Stockland · ASX:SGP
Stockland — Merrill Lynch Australian REIT Conference 2011
35 slides from Stockland's conference presentation, Nov 8, 2011
Slide 1: Merrill Lynch Australian REIT Conference 2011
Waterside, NSW Merrill Lynch y - Australian REIT Conference 2011 8 - 9 November 2011 www.stockland.com
Slide 2: Vision, strategy and competitive advantages
Vision, strategy and competitive advantages Our Vision • To be a trusted partner with government to deliver vibrant and sustainable communities, retail centres and social hubs • To T deliver d li our customers t ‘‘a b better tt way tto live’ li ’ • To be Australia’s preeminent greenfield community d
Slide 3: How do we measure success?
How do we measure success? Target financial outcomes • 60%-80% 60% 80% off group earnings i ffrom recurring i rents t and dddeferred f d managementt ffees • 20%-40% of group earnings from development profits • High visibility of future development profits by controlling an extensive land bank with e
Slide 4: FY12 guidance and key assumptions
FY12 guidance and key assumptions Earnings outlook • FY12 EPS expected to be around the same as FY11 (without taking into consideration impacts of the share buyback of up to 5% of issued capital announced 19th August 2011) • Target FY12 EPS for management incentive purposes requires 6% growth Key as
Slide 5: Residential
Highlands, Vic R id ti l Residential
Slide 6: Variable market conditions across the country with no over-building
Variable market conditions across the country with no over-building Weak sentiment delaying purchasing commitments Residential Communities net deposits • Good employment and household income growth 2,000 1,757 underpinning purchasing capacity, however weak 159 1,500 1,377 sentiment is delaying major
Slide 7: Residential Communities - Increasing market share in growth corridors
Residential Communities - Increasing market share in growth corridors Increasing market share and market reach Market share in active corridors1 • Leading developer in key corridors with 29% Stockland market share 29% 2% % • Focus on diversification and significant increases in market share across
Slide 8: Housing market - currently weak but it's a cycle, not structural
Housing market - currently weak but it’s a cycle, not structural Population growth well above housing starts1 Large and growing housing undersupply2 ‘000 ‘000 ‘000 ‘000 375 500 30 400 Cumulative Dwelling Underrsupply 450 28 supply 325 350 26 400 nnual Dwelling Unders 300 275 24 350 22 Forecast 250 2
Slide 9: Mortgage debt sustainability, bank mortgage lending is responsible
Mortgage debt sustainability, bank mortgage lending is responsible Sustainable debt - buyers are taking on less debt High risk loans are low and falling 80% Average Loan-To-Value ratio1 40% Share of new loan approvals2 75% 2008 2009 2010 2011 70% 30% 65% 20% 20% 18% 60% 15% 13% 14% 11% 11% 11% 55% 9
Slide 10: Leading the market in development of affordable product
Leading the market in development of affordable product Meeting the affordability challenge Innovative, smaller product meeting customer needs • Affordability still stretched by historic standards; Stockland average lot sizes product innovation the key to meeting the sqm 700 challenge: Reduced ave
Slide 11: Continued focus on faster speed to market and improved return on NFE
Continued focus on faster speed to market and improved return on NFE Large and diverse land bank Land bank comprises mostly active projects1 • Total land bank of 90,200 lots; $2.4b Net Funds Employed (NFE)1 Active projects (live or commencing next 2 yrs) $2.1b $2 1b (87% NFE) • Provides 90% coverage
Slide 12: Retirement Living
Tarneit Skies Retirement Village, Vic R ti Retirement t Li Living i
Slide 13: Delivering on our strategy to increase market share and returns
Delivering on our strategy to increase market share and returns Retirement Living net reservations Strong portfolio growth and diversification • Strong Q1 12 result driven by record monthly Portfolio reservations in September 2012 Established portfolio 7,535 units over Significant increase 59 villag
Slide 14: Attractive industry fundamentals underpins outlook
Attractive industry fundamentals underpins outlook Compelling demand drivers Growth of >65 year old demographic is an opportunity • Expect demand for new developments of circa Population aged 65+ years $35b over the next 20 years (at current prices) ple Millions of peop 2 7% pa 2.7% • Industry will
Slide 15: Retirement Living is expected to deliver net cash returns of ~12%
Retirement Living is expected to deliver net cash returns of ~12% Development • Investment hurdle rate for new village developments 20% • Investment in development is ~35% of total cash funds Wtd Avg employed P Pre-overhead h d unlevered IRR ~17% • Expected average FY12-13 turnover Established ~10%
Slide 16: Commercial Property
Rockhampton, Qld C Commercial i l Property P t
Slide 17: Retail sales showing resilience
Retail sales showing resilience Value and convenience focus Retail sales 12 months to 30 September 2011 • Highly accessible centres offering strong 7 % 5.8% value-for-money y shopping pp g 6 5 • Retail mix skewed towards higher sales growth 4 2.9% 3.3% 3.4% categories like food catering, food retail
Slide 18: Delivering on our strategy of re-weighting to Retail
Delivering on our strategy of re-weighting to Retail Retail Portfolio re-weighting2 • Acquired $241m of quality assets in the key growth FY15 – 17 (target) areas of Hervey Bay and Point Cook FY113 • $2.2b1 development p p pipeline p on p program g and 10% FY10 70% budget 12% 53% 58% 13% Office and I
Slide 19: Long-term fundamentals underpin strategy
Long-term fundamentals underpin strategy Sound retail fundamentals National retail demand outstrips supply1 ‘000 sqm million • Population growth drives retailer demand for new 800 24 p retail space in g growing g trade areas 700 23 600 22 • Current active construction pipeline implies Population 500
Slide 20: Retail development pipeline on program and budget
Retail development pipeline on program and budget $300m projects came on line in FY11, trading ahead Retail development pipeline of expectations Estimated Est. Estimated % cost to fully % total specialty total leased income p • Rockhampton, North Shore Townsville, and cost complete ($m) year one y l
Slide 21: Minimal lease expiry risk in Office and Industrial portfolio
Minimal lease expiry risk in Office and Industrial portfolio • Office NOI down 5.2% due to asset disposals Office and Industrial rent at risk 2 Office Industrial Total • Industrial NOI up 2.7% FY12 FY13 FY12 FY13 FY12 FY13 • Comparable p NOI g growth: $m $m $m $m $m $m Total vacant FY11 - Office +
Slide 22: Financial Management
Newhaven, WA Fi Financial i l Management M t www.stockland.com
Slide 23: Capital management initiatives
Capital management initiatives 5% on market share buyback Balance sheet metrics at 30 June 2011 • Security price has fallen to a level that does not S&P rating A- / Stable reflect the underlying value of our business nor Drawn debt1 $3.0b Stockland’s strong capital position Cash on deposit $0.2b • B
Slide 24: Appendix
Appendix www.stockland.com
Slide 25: Upgraded earnings growth delivered despite weaker market conditions
Upgraded earnings growth delivered despite weaker market conditions FY11 FY10 St t t Statutory P Profit fit $754 6m $754.6m 57.7% 57 7% $478 4m $478.4m Underlying Profit1 $752.4m 8.7% $692.3m Underlying Earnings per Security1 31.6 cents 8.6% 29.1 cents Distribution per Security 23.7 cents 8.
Slide 26: FY11 - key achievements
FY11 - key achievements Significant progress in wind down of Apartments business - circa $350m net cash inflow in FY11 for reinvestment in Communities Residential 27,000 future Communities lots secured on capital efficient terms, total 90,000 lots now owned or controlled Market share growth in
Slide 27: FY11 Results and key metrics - Residential Communities
FY11 Results and key metrics - Residential Communities FY11 settlement volumes slightly down, Strong profit growth post global financial crisis but price per sqm significantly up $m # contracts $ price per sqm 350 7,000 500 302 307 447 278 +12% 405 403 300 274 6,000 350 362 400 250 274 222 5,000 250
Slide 28: FY11 Results and key metrics - Retirement Living
FY11 Results and key metrics - Retirement Living Retirement Living is now making a Aevum acquisition was business transformational meaningful profit contribution No of Units Established Units $m % 8000 60 8 7000 7 50 47% +47% 6000 53 6 40 5000 5 4000 7,535 30 36 4 3000 32 3 20 2000 3,670 3,840 2 10
Slide 29: FY11 Results and key metrics - Commercial Property
FY11 Results and key metrics - Commercial Property Strong growth in Retail NOI, Strong and consistent Retail comparable growth; Office NOI down due to asset sales Office & Industrial improving but more volatile $m Net Operating Income (NOI) % Comparable NOI growth 350 Retail 10 $286m Industrial 300
Slide 30: FY11 Results and key metrics - financial management
FY11 Results and key metrics - financial management Maintaining conservative gearing in Low average interest cost through active response to global credit concerns1 debt management and hedging ICR and net debt D/TTA 6 35% 14% 29% 5.3x 5 30% 12% 22% 25% 10% 4 20% 8% 3 7.0% 15% 6% 5.7%2 2 3.3 3.8 2.8
Slide 31: Consumer confidence and household savings
Consumer confidence and household savings Consumer confidence is weak - households are saving more • Households were naturally cautious post global 140 16% financial crisis 120 12% 100 Consumer confidence neutral • This caution has been amplified by global market 80 8% 10 year average savings rate u
Slide 32: Housing market - currently weak but it's a cycle, not structural
Housing market - currently weak but it’s a cycle, not structural The short-term issue - weak market conditions Market conditions Monthly detached house approvals • The housing market has softened during 2011 4,000 are well below trend for Qld and WA • In our view,, it is a cycle y not a structural c
Slide 33: Impact of online retailing on traditional bricks and mortar
Impact of online retailing on traditional bricks and mortar Online is a threat to traditional shopping but building less new space provides a natural ‘shock absorber’ % % of total retail sales made online1 sqm Australian retail floor space per capita2 Impact of 8 population growth UK 7.6% 2.5 withou
Slide 34: Carbon price - we are well prepared; minimal initial impact
Carbon price - we are well prepared; minimal initial impact Carbon emissions performance • We are not liable to purchase carbon credits Office GHG Intensity2 Retail GHG Intensity2 • Our current GHG emissions total 166,000 tonnes1, FY11 89.9 FY06-11 FY11 74.6 FY06-11 mainly from electricity usage in
Slide 35: Stockland Corporation Limited
Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741 25th Floor 133 Castlereagh Street SYDNEY NSW 2000 DISCLAIMER OF LIABILITY While every effort is made to provide accurate and p complete information,, Stockland does not warrant or represent that the info
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