6: Excellent Security Holder Returns
EXCELLENT SECURITY HOLDER RETURNS Earnings per Security* Distribution per Security FYOQ2 FYO3 FY04 FYO5 FYO6 FYO2 FY03 FY04 FY05 im SGP Wi LPT 200 Index * mscRr JE LPT 200 Index’ ‘* Source: UBS * FY02-F Y04 is AGAAP, FY05-FY06 is AiFRS (Before cx nt items)
Slide 7: Bie LL. Hs
_ Bie LL. Hs _ 7 _ oC 7 . . - 7 Gea i ii . oy L 7 oe He) Corporation Profits Property Development Hotel Management Unlisted Property Funds Subtotal By _ _. Lo a oo _ LD Trust Income Shopping Centres Commercial Industrial & Office Parks Subtotal | oy 5 - : CC _ he | . yy ee 7 As Ly z iy Gin er 7 Wee
Slide 8: Finance and Capital Management
FINANCE AND CAPITAL MANAGEMENT Hugh Thorburn * Capital Management * AIFRS
Slide 9: Capital Management
CAPITAL MANAGEMENT S&P Rating Weighted Average Debt Maturity Debt Fixed / Hedged Weighted Average Cost of Debt* Gearing (debt/total tangible assets) * Including all costs, fees and margins FY06 A-/ Stable 7.4 years 61% 6.1% 24.7% FYOS A- / Stable 5.2 years 63% 6.0% elon
Slide 10: Capital Management - Debt Maturity Profile
, os yy i CAPITAL MANAGEMENT Debt Maturity Profile Year Ending 30 June wCommercialPaper | BankDebt %DomesticMediumTermNotes @USSeniorTermNotes Asian Bond
Slide 11: Like-for-like AIFRS reporting basis
Our reporting in this presentation is on a like-for-like basis: FY06 AIFRS compared to restated FY05 AIFRS (the latter was provided in the presentation last year) Income statement volatility, due to: « Revaluation of investment property « Goodwill adjustments ¢ Mark to market of financial instrument
Slide 12: Distribution adjustment policy for amortisation of tenant incentives
For FY06, we adopted the policy of adjusting distributions for the effect of amortisation of leasehold tenant incentives Total payout still <100% of operating earnings We will continue the policy for FYO7 There will be no adjustment for other items (straight lining of rental income, accounting for e
Slide 13: Shopping Centre Division
SHOPPING CENTRE DIVISION Darren Steinberg Highlights Market Commentary Sales Leasing and Management Development Pipeline Summary
Slide 14: Shopping Centre Division Highlights
SHOPPING CENTRE DI Highlights Divisional operating profit $236.7m/+ 6.6% Comparable net income growth 5.4%" Revaluations in FY06 $417.0m Increase on previous Book Value 11.5% Portfolio has delivered a total return of 17.5% pa over the past 5 years 4,000 4 ; 28.0% 5 i + 20,0% | 3,000 2,500: f18.0%. 2
Slide 15: Market Commentary
Market Commentary * Sales growth has moderated to long term sustainable levels * Positive outlook for retail sector: * Solid labour market * Stable planning regime * Tax cuts * Continued strong demand for retail assets
Slide 16: Sales & Occupancy Costs - Total Portfolio
SHOPPING CENTRE DIVISION Sales & Occupancy Costs - Total Portfolio Occupancy Cost High Productivity Rental Upside , 15% $8,176" 12.1%" ; 13% 11% 9% 1% r 8% SGP JHD Specialty Sales Occupancy Costs * Excludes development affect See Annexures Slide 61 for
Slide 17: Leasing and Management
SHOPPING CENTRE DIVISION Leasing and Management * 370 total leasing transactions * 164 renewals, average rental increase 19.3% (on previous rental) 225 - imu % Increase on Renewals Number of Renewals ; 25% 200 | a 175 | oe | 20% 150 a Me 125 | i + 15% 100 | - 109 154 - a | Fe 25 0 Wit Nae on Vacancy
Slide 18: Development Pipeline
SHOPPING CENTRE D Development Pipeline Bis PE re L 8 - 7 ae a , : oC co So — i Retail projects FY06 net profit of $3.5m
Slide 19: Value Enhancement from Development
SHOPPING CENTRE DIVISION Value Enhancement from Development Burleigh Heads Glendale Bay Village lil Book Value Prior to Development i Development Cost @ Valuation Gain
Slide 20: Summary
SHOPPING CENTRE DIVISION Summary « Strong and trusted brand within shopping centre industry * Experienced management team with proven track record * Well positioned for continued growth over next 5 years * $1 billion development pipeline * Organic rental growth
Slide 21: Commercial and Industrial
i bil COMMERCIAL AND INDUSTRIA Steven Mann Divisional Highlights Commercial Industrial and Office Parks Key Focus
Slide 22: Commercial and Industrial Highlights
_ a COMMERCIAL AND INDUSTRIAL Highlights Divisional Operating Profit Comparable Net Income Growth Record Portfolio Occupancy Revaluations in FY06 Completion of 2 Development Projects 3 Acquisitions * Excludes impact of acquisitions, disposals and development
Slide 23: Market Commentary
Market Commentary National Office Market Dynamics % p.a. emp. growth / vacancy rate F 10% F 8% + 6% F 4% i a NN 1 2% r 0% be Ro ie) oO < < » -2% (2 Net Additions to Stock wii’ Net Absorption Office Based Employment (RHS) =— Vacancy Rate (RHS)
Slide 24: Commercial Highlights
COMMERCIAL Highlights Leased / Renewed 106,000m? Strong Tenant Retention 82% Record Occupancy 99.4% Revaluation of 17 Properties $147.4m Increase on Previous Book Value 9.9% 2 Brisbane Acquisitions $70.8m
Slide 25: Commercial Lease Expiry Profile
a COMMERCIAL Lease Expiry Profile June 2005 FYO6 22% Average Lease Term — 4.3yrs June 2006 Vacant <1% Expiry by NLA FYO? 16%
Slide 26: Industrial and Office Parks Market Commentary
Mill LD IN DUSTRIAL AN D OFFICE PARKS Market Commentary National Industrial Sector Output Forecast ‘a i a Manufacturing —~ Wholesale & Retail Trade — Transport & Storage
Slide 27: Industrial and Office Parks Highlights
_ . _ _ INDUSTRIAL AND OFFICE PARKS Highlights Leased / Renewed 155,000m2 Strong Retention 84% High Portfolio Occupancy 99.7% Revaluation of 15 Properties $75.9m Increase on Previous Book Value 11.5% Brisbane Industrial Acquisition $30.2m Melbourne Industrial Portfolio Acquisition July 06 $120m / 7.
Slide 28: Development Pipeline
Lf oe ; | . - Hoey _ a eet AND oe PARKS Development Pipeline Yennora Eastern Land 100% leased _ . . y i | 7 _ oo _ 7 ye aes _ Tran 1 M4 Greystanes Industrial Park 100% leased . Vi ewe os 2 y _ a Dp i. Gy — Wy yy a, Lot 21, Riverside Revised DA lodged a ie oe | ae y Yee : o = To Oe Ae Gee. a 54,000 N
Slide 29: Industrial and Office Parks Lease Expiry Profile
INDUSTRIAL AND OFFICE PARKS Lease Expiry Profile June 2005 June 2006 Vacant FYOG Re 10% FYO8 FY09 10% 1% FY10 16% Average Lease Term — 4.3yrs Average Lease Term — 4.2yrs ted for sale [FYO& — 18 Rodborough Road, Frenchs Fi 5 & 06 Century Estate]. Expiry by GLA pro-rata for Moorebank
Slide 30: Commercial and Industrial Key Focus
Mi Us COMMERCIAL AND INDUSTRIAL Key Focus Pursue rental growth as office markets strengthen Acquisitions in growth markets and UPF partnership opportunities Deliver development projects and extend pipeline Continue innovation for Stockland Service Centre and sustainability initiatives
Slide 31: Development Division
lic DEVELOPMENT DIVISION Denis Hickey FYO6 Performance Market Outlook Strength of Stockland’s Business Model Strategic Focus Moving Forward FYO/ Outlook
Slide 32: Development Division Highlights
Ly) lic DEVELOPMENT DIVISION Highlights Continued demonstration of successfully managing through cycles Record operating profit - up 30%* to $239 million Increased market share in our Residential Communities business Commencement of our Retirement Living business Several industry/peer awards recogni
Slide 33: Highlights - Net Profit Growth
DEVELOPMENT DIVISION Highlights — Net Profit Growth $m 250 4 200 - ii Apartments i) Residential Communities 150 4 100 - Hi lh Wii i FYOO FYO1 FYO2 FY03 FY04 Note: FY00-FY04 is AGAAP, FYO5-FY06 is AIFRS. FY05
Slide 34: Highlights - Results Summary
We Le CC - — / Fe : ee _ a 7 Ls Me i y DEV LOPMENT DIVISI Highlights — Results Summary CC iy - LAAT BE Wi iT i $1,942m 32 $38m 70. 0 <<, Zc 805) $14 4bn : 1S) ($0.1m)
Slide 35: Key Achievements - Residential Communities
DEVELOPMENT DIVISION Key Achievements — Residential Communities ¢ Strong performance from our entire portfolio FY06 Lots Sold Acquisition Date of Lots Sold — FY06 NSW 372 lots ey WA 883 lots QLD 2,090 lots 1-3 years 4-6 years 6 + years
Slide 36: Key Achievements - Apartments
ye DEVELOPMENT DIVISION Key Achievements — Apartments Successful delivery of South Bank Apartments and Saville Hotel (settled in 2HO6) Successful launch of Waterfront (Canberra), Allisee (Gold Coast) & Prince Henry Little Bay (NSW) Strong sales across all projects under construction Koko Allisee - S
Slide 37: Key Achievements - Apartments
DEVELOPMENT DIVISION Key Achievements - Apartments Successfully achieved DA on 4 Projects Received Awards for: « The Abode “Best Apartment Project — Over 10 Storey” HIA Housing Awards NSW 2005 * Saville South Bank - “Project of the Year - Multi Level Development” Brisbane Master Builders Awards 2006
Slide 38: Key Achievements - New Business
DEVELOPMENT DIVISION Key Achievements — New Business Commenced operations in our Retirement Living Business Successfully acquired 8 new projects (2,863 lots) Continued to develop strategic relationships with our builder partners Market leading research and acquisition capabilities
Slide 39: Market Outlook
DEVELOPMENT DIVISION Market Outlook * Whilst rising interest rates pose some challenges, we expect the Key Macro drivers to continue to remain stable in the short to medium term * Strong employment conditions * Bi-partisan political support for immigration levels of 120,000+ p.a. * Land constraints
Slide 40: Market Outlook FY07 - NSW
i y DEVELOPMENT DIVISION Market Outlook FY07 - NSW Building Approvals Home Loan Affordability Parity Private Sector Houses, NSW. Sydney against All Capital Cities ings S a 3 i} Zz ess Houses « Trend sew Houses - Original 40-Vr Average Houses. New house approvals are al a 30 year low Supply remains l
Slide 41: Market Outlook FY07 - VIC
No.of Dwellings. Wisin DEVELOPMENT DIVISION Market Outlook FY07 - VIC Building Approvals Auction Clearance Rates vs. RBA Cash Rate Private Sector Houses, VIC Melbourne (4-mth Rolling average) at wer Houses - Trend “== hiouses ~ Original 40-¥r Average Houses “see Metboume Clearance Rate RBA Cash rate
Slide 42: Market Outlook FY07 - QLD
DEVELOPMENT DIVISION Market Outlook FY07 - QLD Building Approvals Comparison of Historical Troughs - QLD Private Sector Houses, QLD Approvals, Rolling 3-Month Ave, by Number, Private Sector AR Do ull : ny iV oy y' |! ome louses - Original 10:¥r Average Houses 2 2 g O 2 3 a 5 2 Oo wos Aug-O4 ose Gurr
Slide 43: Market Outlook FY07 - WA
DEVELOPMENT DIVISION Market Outlook FY07 - WA Building Approvals Private Capital Expenditure - WA Private Sector Houses, WA Selected Industries, Quarterly, (SBillion) 04 ee Mining = Manufacturing A | ‘= Total Other Selected : =Total All industries ia AAA, u a 8 No. of Owellings. “ert per 4,000. ee H
Slide 44: Key Strengths of Stockland Business Model
Mis DEVELOPMENT DIVISION Key Strengths of Stockland Business Model Scale and diversity of projects No exposure to direct construction activities Market leading status for both Brand and product quality Maintain a strong pipeline that underpins future performance Leads to an ability to successfully m
Slide 45: Managing Through the Cycles
Lo DEVELOPMENT DIVISION Managing Through the Cycles Housing Approval Volatility & SGP Sales Turnover Australia 190,000 | , 4,500 ”), Total Private Building Approvals —-SGP Sales Turnove 180,000 | : + 4,000 170,000 | : ; Ly - 3,500 160,000 | Do oo SJ » 3,000 150,000 + 140,000 | 130,000 | SGP Sales Tu
Slide 46: Well Positioned for FY07
DEVELOPMENT DIVISION Well Positioned for FY07 * Record levels of contracts on hand s458 $400 4 $350 4 $300 4 $250 4 $200 4 a | | iii Apartments ti Residential Communities $50 7 $0 MI nM FY02 FYO03 * Several projects approaching the next phase of the development lifecycle * 10 new projects to be rele
Slide 47: Strategic Focus
EVELOPMENT DIVISION Strategic Focus Continue to grow our share of the Residential Communities market Generate greater profit from our Apartments business as production pipeline is delivered Remain consistent to strategy of Residential Communities / Apartment mix Build momentum in our Retirement Livi
Slide 48: Summary
Melita DEVELOPMENT DIVISION Summary It has been another outstanding year Enter FYO7 in a stronger position than last year, in terms of pipeline, project quality and Brand Feet on the ground in terms of market outlook for the year ahead Clear strategy for delivering sustainable performance
Slide 49: Unlisted Property Funds
UNLISTED PROPERTY FUNDS Robb Macnicol * Highlights « Wholesale Funds * Key Focus
Slide 50: Unlisted Property Funds Highlights
UNLISTED PROPERTY FUNDS Highlights $470m of retail and wholesale assets under management SDOT1 and SDOT2 outperformance to forecast Launched SREEF 1 Continued to strengthen the UPF team with senior resources in: * Funds management « Fund origination
Slide 51: SREEF1
ss oe Mee Lee 2 Li . _ . | |. l _ ee _ LE MEE: yy a Ge Us Z Seon ae ae . - Ly oe . Le . Le 2 2 CF" Oo LL UNLISTED PROPERTY FUNDS SREEF1 7 ~~ _ ~~. # #£#.§ | _ . ee First residential development fund launched February 2006 Target raising $60m Strategic capital partners Closing shortly Stockland THREE
Slide 52: Unlisted Property Funds Key Focus
UNLISTED PROPERTY FUNDS Key Focus Further grow in-house capital distribution capability Acquisition of quality assets in partnership with Stockland balance sheet Target launch of new retail investor product with a shopping centre offer and a follow on SDOT offer Leverage wholesale relationships into
Slide 53: Future Outlook
FUTURE OUT Matthew Quinn Saville Hotel Group Group Strategy Future Outlook Questions
Slide 54: Saville Hotel Group
SAVILLE HOTEL GROUP Saville performing exceptionally well — record profits Strategic review identified Saville as a non core business Strong interest in sale of Saville from Australian and international operators Information Memorandum to be issued in August, expect to close sale by end of 2006
Slide 55: Group Strategy
GROUP STRATEGY One integrated platform across the group * Culture * Systems * Capability Leverage the synergies from diversity to enhance returns To extend our market leading position in Australia And create a world class diversified properly group
Slide 56: Future Outlook
FUTURE OUTLOOK Delivery of development pipeline on track Strong residential presales carried forward into FY07 Low vacancies and solid lease expiry profiles Strong balance sheet Well positioned to deliver consistent growth in returns for our shareholders
Slide 57: Zz ° - < b= z= Lu ” Lu Oo Oo. “ = sand
Zz ° - < b= z= Lu ” Lu Oo Oo. “ = sand — “”) Lu o © © > LL co Oo co) “ a wn > Oo a) <= a
Slide 58: Annexures
ANNEXURES
Slide 59: Operating profit to distribution reconciliation
Cents $m per security Operating Profit 553.7 41.5 Net gain from fair value adjustment of investment properties 640.3 Net unrealised gain on financial instruments 15.6 Net loss on sale of investment properties (3.6) Security holders’ finance costs (144.4) Reported Statutory Net Profit 1,061.6 Net tra
Slide 60: Profit and Loss Effect FY06
Profit and Loss Effect FY06 Interest paid Interest capitalised: Development assets Investment assets Finance costs Capitalised interest expensed via COS Total P&L effect
Slide 61: Year to 30 June 2006
Year to. 30. June 2006
Slide 62: NZ Portfolio Summary - Retail Sales
SHOPPING CENTRE DIVISION NZ Portfolio Summary — Retail Sales (NZ) 211.5 : (NZ) 8,354 (NZ) 300.0 : (NZ) 8,589 N/A Inclusive of GST
Slide 63: At June 2006
es At 30 June 2006
Slide 64: Shopping Centre Portfolio at 30 June 2006
Ra ep Ly Ey, SEE, on _ ey oe LE 0h i y a Ve ping Centre Tee Bue jen eaten anaes iE i 4 EY Sydney [oe EU eye + At 30 June 2006
Slide 65: Shopping Centre Development Pipeline
AG ANS SOMES Ae, =i, ay Gy j y : _ oo . / . | | is Ese ‘g _ . LO . _ _ oo _ . _. L LL . Lo es SHOPPING CENTRE DIVISION Development Pipeline a / : i, ji yy a yo ye Burleigh - . Completed September 2005 Bay Village - . Completed October 2005 Glendale R .! Completed December 2005 Bridge Plaza : . Compl
Slide 66: Lg. | _ Me oo 1.00%
Lg. | _ Me oo 1.00%
Slide 67: Revaluations (cont'd)
_ ee ae i y ae _ ie y _ 7 Wy, SHOPPING CENTRE DIVISION Revaluations (cont'd) 771 Dec-05 12.5 Jun-06 95 71.3 Dec-05 48 69.7 Dec-05 45 69.0 Jun-06 28 68.1 Dec-05 76 62.1 Jun-06 17 48.6 Dec-05 3.4 46.7 Jun-06 40 34.5 Jun-06 6.2 34.0 Dec-05 o7 26.3 Jun-06 0.5 16.9 Dec-05 (0.6) 16.5 Dec-05 0.4 Jun-06 Tie
Slide 68: Commercial Market Commentary
7 COMMERCIAL Market Commentary MO Gp ic a ; y di sea _ — Hee Ueland Sydney CBD . out hice pn — North Sydney - a Bin ao pone soe Suburban Sydney | 10% | oe 10.5% Y 23,500? 51,8002 Brisbane 25% 37,500m? 78,600m? Dh 7 7 Q oC Melbourne Do - oo ie a y 0.07 9.0% 4 155,600m? 121,900m2 16% 43,400m? 298, 200
Slide 69: Industrial and Office Parks Market Commentary
ye INDUSTRIAL AND OFFICE PARKS Market Commentary Macquarie Park aSalle Research, June quarter 2006 etween June 2005 an Moderate 323,000m? Strong 504,600m? Improving 118,400m? Steady 94,300m2 Strong
Slide 70: Commercial and Industrial Revaluations
MDs COMMERCIAL AND INDUSTRIAL Revaluations Cox & Drakeford Buildings 135 King St (50%) 110 Walker Street Northpoint Waterfront Place (60%) Exchange Plaza (50%) 81-95 Waymouth St 72 Christie St 867 George St (Disposal) 7 Macquarie Place (50%) 601 Pacific Highway
Slide 71: Revaluations (cont'd)
COMMERCIAL AND INDUSTRIAL Revaluations (cont'd) 68 Northbourne Avenue 234 Sussex Street Colonial Centre (50%) Piccadilly Centre (Tower & Court) Clemenger Building Exchange Plaza (50%) Riverside Plaza Yennora Distribution Centre §5-63 Bourke Road 509 Boundary Road Sydney Orbital Park
Slide 72: Revaluations (cont'd)
COMMERCIAL AND INDUSTRIAL Revaluations (cont'd) 5 We, - J ; ] 3 Byfield Street : F 750% 115% 8.00% 18 Rodborough Road : ; N/A 60-66 Waterloo Road 750% 9-11 Ferndell Street 719% Prestons 135% Lidcombe 151% Port Adelaide Distribution Park 10.00% Hendra Distribution Centre 8.75% Brooklyn 8.25% 16 Giffn
Slide 73: Residential Communities - Projects Launched in FY06
DEVELOPMENT DIVISION Residential Communities — Projects Launched in FY06 NSW./ ACT Lakewood Macarthur Gardens Wallarah Waterside Highland Reserve Augustine Heights Lake Kawana Mernda Villages Hawkstowe essence Vertu Newhaven South Beach
Slide 74: Residential Communities - Restocking
DEVELOPMENT DIVISION Residential Communities - Restocking Maitland (Gillieston) Ocean Drive, Pacific Paradise Augustine Heights (additional land acquisition) Pallara (additional land acquisition) Rossiters Hill East Lansdale Newhaven (PDA - now wholey owned) South Beach <|<|<|l<|<|<I<|< zZix|zl<|<|<
Slide 75: Apartments Pipeline
DEVELOPMENT DIVISION Apartments Pipeline NSW / ACT Elysium Balgowlah 457 Liverpool Street Prince Henry Little Bay (Staged Project) * 2HO08 2HO7 AHO7 from 1HO7 Norman Reach (Bethany) Eagle Street Pier Allisee (Stage 3) HOT 2HO9 2HO7 Tooronga * Prince Henry excludes Cardita (launched in FY06) 1HO8
Slide 76: Consistent Strategy
Wile DEVELOPMENT DIVISION Consistent Strategy Gross Assets $516m 30 June 2002 Apariments 11% Gross Assets $2,332m 30 June 2006 Apartments 17% Residential Communities 89% Residential Communities 83%
Slide 77: Geographic Diversity
DEVELOPMENT DIVISION Geographic Diversity National Queensland VIC &SA 25% Gold Coast Brisbane 19% 32% Sunshine 23% North QLD NSW&ACT 23% * Excluding Caloundra Downs 26%
Slide 78: Product Diversity
DEVELOPMENT DIVISION Product Diversity Rural Retirement Living C&l Retail Apartments Townhouses . Small Lots Large Conventional
Slide 79: Residential Communities - Lots sold
Wi DEVELOPMENT DIVISION Residential Communities — Lots sold
Slide 80: Disclaimer
DISCLAIMER Corporation/ Responsible Entity Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741 16! Floor 15/ Liverpool Street SYDNEY NSW 2000 Disclaimer of Liability: While every effort is made to provide accurate and complete infermation, Stockland does