Region Group · ASX:RGN
Region — Shopping Centres Australasia Property Group — FY2020 Earnings Presentation
38 slides from Region's earnings presentation, Aug 10, 2020
Slide 1: FY20 Results Presentation
FY20 RESULTS PRESENTATION 10 August 2020 slide Warner, QLD
Slide 2: Agenda
AGENDA 1. OVERVIEW OF FY20 RESULTS 2. FINANCIAL PERFORMANCE 3. OPERATIONAL PERFORMANCE 4. GROWTH OPPORTUNITIES 5. KEY PRIORITIES AND OUTLOOK 6. QUESTIONS 7. APPENDICES slide
Slide 3: Overview of FY20 Results
1 OVERVIEW OF FY20 RESULTS Anthony Mellowes Chief Executive Officer slide 3
Slide 4: FY20 Highlights
FY20 HIGHLIGHTS FINANCIAL CAPITAL ACTIVE PORTFOLIO PERFORMANCE MANAGEMENT MANAGEMENT FFO per unit 1 Gearing 3 Portfolio occupancy 6 Specialty vacancy 6 14.65 cpu, down by 10.3% 25.6%, down by 7.2% 98.2% 5.1% Distribution per unit 1,2 NTA per unit 4 Portfolio weighted average cap rate 7 12.50 cpu, do
Slide 5: Key Achievements
KEY ACHIEVEMENTS Supermarket anchored convenience centres continue to be resilient • Throughout the COVID-19 pandemic, our convenience-based centres have been relatively resilient – Anchor tenants have experienced strong sales growth and turnover rent has increased – We have continued to complete le
Slide 6: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer slide 6
Slide 7: Impact of COVID-19 on Earnings
IMPACT OF COVID-19 ON EARNINGS The largest negative impact has been increased rental arrears Cash rent shortfall Cash rent shortfall ($m) • The difference between invoiced rental income and cash rent collected during FY20 was $26.8m: COVID-19 period shortfall = $22.7m – $4.1m relates to the pre-COVI
Slide 8: Profit & Loss
PROFIT & LOSS For the year ended 30 June 2020 30 June 30 June • Gross property income increased due to acquisitions (full year benefit of the FY19 $m 2020 2019 % Change acquisitions, and Warner Marketplace in December 2019), partially offset by sale of Anchor rental income 128.7 120.0 7.2% Cowes in
Slide 9: Funds From Operations
FUNDS FROM OPERATIONS For the year ended 30 June 2020 $m 30 June 30 June 2020 2019 % Change Net profit after tax (statutory) 85.5 109.6 (22.0)% • Funds From Operations (“FFO”) of $140.8m is down by 0.7% compared to last year, due to COVID-19 impacts offsetting the contribution from acquisitions – No
Slide 10: Balance Sheet
BALANCE SHEET As at 30 June 2020 $m 30 June 2020 30 June 2019 % Change • Value of investment properties decreased from $3,147.0m to $3,138.2m due to: Cash 183.8 4.2 nm – Acquisition of Warner Marketplace for $83.4m ($78.4m acquisition price plus transaction costs of $5.0m) Investment properties 3,13
Slide 11: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 30 June 2020 • Gearing of 25.6% is below the target range of 30% to 40%. Our preference is for gearing 30 June 2020 30 June 2019 to remain below 35% at this time. The reduction of gearing from June 2019 is due to the Facility limit ($’m) 1 1,457.1 1,257.1 equity rai
Slide 12: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer slide 12
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW Weighting towards food, health and retail services (non-discretionary) As at 30 June 2020 Number of Number of GLA Site Area Occupancy Value WALE Weighted average centres specialties (sqm) (sqm) (% GLA) ($m) (yrs) cap rate (%) Neighbourhood 75 1,321 465,497 1,495,916 98.3% 2,334.3
Slide 14: Portfolio Occupancy
PORTFOLIO OCCUPANCY Specialty vacancy is stable despite COVID-19 challenges Portfolio Occupancy (% of GLA) • Strategic focus on remixing toward non-discretionary categories, reducing long term vacancies and maintaining the retention rate on existing tenant renewals 98.6% 98.4% 98.4% 98.2% 98.2% • To
Slide 15: Sales Growth and Turnover Rent
SALES GROWTH AND TURNOVER RENT Sales growth strong despite specialties impacted by COVID-19 • Supermarket portfolio MAT1 sales growth has increased by 5.1% (June 2019: 2.0%) Comparable Store MAT1 Sales Growth by Category (%) – Increased growth during the COVID period, as customers engaged in panic b
Slide 16: Specialty Key Metrics
SPECIALTY KEY METRICS Executing our strategy in a challenging retail market exacerbated by COVID-19 • Sustainable rents and occupancy costs for specialty tenants: – Sales growth declined by (1.1)% due to impact of COVID-19 (June 2019: +1.8%) Specialty Tenant Metrics – Sales productivity increased to
Slide 17: Growth Opportunities
4 GROWTH OPPORTUNITIES Anthony Mellowes Chief Executive Officer slide 17
Slide 18: Portfolio Management
PORTFOLIO MANAGEMENT One acquisition, one completed development and one disposal in the year to 30 June 2020 ACQUISITION DEVELOPMENT Warner Marketplace (Warner, QLD) Shell Cove – Stage 3 (Shellharbour, NSW) • Acquisition completed in Dec 2019 for $78.4m (5.92% implied fully let • Stage 3 refers to a
Slide 19: Convenience Based Centres
CONVENIENCE BASED CENTRES Fragmented ownership provides acquisition opportunities Indicative CONVENIENCE BASED CENTRE LANDSCAPE Ownership of Convenience Based Centres • There are approximately 1,200 Coles and Woolworths anchored (number of centres) neighbourhood and sub regional centres in Australia
Slide 20: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE Over $125m of development opportunities identified at 31 of our centres over the next 5 years1 Estimated Capital Investment (A$m) DEVELOPMENT TYPE CENTRE(S) FY20 FY212 FY22 FY23 FY24 FY25 Shell Cove, Epping North, Belmont, North Orange, Warner Centre expansions Market
Slide 21: Funds Management Business – AUM $104.8m
FUNDS MANAGEMENT BUSINESS – AUM $104.8M Potential to deliver additional earnings growth in the future • First fund “SURF 1” was launched in October 2015, and has successfully sold the five assets, consistent with 5-year term set out in the original PDS – Achieved sales price for the five assets of $
Slide 22: Key Priorities and Outlook
5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes and Mark Fleming Chief Executive Officer and Chief Financial Officer slide 22
Slide 23: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure and growing long term distributions to our unitholders WEIGHTED TO FOCUS ON CONVENIENCE- LONG LEASES TO NON-DISCRETIONARY BASED RETAIL CENTRES QUALITY ANCHOR TENANTS RETAIL SEGMENTS APPROPRIATE GROWTH CAPITAL STRUCTURE OPPORTUN
Slide 24: Future Impact of COVID-19
FUTURE IMPACT OF COVID-19 Given current uncertainty, it is not possible to accurately forecast the impact of COVID- 19 on the FY21 results Monthly Gross Property Income (approximate) ($m) • Services includes several tenants that are Impact Monthly from Gross directly impacted, including travel agent
Slide 25: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY21 • Our primary objective over the next 12 months is to ensure that our centres emerge from the COVID-19 pandemic in a strong position, with sustainable tenants paying sustainable rents • As such, our focus continues to be to: – Improv
Slide 26: Questions
6 QUESTIONS slide 26
Slide 27: Appendices
7 APPENDICES slide 27
Slide 28: Sustainability
SUSTAINABILITY We continue to focus on long-term sustainable performance Our performance in the area of Environment, Social and Governance (ESG) continues to mature and deliver practical solutions across our Our Sustainability Objectives growing portfolio. SCP achievements during this period: Streng
Slide 29: Long Term Leases to Woolworths, Coles and Wesfarmers
LONG TERM LEASES TO WOOLWORTHS, COLES AND WESFARMERS Overall Lease Expiry (% of Gross Rent) • 48.0% of gross rent is generated by anchor tenants (Woolworths 32.0%, Coles 26.8% 11.0%, Wesfarmers 4.0% and Other majors 1.0% on a fully leased basis), with an Anchor WALE of 9.6 years • Overall, a 7.4 yea
Slide 30: Anchor Tenants
ANCHOR TENANTS 30 June 2016 30 June 2017 30 June 2018 30 June 2019 30 June 2020 • All of our centres are currently anchored by either Woolworths Woolworths Limited Limited, Coles Group Limited or Wesfarmers Limited retailers Woolworths 53 54 54 58 59 Big W 8 7 7 9 9 • We are gradually increasing our
Slide 31: Assets Acquired in FY19 – Key Metrics
ASSETS ACQUIRED IN FY19 – KEY METRICS Sales growth, turnover rent, portfolio occupancy, WALE Sales MAT Growth Existing Centres FY19 Acquisitions Total Portfolio Existing Centres: Supermarkets 5.8% 2.0% 5.1% • Continue to perform strongly despite COVID-19 related trading DDS 8.9% 5.0% 7.6% restrictio
Slide 32: Assets Acquired in FY19 – Key Metrics
ASSETS ACQUIRED IN FY19 – KEY METRICS Specialty key metrics Existing Centres: Spec Tenant Metrics Existing Centres FY19 Acquisitions Total Portfolio • Tenant metrics improving vs June 2019 with improvements in sales productivity, occupancy cost and average gross rent psm. Comparable sales MAT growth
Slide 33: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Facility Limit Drawn Debt Financing capacity Maturity / Notes $m (A$m) (A$m) (A$m) Bank Facilities Bank bilateral 50.0 - 50.0 FY22: Apr 2022 Bank bilateral 175.0 - 175.0 FY23: Dec 2022 $75.0m and Jun 2023 $100.0m Bank bilateral 25.0 - 25.0 FY24: Dec 2023 Bank
Slide 34: Acquisitions and Divestments During the Year
ACQUISITIONS AND DIVESTMENTS DURING THE YEAR 30 June 2020 Total Anchor Specialty Total Implied Acquisition % GLA Purchase Centre Type GLA GLA GLA Fully Let Date Committed Price (sqm) (sqm) (sqm) Yield ($m) Acquired Properties Warner Marketplace Neighbourhood Dec 2019 6,164 5,306 11,470 96% 78.4 5.92
Slide 35: Portfolio List (I)
PORTFOLIO LIST (I) Valuation Completion Total GLA Occupancy Number of WALE Valuation June 2020 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Lavington Square NSW Sub-Regional WOW; Big W 2005 20,236 98.0% 57 4.0 7.50% 57.4 Sturt Mall NSW
Slide 36: Portfolio List (II)
PORTFOLIO LIST (II) Valuation Completion Total GLA Occupancy Number of WALE Valuation June 2020 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Annandale Central QLD Neighbourhood Coles 2007 6,655 99.1% 20 5.0 7.50% 26.1 Ayr QLD Neighbour
Slide 37: Portfolio List (III)
PORTFOLIO LIST (III) WALE Valuation Total GLA Occupancy Number of (Years by Valuation June 2020 Property State Property Type Anchor Tenant(s) Completion Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Properties Under Management - SURF 1 All assets have been sold and this vehicle will be wound
Slide 38: Contact Details and Disclaimer
CONTACT DETAILS AND DISCLAIMER For further information please contact: Anthony Mellowes Mark Fleming Chief Executive Officer Chief Financial Officer T: +61 2 8243 4900 T: +61 2 8243 4900 E: anthony.mellowes@scaproperty.com.au E: mark.fleming@scaproperty.com.au Disclaimer This presentation has been p
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