Stockland · ASX:SGP
Stockland — H1 2023 Earnings Presentation
40 slides from Stockland's earnings presentation, Feb 21, 2023
Slide 1: 1H23 Annexure
1H23 Annexure 21 February 2023
Slide 2: Contents
Contents About Stockland Financial Results and Capital Management Commercial Property Communities 2 1H23 Results Figures are rounded to nearest million, unless otherwise stated. Percentages are calculated based on the figures rounded to one decimal place. Percentage changes are calculated on the pri
Slide 3: Stockland quick facts
Stockland quick facts Trust net funds employed: $10.7bn1 Corporation net funds employed: $3.1bn2 Town Centres Logistics Workplace Masterplanned Communities Land Lease Communities 39% 25% 15% 18% 3% Portfolio weighting3 Portfolio weighting3 Portfolio weighting3 Portfolio weighting3 Portfolio weightin
Slide 4: Stockland is one of Australia's largest diversified property groups
Stockland is one of Australia's largest diversified property groups Book value by state1 WA - $0.9bn QLD - $3.1bn Commercial Property Communities Commercial Property Communities 32 11 73 12 - 5 5 18 20% 1 5% - VIC - $2.9bn 56% NSW4 - $8.7bn Commercial Property Communities Commercial Property Communi
Slide 5: Good progress towards strategic targets
Good progress Sector capital allocation1 Target 1H23 towards strategic Logistics and Workplace Residential (for sale and ownership) 30-50% 20-35% 40% 21% targets Town Centres Alternate2 20-30% 0-5% 39% <1% Executing our strategy: Dynamically reshaping the portfolio through strategic transactions a
Slide 6: Financial results and capital management
Financial results and capital management Annexure Stockland Head Office, Sydney CBD, NSW
Slide 7: Profit summary
Profit summary $m 1H23 1H22 Change Segment EBIT (before interest in COGS): Communities EBIT 141 155 (8.6)% Commercial Property EBIT 318 273 16.5% Other EBIT - 16 (100.0)% Consolidated segment EBIT (before interest in COGS) 459 444 3.5% Amortisation of lease fees 6 7 (12.5)% Unallocated corporate ove
Slide 8: Statutory profit to FFO and AFFO reconciliation
Statutory profit to FFO and AFFO reconciliation The table below shows the reconciliation of statutory profit to FFO and AFFO with reference to the definitions outlined in the Property Council of Australia (PCA) white paper “Voluntary best practice guidelines for disclosing FFO and AFFO” $m 1H23 1H22
Slide 9: Net interest gap
Net interest gap $m 1H23 1H22 Interest Deferred Total Interest Deferred Total interest1,2 interest1,2 Interest income (5) - (5) (2) - (2) Interest expense 80 20 100 78 16 94 Less: capitalised interest - Commercial Property development projects (9) - (9) (7) - (7) - Masterplanned Communities (33) (18
Slide 10: Debt and hedging profile
Debt and hedging profile Cost of debt for 1H23 Drawn debt of $3.8bn4 Committed facilities of $5.1bn4 $225m, 6% Debt1 Total debt2 Interest rate $251m, 6% $1,706m, 34% $1,500m, 29% Hedged debt $2,301m 59% 1.8% Floating debt $1,623m 41% 1.1% $1,706m, 45% Total debt $3,924m 2.9% Margin 0.9% $251m, 5% Fe
Slide 11: Stockland Corporation income tax reconciliation
Stockland Corporation income tax reconciliation 1H23 1H22 Net profit before tax 330 869 Less: Trust profit and Intergroup eliminations (231) (835) Corporation profit/(loss) before tax B 99 34 Prima facie tax expense @ 30% (30) (10) Tax effect of permanent differences: Permanent component of capital
Slide 12: Commercial Property
Commercial Property Annexure
Slide 13: Commercial Property funds from operations
Commercial Property Funds from operations Development Management Net overhead Town Centres Logistics Workplace Total Income Income costs $m 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 1H23 1H22 Operating EBIT 146 125 60 49 40 47 27 28 16 8 (29) (29) 260 228 Adjust for: Amortisation o
Slide 14: Logistics performance
Logistics Performance Occupancy and lease expiry by income1 FFO movements between 1H22 and 1H23 $8m Assets by location 1H23 1H22 Occupancy 99.9% 99.9% 3 5 VIC WALE 3.4 yrs 3.6 yrs 25% $3.2bn2 Lease expiry profile1 FY28+ 25.4% NSW 67 FY27 59% 17.2% 59 QLD FY26 15.2% 16% FY25 15.7% FY24 22.4% FY23 4.0
Slide 15: Logistics development
Logistics development Pipeline – Delivering Logistics developments Completed during 1H23 Active development1 Planning underway1 Future wave1 $0.1bn $1.3bn2 $0.9bn2 $4.2bn2 NSW Ingleburn Kemps Creek 3 Yennora Distribution DA approvals received Stage 3 Centre Stages 1-3 • Melbourne Business Park Lot 4
Slide 16: Workplace performance
Workplace Performance Occupancy and lease expiry by income1 FFO movements between 1H22 and 1H23 $(2)m Assets by location 1H23 1H22 (2) Occupancy2 NSW 92% 92.7% 90.6% WALE2 4.4 yrs 4.8 yrs Lease expiry profile1,2 56 54 ~$2.1bn3 FY28+ 29.2% FY27 14.3% FY26 9.0% WA 3% FY25 17.7% FY24 20.1% VIC 5% FY23
Slide 17: Workplace development
Workplace development Pipeline – adding value and maintaining optionality Completed during 1H23 Active development Planning underway Future wave - $0.5bn1 $4.0bn1 $1.3bn1 NSW M_Park M_Park M_Park Stage 12,3 Stage 12,3 Stage 2 (Building A & B) (Building C & D) Johnson & Johnson Medical Pty Ltd3,4 Aff
Slide 18: Town Centres performance
Town Centres Performance Diversified rental income, non-discretionary focus1 To 31 December 2022 Total portfolio3 Comparable centres4 Low reliance on department store income and leisure MAT 1H23 Department stores 1.1% Retail sales MAT MAT growth on growth on MAT $m Leisure 2.7% by category growth5 g
Slide 19: Town Centres: spending improved during 1H23
Town Centres Performance – Spending improved during 1H23 in line with COVID-19 recovery cycles Retail trade1 Consumer sentiment impacted by rising cost of living and rate increases2 YoY Growth % Rolling 12 Months (MAT) Growth % 130 25% 120 20% 110 15% 100 10% 90 5% 80 0% 70 (5)% 2007 2009 2011 2013
Slide 20: Town Centres development
Town Centres development Pipeline – Strengthening and growing our essential-based assets Completed during 1H23 Active development Planning underway Future wave - $0.0bn1 $0.4bn1 $0.3bn1 NSW The Gables DA approvals received • Glendale, NSW Glendale • Wendouree, VIC • Rockhampton, QLD QLD Aura Provide
Slide 21: Acquisitions and disposals
Commercial Property Acquisitions and disposals Property disposed1 Asset class Settlement date Disposal value2 $m Bull Creek, WA Retail Aug-22 78 Riverton, WA3 Retail - 494 Gladstone, QLD3 Retail - 139 Property acquired1 Asset class Settlement date Acquisition value2 $m 92 Gow Street, Padstow, NSW Lo
Slide 22: Logistics and Workplace development work-in-progress
Commercial Property Logistics and Workplace development work-in-progress Est. total Est. Est. fully Asset Development Est. end value Gross lettable Cost spent to Est. cost to At Stockland’s ownership interest Class type incremental ($m) area (sqm) date ($m) complete ($m) completion leased year Est.
Slide 23: Top tenants by income
Commercial Property Top 10 tenants by income Town Centres Logistics Workplace Rank Tenant Portfolio Tenant Portfolio Tenant Portfolio 1 Woolworths 8.0% Toll Transport Pty Ltd 5.7% Optus Administration Pty Ltd 20.6% 2 Wesfarmers 4.8% Qube Logistics (SB) Pty Ltd 5.3% Stockland Development Pty Ltd 10.8
Slide 24: Weighted average cap rates
Commercial Property Weighted average cap rates Town Centres 9% 8% 7% 6% 5% 6.9% 6.7% 6.4% 6.0% 5.8% 5.7% 6.0% 6.1% 6.1% 5.9% 5.9% 4% 3% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1H23 Logistics 9% 8% 7% 6% 8.7% 8.5% 8.2% 5% 7.5% 7.2% 6.7% 6.1% 5.5% 4% 4.6% 4.4% 4.1% 3% FY13 FY14 FY15 FY16 FY1
Slide 25: Communities
Communities Annexure
Slide 26: Development operating margins
Development operating margins Masterplanned Communities (MPC) Development revenue 1H23 571 1H22 663 Change (13.9)% MPC and LLC margins Cost of goods sold and direct project costs1 (406) (461) (12.1)% Development EBIT 166 202 (17.9)% Development EBIT margin % 29.0% 30.4% (140)bps Impacted by lower vo
Slide 27: 1H23 development operating margin reconciliation
Masterplanned Communities 1H23 development operating margin reconciliation Masterplanned Communities (MPC) Old Methodology New Methodology Reclassification of income relating to managed joint ventures from MPC Development revenue 579 571 development revenue to Communities Management Income Cost of g
Slide 28: Masterplanned Communities performance
Masterplanned Communities Performance – Development operating margin impacted by mix shift and overheads reflecting 2H23 settlement skew Key metrics 1H23 1H22 Change Development operating profit margin % Total lots settled1 1,872 2,329 (19.6)% 6.1% (7.5%) Total development revenue $571m $663m (13.9)
Slide 29: Lots settled by location and ownership
Masterplanned Communities Lots settled by location and ownership 3,418 3,635 3,161 3,273 3,101 760 2,460 1,008 597 244 750 2,329 2,158 NSW/ACT 954 1,145 1,872 451 842 316 353 887 QLD 1,182 157 511 VIC 897 641 1,221 696 1,410 1,004 1,423 WA 1,165 764 797 803 781 682 632 348 431 361 312 337 307 238 1H
Slide 30: Development pipeline – major projects
Masterplanned Communities Development Pipeline – major projects Approximate Approximate Total State Project State percentage1 settlements per remaining FY23 FY24 FY25 FY26 FY27 FY28 project lots annum2 project lots Aura3 19,995 760 15,407 Providence 7,062 309 6,735 North Shore 5,555 110 3,201 QLD Ne
Slide 31: Composition of Masterplanned Communities landbank
Masterplanned Communities Composition of Masterplanned Communities landbank Net funds employed: $2.3bn Book value: $3.7bn NFE by product NFE by pipeline NFE by state Book value by state 4% Active 22% 26% Apartments NSW NSW 22% Active within 2 yrs 23% 83% QLD QLD 83% Residential communities Active be
Slide 32: Sales price – average price per lot across states
Masterplanned Communities Sales Price1 – average price per lot across states 1H23 settlements 1H22 settlements State No. lots2 Av. size per lot sqm Av. price per lot $k $/sqm No. lots Av. size per lot sqm Av. price per lot $k $/sqm NSW 123 359 587 1,633 287 336 456 1,355 QLD 656 392 341 870 456 426
Slide 33: Providing affordable product within our catchments
Masterplanned Communities Providing affordable product within our catchments Stockland pricing relative to local median house and unit price ($) 1,334k Stockland H&L entry price1 Median house price3 1,080k 1,020k 799k 710k 704k 746k 666k 677k 611k 565k 493k 500k 536k 508k 413k The Gables Aura Grandv
Slide 34: Net deposits and enquiries improving during 2Q23
Masterplanned Communities Net deposits and enquiries improving during 2Q23 Net deposits by buyer 80.0% 77.2% 87.3% 91.0% 86.0% 79.9% 76.9% 74.8% 73.4% 72.4% 71.8% 90.0% 65.7% Retail investors 2,036 60.7% 61.7% 1,799 1,891 1,974 1,947 70.0% 1,868 292 1,562 1,545 50.0% Upgraders / 1,350 1,375 167 380
Slide 35: Workout contribution and impairment provision balance
Masterplanned Communities Workout contribution and impairment provision balance Workout contribution to Masterplanned Communities Impairment provision Masterplanned Communities Core Workout1 Total Final settlement balance ($m) Lots settled 1,870 2 1,872 Projects to be developed 41 ~7 yrs Development
Slide 36: Land Lease Communities development pipeline
Land Lease Communities Development pipeline Incremental acquisitions and pipeline launches driving ramp up in settlement volumes Remaining Community home sites FY23 FY24 FY25 FY26 FY27+ In development1 Stockland Halcyon Greens, QLD 70 Stockland Halcyon Rise, QLD 200 Stockland Halcyon Promenade, QLD
Slide 37: National house and land prices
National house and land prices Pricing remains elevated for land whilst established house prices moderate in the Eastern States Land price per sqm1 Capital city house prices – Rolling annual change2 Metro Sydney Melbourne SEQ Perth 45% Sydney Melbourne Brisbane Perth 2,000 35% 1,500 25% 1,000 15% 5%
Slide 38: Vacant land sales
Vacant land sales NSW vacant land quarterly sales VIC vacant land quarterly sales 4,500 10,000 4,000 9,000 3,500 8,000 7,000 3,000 6,000 2,500 5,000 2,000 4,000 1,500 3,000 1,000 2,000 500 1,000 0 0 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-10 Dec
Slide 39: Residential vacancy rates
Residential vacancy rates Remains low vs historical levels 6% 5% 4% 3% 2% Sydney Melbourne Brisbane 1% Perth 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 39 1H23 Results Source: SQM Research, December 2022.
Slide 40: Important Notice
Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741; AFSL 241190 As a responsible entity for Stockland Trust ARSN 092 897 348 Important Notice This Presentation and its accompanying Annexures (“Presentation”) has been prepared and issued by Stockland Corp