Slide 1: FY17 interim results
For personal use only Chadstone, VIC FY17 interim results December 2016 15 February 2017
Slide 2: Overview
For personal use only Overview Angus McNaughton Emporium Melbourne, VIC
Slide 3: Agenda
For personal use only Agenda Angus McNaughton Richard Jamieson Michael O’Brien Carolyn Viney CEO and Managing Director Chief Financial Officer Chief Investment Officer EGM Development Overview Angus McNaughton Financial results Richard Jamieson Portfolio update Michael O’Brien Development update Car
Slide 4: FY17 interim results summary
FY17 interim results summary Solid result reflecting focus on strategy and strong underlying performance Solid financial result $908.8m 14.3% For personal use only $908.8m statutory net profit Net profit 12 month total return1 Underlying earnings down 0.4%, but up 4.8% on a comparable basis4 Dec-15:
Slide 5: Delivering on portfolio enhancement strategy
Delivering on portfolio enhancement strategy Significant improvement in portfolio quality reflected in key property metrics For personal use only Portfolio enhancement strategy and ~$1.5b asset divestment Improvement in metrics over past year program announced in December 2015 Dec-16 Dec-15 Change D
Slide 6: Retail environment
Retail environment Drivers generally supportive of retail spending growth AUD supporting rising inbound travel growth Consumer sentiment reflecting increased uncertainty For personal use only 1.20 Exchange Rate (AUD:USD) Overseas Travel OUT:IN Ratio 1.5 125 Consumer Sentiment Retail Turnover (MAT) G
Slide 7: Retail trends
Retail trends Structural changes providing opportunities for Vicinity For personal use only Consumer demand for better experiences Consumer demand for lifestyle, services and food driving sales growth in these categories Opportunities exist to enhance consumers’ shopping centre experience Portfolio-
Slide 8: Financial results
For personal use only Financial results Richard Jamieson QueensPlaza, QLD
Slide 9: Financial results
Financial results Underlying earnings up 4.8%1 on a comparable basis For personal use only Dec-16 Dec-15 Change For the six months to ($m) ($m) (%) $908.8m 3.0% Net profit Comparable NPI growth4 Net property income (NPI) 461.7 472.9 (2.4) Driven largely by net valuation Solid income growth and Partn
Slide 10: Balance sheet
Balance sheet Strong balance sheet provides sufficient capacity to fund future growth For personal use only Dec-16 Jun-16 Change As at ($m) ($m) ($m) 5.4% Growth in NTA to $2.73 Cash 79.6 52.8 26.8 Direct properties 15,037.0 14,658.7 378.3 Intangible assets 600.8 602.4 (1.6) $378.3m Increase in dire
Slide 11: Valuations
Valuations Strong portfolio valuation gains1 of $508m or 3.5% For personal use only Strongest growth in Chadstone, Outlet Centre and Neighbourhood centres WACR2 tightened 20 bps over the six months to 5.75% Chadstone’s valuation now at $5.25b (Vicinity share: $2.63b), driven by continued income grow
Slide 12: Capital management
Capital management Limited debt expiries over the next 18 months For personal use only Total facilities of $5.1b Drawn debt of $3.7b comprised of 41% bank debt and 59% debt capital markets Available liquidity of $1.4b Debt maturity profile ($m) Debt sources (%) 1,500 128 1,250 27 30 655 1,000 700 75
Slide 13: Capital management
Capital management Credit rating raised on portfolio quality improvement For personal use only Standard & Poor’s raised4 Vicinity’s credit rating As at Dec-16 Jun-16 to ‘A/stable’ from ‘A-/positive’ Weighted average interest rate1 (%) 4.2 4.0 Strong financial position 2 Gearing (%) 24.0 25.9 Conserv
Slide 14: Portfolio update
For personal use only Portfolio update Michael O’Brien DFO Homebush, NSW
Slide 15: Portfolio summary
Portfolio summary Property metrics remain solid For personal use only Portfolio quality enhanced As at 31-Dec-16 30-Jun-16 Sold interests in eight retail assets and acquired interests in two assets3 Number of retail assets 75 81 Gross lettable area (m)(sqm) 2.6 2.7 Property metrics remain solid Comp
Slide 16: Portfolio sales by store type
Portfolio sales by store type Mini majors sales growth robust in a moderating sales environment For personal use only Actual MAT Dec-16 Specialty stores Comparable1 Growth solid but has moderated to 2.2%, Proportion of MAT growth excluding Dick Smith growth was 2.7% portfolio (%) MAT Dec-16 Jun-16 (
Slide 17: Portfolio specialty store performance
Portfolio specialty store performance General retail and services continue to grow strongly For personal use only Actual MAT Dec-16 Comparable1 MAT growth Apparel % of Men’s Apparel (+8.0%), Fashion Accessories (+6.6%) and Footwear (+4.3%) particularly strong MAT specialty Dec-16 Jun-16 ($m) sales (
Slide 18: Portfolio sales by state
Portfolio sales by state Growth predominantly driven by eastern seaboard states For personal use only Comparable1 specialty store MAT growth by state (%) Victoria Strong employment and housing market growth driving household 5 4.6 4.6 consumption 4 3.2 3 2.2 DFO portfolio continues to perform strong
Slide 19: Leasing
Leasing Leasing spreads have improved and lease expiry profile is well weighted Leasing spread1,2 (%) Leasing spreads have improved For personal use only 667 lease transactions completed2 Six months to 12 months to 31-Dec-16 30-Jun-16 Solid increase in leasing spreads on renewals particularly in Out
Slide 20: DFO portfolio continues to perform strongly
DFO portfolio continues to perform strongly Vicinity is the leading owner and manager of Outlet Centres in Australia For personal use only DFO portfolio now valued at $1.2b, with a 6.35% WACR1 Comparable specialty store MAT growth of 9.5% Comparable specialty store MAT of $9,428/sqm Specialty store
Slide 21: A focus on creating shared value for Vicinity and our stakeholders
A focus on creating shared value for Vicinity and our stakeholders Our sustainability program has generated significant benefits For personal use only Strong sustainability survey results Our commitments Dow Jones Sustainability Index (DJSI) Included in DJSI World, Asia Pacific and Australia leaders
Slide 22: Development update
For personal use only Development update Carolyn Viney The Glen, VIC
Slide 23: Development summary
Development summary Development pipeline provides ongoing portfolio enhancement opportunities Development pipeline of $3.0b (Vicinity share: $1.4b) For personal use only Chadstone key retail stage successfully opened, with overall project completion by June 2017 Mandurah Forum multi-deck car park op
Slide 24: Investing to create long-term value
Investing to create long-term value Extensive $3.0b development pipeline (Vicinity share: $1.4b) provides significant opportunities $m For personal use only Vicinity share Partner share Total Chadstone Retail and Office 333 666 Mandurah Forum 175 350 Current DFO South Wharf car park 46 61 Gateway Pl
Slide 25: Chadstone development key retail stage completed
Chadstone (VIC) development key retail stage completed The evolution of Australia’s best shopping centre continues Key metrics For personal use only Cost (Retail and Office)1 $666m +19,800 sqm June 2017 Initial yield >6% project GLA completion Expected IRR >10% Key retail stage opened in October 201
Slide 26: Chadstone development
Chadstone development Key retail stage and office tower complete For personal use only Food Central Office tower Vicinity Centres | FY17 interim results | 15 February 2017 26
Slide 27: Mandurah Forum redevelopment on track
Mandurah Forum (WA) redevelopment on track Major redevelopment significantly improving product offer to capture growth opportunity Key metrics For personal use only Cost1 $350m +26,000 sqm Mid-2018 project Initial yield >6% GLA completion Expected IRR >10% New 850 space multi-deck car park opened ah
Slide 28: DFO Perth Airport site works commenced
DFO Perth Airport (WA) site works commenced Retail construction to start in mid-2017 Key metrics For personal use only Cost1 $150m 24,000 sqm Mid-2017 target retail Initial yield >10% GLA commencement Expected IRR >15% Joint venture to develop the first DFO in Perth • 120 specialty stores • Over 1,6
Slide 29: The Glen redevelopment approved
The Glen (VIC) redevelopment approved Major redevelopment to capitalise on high income trade area and capture of escape expenditure Key metrics For personal use only Cost1 $490m +18,900 sqm 2Q 2017 target Initial yield >6% GLA commencement Expected IRR >10% $490m1 major redevelopment • Latest format
Slide 30: Galleria planning advanced
Galleria (WA) planning advanced Significant proposed redevelopment to become one of the leading retail destinations in Perth Centre metrics Post Change For personal use only Majors 8 +1 +53,000 sqm GLA Mini majors 18 +11 Specialties ~350 +180 FY18 Car spaces ~6,100 +2,000 target GLA (sqm) ~126,000 +
Slide 31: Summary and FY17 guidance and focus
For personal use only Summary and FY17 guidance and focus Angus McNaughton Emporium Melbourne, VIC
Slide 32: FY17 interim results summary
FY17 interim results summary Another active period for Vicinity For personal use only Comparable underlying earnings growth of 4.8% Enhanced portfolio quality through asset divestment program, strategic acquisitions and progressing development projects Solid portfolio fundamentals reflected in key m
Slide 33: FY17 guidance and focus
FY17 guidance and focus Well positioned to create long-term value and sustainable growth For personal use only Broader economic environment expected to remain supportive of retail spending growth FY17 underlying EPS guidance of 18.6 to 18.8 cents1 unchanged • Reflects 4.5% to 5.6% growth in comparab
Slide 34: Appendices
For personal use only 35 Our strategy 46 Tenants 36 Direct portfolio 47 Non-comparable centres for sales 38 Assets under management 48 Asset summaries Appendices 39 Financial results 56 Organisational chart 44 Capital transactions 57 Key dates 45 Development pipeline 58 Contact details Chadstone, VI
Slide 35: Our Strategy: simple and transparent business model
Our Strategy: simple and transparent business model, with a single sector focus Creating value and sustainable growth by owning, managing and developing quality Australian retail assets For personal use only Invest in quality Australian assets across the retail spectrum 85 centres $24.5b Focus on lo
Slide 36: Direct portfolio
Direct portfolio Well diversified by geographic and retail sub-sector exposure For personal use only Centre type composition Geographic exposure 14 2 City Centre 4 3 Regional 16 17 Regional 2 4 Sub Regional Outlet Centre 8% Major Regional 1 Sub Regional 2 4 Neighbourhood Regional 2 1 Outlet Centre S
Slide 37: Direct portfolio: key statistics by centre type
Direct portfolio Key statistics by centre type For personal use only As at 31 December 2016 Total portfolio Regional1 Sub Regional Neighbourhood Outlet Centre Number of retail assets 75 22 33 15 5 Gross lettable area (000’s)(sqm) 2,572 1,490 758 134 189 Total value2 ($b) 14,922 9,674 3,383 705 1,160
Slide 38: Assets under management
Assets under management ~8,700 tenants across 85 assets under management1 For personal use only Direct portfolio Managed Third party/ Total Wholly-owned1 Co-owned Total co-owned AUM Number of retail assets 48 27 75 10/27 85 Gross lettable area (000’s)(sqm) 1,149 1,423 2,572 250 2,821 Number of tenan
Slide 39: Underlying earnings reconciliation to net profit after tax
Financial results Underlying earnings reconciliation to net profit after tax For personal use only 31-Dec-16 31-Dec-15 For the six months to ($m) ($m) Underlying earnings 376.0 377.6 Property revaluation increments for directly owned properties 546.8 428.3 Non-distributable gain relating to equity a
Slide 40: Reconciliation of actual and comparable underlying earnings growth
Financial results Reconciliation of actual and comparable underlying earnings growth For personal use only $m Comparable growth1 +4.8% 17.2 (31.2) 16.5 377.6 376.0 342.3 1H FY16 Impact of Comparable 1H FY16 Comparable underlying Impact of 1H FY17 underlying earnings portfolio changes underlying earn
Slide 41: Distribution reconciliation to earnings measures
Financial results Distribution reconciliation to earnings measures For personal use only 31-Dec-16 31-Dec-15 For the six months to ($m) ($m) Underlying earnings 376.0 377.6 Less: Rent lost from undertaking developments (15.3) (9.1) Funds From Operations (FFO) 360.7 368.5 Less: Maintenance capex and
Slide 42: Interest rate hedging profile
Financial results Interest rate hedging profile For personal use only Hedging profile1,2 Key hedging statistics 4,000 5.5 3,500 5.0 As at period end 31-Dec-16 30-Jun-16 3,000 4.5 Weighted average hedge rate (%)1 4.3 4.23 2,500 4.0 Notional A$m Proportion of debt hedged (%) 92 91 Hedge rate (%) 2,000
Slide 43: Drawn debt by instrument
Financial results Drawn debt by instrument Limit Drawn Undrawn For personal use only Instrument Maturity ($m) ($m) ($m) US private placement (USPP) 1 Feb-17 177.6 177.6 - Bank debt facilities Jun-18 260.0 260.0 - Bank debt facilities Dec-18 450.0 450.0 - USPP 1 Feb-19 38.0 38.0 - Bank debt facilitie
Slide 44: Capital transactions
Capital transactions Active portfolio enhancement For personal use only Divestments Acquisitions Settlement Sale Passing Settlement Purchase Passing Divestment program date price yield Acquisitions date price3 yield ($m) (%) ($m) (%) Toombul Jun-16 228.1 Bentons Square (50%) Aug-16 38.3 6.5 Clifford
Slide 45: Development pipeline
Development pipeline Vicinity’s share of costs to complete projects under construction is $165m For personal use only Total Vicinity’s share Identified development pipeline ($m) project Project Spent to Cost to cost cost 31-Dec-16 complete Chadstone Retail and Office 666 333 303 30 Mandurah Forum 35
Slide 46: Key portfolio tenants
Tenants Key portfolio tenants For personal use only Top 10 tenants Top 10 tenant groups Number % of Number % of Rank Retailer Retailer type of stores income Rank Retailer of leases income Brands 1 Supermarket 50 4.2 1 126 9.4 Coles, Kmart, Liquorland, Target Big W, BWS, Dan Murphy’s, 2 Supermarket 4
Slide 47: Non-comparable centres for sales
Non-comparable centres for sales Centres excluded from comparable portfolio for sales reporting For personal use only Centre1 Reason Broadmeadows Major tenant changeover Chadstone Development Cranbourne Park Development Currambine Central Development Dianella Plaza Major tenant changeover Elizabeth
Slide 48: Asset summaries: centre statistics
Asset summaries Centre statistics Moving For personal use only annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) New South Wales Chatswood Chase Sydney Major Regional 100 63,732 99.2
Slide 49: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) Moving For personal use only annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Queensland QueensPlaza City Centre 100 39,066 99.0 302.1 8
Slide 50: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) Moving For personal use only annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria Chadstone Shopping Centre2 Super Regional 50 209,
Slide 51: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) Moving For personal use only annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate1 (MAT) sales1 sales1 costs1,2 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria (continued) The Gateway Neighbourhood 100 10
Slide 52: Asset summaries: valuations
Asset summaries Valuations For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-161 31-Dec-16 30-Jun-16 Movement 31-Dec-16 (%) ($m) ($m) (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regiona
Slide 53: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-161 31-Dec-16 30-Jun-16 Movement 31-Dec-16 (%) ($m) ($m) (%) (%) (%) Queensland QueensPlaza City Centre 100 1
Slide 54: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-161 31-Dec-16 30-Jun-16 Movement 31-Dec-16 (%) ($m) ($m) (%) (%) (%) Victoria Chadstone Shopping Centre Super
Slide 55: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-161 31-Dec-16 30-Jun-16 Movement 31-Dec-16 (%) ($m) ($m) (%) (%) (%) Victoria (continued) The Gateway Neighbo
Slide 56: Organisational chart
Organisational chart Structured to support strategy execution For personal use only CEO and Managing Director Angus McNaughton EGM EGM Chief Financial Chief Investment EGM EGM EGM Digital, Business General Counsel Officer Officer Development Leasing Shopping Centres Marketing, Development People & C
Slide 57: Key dates
Key dates Investor calendar For personal use only Key dates Ex-distribution date for December 2016 distribution 29 December 2016 Record date for December 2016 distribution 30 December 2016 FY17 interim results 15 February 2017 December 2016 distribution payment 2 March 2017 Ex-distribution date for
Slide 58: Contact details and disclaimer
Contact details and disclaimer For further information please contact: For personal use only Penny Berger Troy Dahms Head of Investor Relations Senior Investor Relations Manager T +61 2 8229 7760 T +61 2 8229 7763 E penny.berger@vicinity.com.au E troy.dahms@vicinity.com.au Disclaimer This document i