Slide 1: SCA Property Group FY17 Results Presentation
SCA PROPERTY GROUP FY17 Results Presentation 7 August 2017 Worongary, QLD
Slide 2: Agenda
AGENDA 1 Overview of FY17 Results 2 Financial Performance 3 Operational Performance 4 Growth Initiatives 5 Key Priorities and Outlook 6 Questions 7 Appendices 2
Slide 3: Overview of FY17 Results
1 OVERVIEW OF FY17 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: FY17 Highlights
FY17 HIGHLIGHTS Financial Capital Active Portfolio Performance Management Management $108.4m, up by 8.3% 31.8% 98.4% 4.8% Funds from operations (“FFO”)1 Gearing3, lower end of 30 – 40% target range Portfolio occupancy6 Specialty vacancy6 14.7 cpu, up by 6.9% $2.20, up by 14.6% 6.47% FFO per unit 1 N
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY • Supermarket sales showing improving trends, particularly Woolworths – Moving annual turnover growth of 2.2% with volumes continuing to grow faster than sales Optimising the • Specialty tenants continue to perform strongly Core Business – Sales growth of 3.
Slide 6: Strong Returns to Unitholders
STRONG RETURNS TO UNITHOLDERS Consistent DPU and EPU Growth 6.0% pa 5.8% pa 14.70 13.75 13.10 12.40 12.80 12.20 11.40 11.00 SCP has delivered consistent and growing earnings and distributions, with a compound annual growth rate of around 6% pa FY14 FY15 FY16 FY17 Distribution Per Unit (DPU) FFO Per
Slide 7: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer
Slide 8: Profit & Loss
PROFIT & LOSS For the Year Ended 30 June 2017 • This table is consolidated including both the Australian and New Zealand $m FY17 FY16 % Change assets. For a reconciliation to the statutory financial report, please refer Anchor rental income 106.3 113.8 (6.6%) to slide 30 Specialty rental income 85.4
Slide 9: Funds From Operations
FUNDS FROM OPERATIONS For the Year Ended 30 June 2017 • Funds From Operations of $108.4m is up by 8.3% on the same period $m FY17 FY16 % Change Net profit after tax (statutory) 319.6 184.7 73.0% last year – Non-cash and one-off items have been excluded Adjustment for non cash items – Whitsunday insu
Slide 10: Balance Sheet
BALANCE SHEET As at 30 June 2017 • Value of Australian investment properties increased from $1,888.0m to $m 30 June 2017 30 June 2016 % Change $2,364.6m, primarily due to acquisitions and positive revaluations (see Cash 3.6 3.8 (5.3%) slide 34 for further detail) Investment properties 2,364.6 1,888.
Slide 11: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 30 June 2017 • Gearing of 31.8%3 is within target range of 30% to 40%. 30 June 2017 30 June 2016 Our preference is for gearing to remain below 35% at this $m point in the cycle Facility limit1 1,054.8 829.8 Drawn debt (net of cash)2 790.2 736.6 • Look through gearin
Slide 12: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW Assets Number of Number of GLA Occupancy Value WALE Weighted average As at 30 June 2017 centres specialties (sqm) (% GLA) (A$m) (yrs) cap rate (%) Freestanding - - - - - - - Neighbourhood 68 1,007 393,893 98.3% 1,814.3 9.3 6.50 Sub-regional 6 302 131,900 98.7% 537.5 11.3 6.38 1 De
Slide 14: Portfolio Occupancy
PORTFOLIO OCCUPANCY Australian portfolio occupancy is 98.4% • Total Australian portfolio occupancy is 98.4% of GLA Portfolio Occupancy (% of GLA) – Specialty vacancy of 4.8% is slightly higher due to 98.8% 98.6% 98.4% acquisitions, but still within the normalised target range of 3-5% • Acquisitions
Slide 15: Sales Growth & Turnover Rent
SALES GROWTH & TURNOVER RENT • Supermarket MAT1 sales growth has improved due to our relative weighting to Woolworths and its improved trading performance Comparable Store MAT1 Sales Growth by Category (%) – Sales improvement has been driven by increases in transactions and volumes, offset by price
Slide 16: Specialty Key Metrics
SPECIALTY KEY METRICS Positive rent reversions are expected to continue • Specialty sales continue to grow strongly, assisted by supermarket volume growth Australian Specialty Tenant Metrics • Average specialty occupancy cost is sustainable and average 30 June 2017 30 June 2016 specialty rent / sqm
Slide 17: Growth Initiatives
4 GROWTH INITIATIVES Anthony Mellowes Chief Executive Officer
Slide 18: Active Portfolio Management (I)
ACTIVE PORTFOLIO MANAGEMENT (I) Eight acquisitions and sixteen divestments in the twelve months to 30 June 2017 Acquisitions Muswellbrook Fair Shopping Centre Lillybrook Shopping Village (Muswellbrook, NSW) (Kallangur, QLD) • Acquisition completed in July 2016 for $29.3m • Acquisition completed in O
Slide 19: Active Portfolio Management (II)
ACTIVE PORTFOLIO MANAGEMENT (II) Eight acquisitions and sixteen divestments in the twelve months to 30 June 2017 Acquisitions (continued) Mudgeeraba Market & Franklin Square Charter Hall Retail (‘CQR’) – 4.9% Interest (Mudgeeraba, QLD) • Acquired on-market from September 2016 to November 2016 for $8
Slide 20: Neighbourhood Centres in Australia
NEIGHBOURHOOD CENTRES IN AUSTRALIA Fragmented ownership provides acquisition opportunities Neighbourhood Centre Landscape in Australia Ownership of Neighbourhood Centres in Australia (Number of centres) • There are over 850 Coles and Woolworths anchored Indicative neighbourhood centres in Australia
Slide 21: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE We have identified over $130m of development opportunities at 22 of our centres over the next 5 years1 Estimated Capital Investment (A$m) FY17 Development Type Centre(s) Actual FY18 FY19 FY20 FY21 FY22 Centre Improvement Burnie, Clemton Park, Murray Bridge, The Market
Slide 22: Funds Management Business
FUNDS MANAGEMENT BUSINESS Potential to deliver additional earnings growth in the future • First fund “SURF 1” progressing well – Investment property valuation increased from $60.9m in October 2015 to $67.3m as at 30 June 2017 with NTA per Woolworths & Big W, Katoomba unit increasing from $0.95 to $1
Slide 23: Key Priorities and Outlook
5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes Chief Executive Officer Mark Fleming Chief Financial Officer
Slide 24: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure distributions to our unitholders Weighted to Focus on convenience- Long leases to non-discretionary based retail centres quality anchor tenants retail segments Appropriate Growth capital structure opportunities 24
Slide 25: Potential Earnings Growth Trends
POTENTIAL EARNINGS GROWTH TRENDS Continued solid earnings growth expected over time Indicative Contribution to FFO Growth Rate (% pa) Description and Assumptions (medium to longer term) Anchor • Anchor rental income represents about 52% of overall gross property income 0 - 1% Rental • Once turnover
Slide 26: FFO Per Unit – Key Movements
FFO PER UNIT – KEY MOVEMENTS FY16 to FY18 guidance (cpu) FY17 Comparable NOI Minimal increase Lower weighted forecast to grow at in corporate Lower tax average cost of 2.6% in FY18 (would costs and tax on Increase in weighted FY16 expense due to debt due to be 3.0% excluding funds average cost of de
Slide 27: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY18 • Increase specialty rent per sqm by optimising tenancy mix and achieving rental uplifts Optimising the Core on renewals Business • Focus on managing expenses both at centres and corporate while maintaining appropriate standards • Co
Slide 28: Questions
SGA Property Group 6 QUESTIONS
Slide 29: Appendices
SGA Property Group 7 APPENDICES
Slide 30: Profit & Loss Reconciliation (A$)
PROFIT & LOSS RECONCILIATION (A$) For the year ended 30 June 2017 • The NZ portfolio was sold in two tranches during the first half of $m FY17 NZ Discontinued FY17 Statutory Consolidated Operation Accounts FY17 Anchor rental income 106.3 2.9 • The accounting standards require separate disclosure as
Slide 31: Sustainability
SUSTAINABILITY We continue to focus on long-term sustainable performance Our Sustainability Objectives SCP has established a sustainability strategy (environment, social and governance) that aims to reduce risks, improve operations and enhance stakeholder relationships for the Strengthen the relatio
Slide 32: Long Term Leases to Woolworths and Wesfarmers Group
LONG TERM LEASES TO WOOLWORTHS AND WESFARMERS GROUP • 52% of gross rent generated by Woolworths (39%) Overall Lease Expiry (% of gross rent) and Wesfarmers Group (13%) (on a fully leased basis), with an Anchor WALE of 12.8 years 43.1% • Opportunity to realise positive rent reversions from specialty
Slide 33: Anchor Tenants
ANCHOR TENANTS 30 June 2013 30 June 2014 30 June 2015 30 June 2016 30 June 2017 Woolworths Limited • All of our centres are currently anchored by either Woolworths Woolworths 50 51 53 53 54 Limited or Wesfarmers Limited Big W 8 9 9 8 7 retailers Dan Murphy's 6 5 5 3 2 Masters 1 1 1 1 0 • We are grad
Slide 34: Investment Properties Value
INVESTMENT PROPERTIES VALUE • Acquisitions of $290.9m being A$m Muswellbrook Fair ($29.3m), Jimboomba Junction ($27.5m), Belmont Central 2,500 211.6 6.2 2,364.6 ($28.5m), Lillybrook Shopping Village 290.9 22.8 ($25.5m), Annandale Central ($33.5m), Clemton Park Village ($48.5m), 2,000 1,888.0 (54.9)
Slide 35: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Facility Limit Drawn Debt Undrawn Maturity $m (A$m) (A$m) (A$m) Bank Facilities Bank bilateral 190.0 - 190.0 Nov - Dec 2018 Bank bilateral 25.0 - 25.0 Feb 2019 Bank bilateral1 230.0 184.0 46.0 Dec 2019 445.0 184.0 261.0 Debt Facilities as at 4 Medium Term Note
Slide 36: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Twelve months to 30 June 2017 Implied Anchor Specialty Total Total Purchase Acquisition Acquisition GLA GLA GLA % GLA Price Cap Rate Centre Type Date (sqm) (sqm) (sqm) Committed ($m) (Fully-Let) Acquired Properties Muswellbrook Fair, NSW Neighbourhood Jul 2016 5,103 3,
Slide 37: Divestments During the Period
DIVESTMENTS DURING THE PERIOD Twelve months to 30 June 2017 Anchor Specialty Total Total Sale Divestment GLA GLA GLA % GLA Price Divestment Centre Type Date (sqm) (sqm) (sqm) Committed (NZ$m) Cap Rate Divested Properties (NZ) Neighbourhood / Tranche 1 Jul 2016 22,927 6,397 29,324 98.6% 128.2 Freesta
Slide 38: Portfolio List (I)
PORTFOLIO LIST (I) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Jun-17 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Australia Lilydale VIC Sub-Regional WOW; Big W, Aldi Jul-13 22,066 100% 58 12.2 6.00% 109.0 Pakenh
Slide 39: Portfolio List (II)
PORTFOLIO LIST (II) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Jun-17 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Australia Annandale Central QLD Neighbourhood Coles Oct-07 6,685 93% 20 7.6 7.25% 33.5 Ayr QLD Ne
Slide 40: Portfolio List (III)
PORTFOLIO LIST (III) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Jun-17 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Properties Under Management – “SURF 1” Burwood DM NSW Freestanding Dan Murphy's Nov-09 1,400 100
Slide 41: Management Team
MANAGEMENT TEAM Anthony Mellowes, Chief Executive Officer Mark Fleming, Chief Financial Officer • Mr Mellowes is an experienced property executive. Prior to joining SCA • Mr Fleming worked for 8 years at Woolworths Limited from 2003 to 2011, Property Group as an Executive Director, Mr Mellowes was e
Slide 42: SCA Property Group
SCA Property Group Level 5, 50 Pitt Street Sydney NSW 2000 Tel: (02) 8243 4900 Fax: (02) 8243 4999 www.scaproperty.com.au Disclaimer This presentation has been prepared by Shopping Centres Australasia Property Group RE Limited (ABN 47 158 809 851) (SCPRE) as responsible entity of Shopping Centres Au