Slide 1: SCA Property Group FY16 Results Presentation
SCA PROPERTY GROUP FY16 Results Presentation 15 August 2016 Greenbank Shopping Centre, Qld
Slide 2: Agenda
AGENDA 1 Overview of FY16 Results 2 Financial Performance 3 Operational Performance 4 Growth Initiatives 5 Key Priorities and Outlook 6 Questions 7 Appendices 2
Slide 3: Overview of FY16 Results
1 OVERVIEW OF FY16 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: FY16 Highlights
FY16 HIGHLIGHTS Financial Capital Active Portfolio Performance Management Management $100.1m, up by 25.0% 34.0% 98.6% 4.3% Funds from operations1 Gearing3, within 30 – 40% target range Portfolio occupancy6 Specialty vacancy6 $92.3m, up by 25.2% $1.92, up by 8.5% 7.13% Adjusted Funds From Operations1
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY • Specialty tenants are performing strongly – Sales growth of over 5% pa continuing Optimising the – 7.5% average rental increase across 69 renewals completed during FY16 Core Business – Occupancy cost down to 9.3% • Anchor tenant sales growth remains subdue
Slide 6: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer
Slide 7: Statutory Profit & Loss
STATUTORY PROFIT & LOSS For the Year Ended 30 June 2016 • This table is consolidated including both the Australian and New Zealand % assets. For a reconciliation to the statutory financial report, please refer $m FY16 FY15 Change to slide 36 Anchor rental income 113.8 106.6 6.8% • Net property incom
Slide 8: Funds From Operations
FUNDS FROM OPERATIONS For the Year Ended 30 June 2016 • Funds From Operations of $100.1m is up by 25.0% on the % $m FY16 FY15 Change same period last year – Whitsunday insurance proceeds received of $5.0m, but Net profit after tax (statutory) 184.7 150.5 22.7% only $0.3m relates to lost income Rever
Slide 9: Balance Sheet
BALANCE SHEET As at 30 June 2016 • New Zealand investment properties reclassified as “assets of 30 June 30 June % $m 2016 2015 Change disposal group”. Value of New Zealand investment properties increased from $208.0m as at 30 June 2015 to $253.1m as at Cash 3.8 3.7 2.7% 30 June 2016, reflecting the
Slide 10: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 30 June 2016 • Gearing of 34.0%1 is within target range of 30% to 40%. New Zealand sale will reduce pro-forma gearing by around 8% to 26%, 30 June 30 June prior to redeployment of proceeds. Post balance date we acquired $m 2016 2015 or agreed to acquire $118.8m of n
Slide 11: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 12: Portfolio Overview
PORTFOLIO OVERVIEW Assets Number of Number of GLA Occupancy Value WALE Weighted average As at 30 June 2016 centres specialties (sqm) (% GLA) (A$m) (yrs) cap rate (%) Freestanding 1 - 9,387 100.0% 43.0 19.3 6.75 Neighbourhood 60 740 332,110 98.5% 1,357.4 10.4 7.08 Sub-regional 7 326 139,718 98.8% 480
Slide 13: Portfolio Occupancy
PORTFOLIO OCCUPANCY Australian portfolio occupancy is 98.6% • Total Australian portfolio occupancy is at 98.6% of GLA Portfolio Occupancy (% of GLA)1 – Specialty vacancy of 4.3% is within the normalised target range of 3% - 5% 98.6% 98.8% 98.7% 98.6% • Sale of NZ decreased portfolio occupancy by 0.1
Slide 14: Sales Growth & Turnover Rent
SALES GROWTH & TURNOVER RENT • Moderating Australian supermarket sales growth, due to Comparable Store MAT sales growth by category (%) – Maturing of our original portfolio – Acquisitions of more mature centres As at As at – Woolworths supermarkets relative under-performance 30 June 2016 30 June 201
Slide 15: Specialty Key Metrics
SPECIALTY KEY METRICS Positive rent reversions are expected to continue • Specialty sales continue to grow strongly, assisted by supermarket Australian specialty tenant key metrics volume growth FY16 FY15 • Average specialty occupancy cost continues to be sustainable at 9.3% Specialty sales MAT grow
Slide 16: Sustainability
SUSTAINABILITY We continue to focus on long-term sustainable performance SCP has established a sustainability strategy (environment, Our sustainability objectives social and governance) that aims to reduce risks, improve operations and enhance stakeholder relationships for the long-term. In FY16, SC
Slide 17: Growth Initiatives
4 GROWTH INITIATIVES Anthony Mellowes Chief Executive Officer
Slide 18: Active Portfolio Management (I)
ACTIVE PORTFOLIO MANAGEMENT (I) Six acquisitions and five divestments in the twelve months to 30 June 2016 Acquisitions Griffin Plaza (Griffith, NSW) Wonthaggi Plaza (Wonthaggi, VIC) • Acquisition completed in Sept 2015 for $23.0m • Acquisition completed in Dec 2015 for $45.4m (7.45% implied cap rat
Slide 19: Active Portfolio Management (II)
ACTIVE PORTFOLIO MANAGEMENT (II) NZ divestments and post balance date acquisitions NZ Disposal Post Balance Date Acquisitions • On 10 June 2016 SCP Since 30 June 2016, SCP has acquired or agreed to acquire four neighbourhood announced it had entered into shopping centres in Australia for $118.8m, re
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 around $150m of development opportunities at 20 of our centres over the next 5 years1 Estimated Capital Investment (A$m) Development Type Centre (s) FY17 FY18 FY19 FY20 FY21 Centre Improvement Burnie, Murray Bridge, The Markets 0.2 2.7 2.6 - - Stage
Slide 22: Funds Management Business
FUNDS MANAGEMENT BUSINESS Potential to deliver additional earnings growth in the future • First fund “SURF 1” successfully completed – Five SCP non-core assets acquired for $60.9m, a 12% premium to book value – Fund commenced on 1 October 2015 – SCP retains a 24.4% equity interest in the fund • We i
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 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) (medium to longer term from Description and Assumptions FY18 onwards) Anchor • Anchor rental income represents about 55% of overall gross property income 0 - 1% Renta
Slide 26: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY17 • Increase specialty rent per sqm by optimising tenancy mix and achieving rental uplifts Optimising the Core on renewals Business • Manage potential sale or closure of Masters store at Mount Gambier • Redeploy NZ sale proceeds of $25
Slide 27: Questions
SGA Property Group
Slide 28: Appendices
SGA Property Group 7 APPENDICES
Slide 29: Long Term Leases to Woolworths and Wesfarmers Group
LONG TERM LEASES TO WOOLWORTHS AND WESFARMERS GROUP • 55% of gross rent generated by Woolworths (46%) and Overall Lease Expiry (% of gross rent) Wesfarmers Group (9%) (on a fully leased basis), with an Anchor 46.3% WALE of 14.0 years • Opportunity to realise positive rent reversions from specialty t
Slide 30: Investment Properties Value
INVESTMENT PROPERTIES VALUE • Acquisitions of $145.3m being Griffin Plaza ($23.0m), Marian Town Centre A$m ($32.0m), Northgate ($14.8m), Wonthaggi ($45.4m), Greenbank 2,500 ($23.0m) and Bushland ($7.1m). $10.0m of stamp duty and other 54.9 2,141.1 253.1 164.4 10.8 15.6 transaction costs. The balance
Slide 31: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Facility Limit Drawn Debt Undrawn $m (A$m) (A$m) (A$m) Maturity Bank Facilities Bank bilateral 190.0 160.9 29.1 Nov – Dec 2018 Bank bilateral 25.0 10.0 15.0 Feb 2019 Bank bilateral1 230.0 185.0 45.0 Dec 2019 Debt Facilities 445.0 355.9 89.1 as at Medium Term N
Slide 32: Retail Transactions
RETAIL TRANSACTIONS On average, over 30 neighbourhood shopping centres are sold in Australia each year • Even during the global financial Neighbourhood shopping centre transactions in Australia crisis there was transaction activity in the neighbourhood Value of centres transacted (A$m) Average Cap R
Slide 33: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Twelve months to 30 June 2016 Implied Anchor Specialty Total Total purchase Acquisition Acquisition GLA GLA GLA % GLA price Cap rate Centre type date (sqm) (sqm) (sqm) committed ($m) (fully-let) Acquired Properties Griffin Plaza, NSW Neighbourhood Sep 2015 3,679 3,554
Slide 34: Divestments During the Period
DIVESTMENTS DURING THE PERIOD Twelve months to 30 June 2016 Anchor Specialty Total Total sale Divestment GLA GLA GLA % GLA price Divestment Centre type date (sqm) (sqm) (sqm) committed (A$m) Cap rate Divested Properties (“SURF 1”) Woolworths Griffith North, NSW Freestanding Oct 2015 2,560 - 2,560 10
Slide 35: NZ Disposal – Balance Sheet Impact
NZ DISPOSAL – BALANCE SHEET IMPACT (A$) As at 30 June 2016 • On 10 June 2016 the Group announced it entered into a sale contract with Stride (NZX: STR) for the sale of SCP’s New Zealand properties to Investore. Settlement of this transaction is scheduled to occur in two Australian NZ Disposal tranch
Slide 36: NZ Disposal – Profit & Loss Impact
NZ DISPOSAL – PROFIT & LOSS IMPACT (A$) For the year ended 30 June 2016 • The accounting standards require separate disclosure as a FY16 NZ Discontinued Statutory “discontinued operation” when a reported segment is to be $m Consolidated Operation Accounts sold. As such, our New Zealand assets and th
Slide 37: Anchor Tenants
ANCHOR TENANTS Increasing exposure to Wesfarmers Limited 30 June 2016 30 June 2016 30 June 2013 30 June 2014 30 June 2015 pre NZ sale post NZ sale • All of our centres are anchored Woolworths Limited by either Woolworths Limited or Woolworths 50 51 53 53 53 Wesfarmers Limited retailers Big W 8 9 9 8
Slide 38: Portfolio List (I)
PORTFOLIO LIST (I) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Jun-16 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Australia Lilydale VIC Sub-Regional WOW; Big W; Aldi Jul-13 22,066 100% 55 13.1 6.75% 90.0 Pakenha
Slide 39: Portfolio List (II)
PORTFOLIO LIST (II) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Jun-16 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Australia Ayr QLD Neighbourhood Coles Jan-00 5,513 98% 9 8.7 7.50% 18.0 Brookwater Village QLD Ne
Slide 40: Portfolio List (III)
PORTFOLIO LIST (III) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Jun-16 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) New Zealand Kelvin Grove NZ Neighbourhood Countdown Jun-12 3,611 100% 5 15.6 n/a n/a Newtown NZ
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