Stockland · ASX:SGP
Stockland — FY2020 Earnings Presentation
41 slides from Stockland's earnings presentation, Aug 25, 2020
Slide 1: FY20 Results
FY20 For personal use only Results 25 August 2020 AURA, QLD
Slide 2: Agenda
Agenda For personal use only Group update Mark Steinert Managing Director & CEO Financial results and capital management Tiernan O’Rourke CFO Commercial Property Louise Mason Group Executive & CEO, Commercial Property Communities Andrew Whitson Group Executive & CEO, Communities Summary Mark Steiner
Slide 3: Group update
For personal use only Group update Mark Steinert THE GABLES, NSW 3
Slide 4: Group update: FY20 result
Group update FY20 result For personal use only Funds from operations1 (FFO) FFO per security1 Adjusted FFO (AFFO)1 AFFO per security1 $825m 34.7 cents $736m 31.0 cents (8.0)% (7.2)% (5.6)% (4.6)% Statutory loss2 Return on equity3 Net tangible assets (NTA) Distribution per security (DPS) per security
Slide 5: COVID-19 response to date
Group update COVID-19 response to date For personal use only Stockland has taken proactive and decisive measures to protect our business and position for the future • Prioritised safety and wellbeing of our tenants, customers, contractors and our teams Safety and • Implemented COVID-safe operating p
Slide 6: Continued focus on strategy execution
Group update Continued focus on strategy execution For personal use only • Result reflects the benefits of our diversified portfolio in a • Strong operational cashflow, improved gearing to 25.4% and $2.0bn challenging environment available liquidity3 • Rebalancing our portfolio with Retail Town Cent
Slide 7: Strong momentum in delivering strategic priorities
Group update Strong momentum in delivering strategic priorities PRIORITY ACHIEVEMENTS For personal use only • Entered into an agreement to acquire Johnson & Johnson (J&J) site at Macquarie Park (NSW)1 creating a potential consolidated development opportunity with M_Park in excess of $1.5bn Acquisi
Slide 8: Driving operational excellence
Group update Driving operational excellence Our customers and employees are pivotal to our success For personal use only 80% Above Strong focus on people and talent Accelerating digital and data innovation Ways of working Leading edge technology Customer satisfaction scores1 • Fast-tracked flexible
Slide 9: Financial results and capital management
For personal use only Financial results and capital management Tiernan O’Rourke 9 YENNORA DISTRIBUTION CENTRE, NSW
Slide 10: Capital position
Financial results and capital management Capital position At 30 June 2020 For personal use only Gearing Investment grade credit ratings Weighted average cost of debt1 Weighted average debt maturity 25.4% A-/Stable S&P 4.0% 5.7 years A3/Stable Moody’s Improved from 26.7% at 30 June 2019 Within target
Slide 11: Strong operating cashflows
Financial results and capital management Strong operating cashflows For personal use only $m FOCUSED CASHFLOW MANAGEMENT 1,800 18 • Strong operating cashflow covering distributions and strengthening 1,600 our balance sheet 1,400 (658) 705 (711) • 2H20 distribution reduced to 10.6 cps to retain capit
Slide 12: COVID-19 rental support – accounting treatment
Financial results and capital management COVID-19 rental support – accounting treatment 2H20 RENT COLLECTION AS AT 30 JUNE 2020 ($m) For personal use only 468 (366) • Commercial Property FFO was impacted materially due to COVID-19 (143) 233 • Accounting recognition is in line with the recent ASIC gu
Slide 13: Funds from operations
Financial results and capital management Funds from operations For personal use only • Decline in Commercial Property FFO reflects: • $27m net impact from capital transactions • $29m tenant abatement and $38m ECL • Reduction in unallocated corporate overheads reflects savings realised from organisat
Slide 14: Statutory profit to FFO and AFFO reconciliation
Financial results and capital management 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
Slide 15: Commercial Property
For personal use only Commercial Property Louise Mason 15 M_PARK, NSW Artist Impression
Slide 16: Operating metrics
Commercial Property Operating metrics Commercial Property For personal use only SGP PORTFOLIO FFO KEY WEIGHTING COMPARABLE METRICS ASSET VALUE1 AT 30 JUNE 2020 FFO CHANGE2 OCCUPANCY WALE5 $9.9bn Asset value1 Retail Town Centres $5,975m 40% $343m (17.0)%3 99.0%4 5.7 yrs Workplace $1,038m 7% $54m 1.7%
Slide 17: Year in review
Commercial Property Year in review Key trends in FY20 For personal use only • Portfolio rebalancing continued with reduced exposure to Retail Town Centres (39%)1 and increased exposure to Workplace and Logistics (29%)1 • Settled $220m2 non-core Retail divestments and executed contracts for additiona
Slide 18: COVID-19 rental support negotiations
Commercial Property COVID-19 rental support negotiations For personal use only • Stockland teams have worked closely with small and medium enterprise (SME) and national tenants in progressing rental support negotiations • All deals are bespoke and undertaken on a case by case basis Tenant negotiatio
Slide 19: Valuation results
Commercial Property Valuation results Commercial Property For personal use only Net valuation decline of $464m1 in FY20 with 100% of assets2 independently revalued at 30 June 2020 RETAIL TOWN CENTRES WORKPLACE LOGISTICS FY203 $(715)m, (10.7)% $14m, 1.4% $237m, 9.0% 1H / 2H movement4 $(31)m / $(684)m
Slide 20: Performance underpinned by low and non-discretionary categories
Commercial Property Performance underpinned by low and non-discretionary categories Retail Town Centres For personal use only DIVERSIFIED MAT ~70% LOW AND NON-DISCRETIONARY 30 $6.0bn1 assets1 portfolio value 71% 22% 7% 40% SUPERMARKETS / DDS / FOOD / RETAIL SERVICES / GENERAL RETAIL / FASHION / MINI
Slide 21: Sales performance mixed
Commercial Property Sales performance mixed Retail Town Centres For personal use only TO 30 JUNE 2020 TOTAL PORTFOLIO2 COMPARABLE CENTRES3 • Comparable sales performance was significantly impacted in 4Q20 with a specialty sales Retail sales MAT MAT 2H20 decline of (30.1)%, offset by supermarket grow
Slide 22: Operational metrics demonstrate relative resilience
Commercial Property Operational metrics demonstrate relative resilience Retail Town Centres For personal use only FY20 FY19 • Specialty occupancy cost ratio has moderately increased to 15.5%1 Occupancy3 99.0% 99.3% • Negative rent reversions in line with the prior FY20 guidance range of -5% to -7%,
Slide 23: Enterprise data capabilities and opportunities
Commercial Property Enterprise data capabilities and opportunities Data driven approach to shape our future Town Centres For personal use only EXPERIENCE INSIGHTS • Emerging trends in the retail sector support our remixing strategy Amazon lockers now in 17 centres • DDS consolidation opportunity to
Slide 24: Strong operational metrics: Workplace
Commercial Property Strong operational metrics Workplace For personal use only • Comparable FFO growth of 1.7% • Rental growth on new leases and renewals of 18.6% 4 $1.0bn assets portfolio value4 • 91% Sydney (NSW) exposure with 97.6% occupancy • Portfolio WALE of 3.2 yrs with less than 10% of lease
Slide 25: $2.4bn development pipeline
Commercial Property $2.4bn1 development pipeline Workplace For personal use only Development approach • Progressing planning approvals for Piccadilly, Sydney (NSW) and Walker St, North Sydney (NSW) requiring minimal capital in the near term • Piccadilly Stage 1 planning proposal lodged in August 202
Slide 26: Portfolio remains well-positioned: Logistics
Commercial Property Portfolio remains well-positioned Logistics – including Business Parks For personal use only • One of the largest logistics portfolios among listed A-REITs with significant future development opportunity • 98%1 of assets located on the eastern seaboard 28 • Resilient valuations r
Slide 27: Performance demonstrates quality of portfolio
Commercial Property Performance demonstrates quality of portfolio Logistics – including Business Parks For personal use only FY20 FY19 • Strong comparable FFO growth of 1.7% FFO1 $160m $164m • Leasing demand remains strong with 423,579sqm leased Asset value2,4 $2,859m $2,537m • Lease arrangement at
Slide 28: M_Park $1.5bn development opportunity
Commercial Property M_Park $1.5bn development opportunity For personal use only M_Park Business Campus, Macquarie Park, NSW M_Park and J&J site, Macquarie Park, NSW M_Park Entered into an agreement to $450m1 development $1.5bn1 development 16,000sqm NLA Stage 1 acquire J&J ~4Ha site adjacent to oppo
Slide 29: Commercial Property - key strategic priorities progressed
Commercial Property Commercial Property - key strategic priorities progressed For personal use only RETAIL TOWN CENTRES WORKPLACE LOGISTICS STRATEGIC Strengthen Retail Grow Workplace Grow and execute pipeline PRIORITIES • Rebasing and repositioning to ensure quality, • Secure 100% ownership of Picca
Slide 30: Communities
For personal use only Communities Andrew Whitson WATERLEA, VIC 30
Slide 31: Result reflects market leading business
Communities Result reflects market leading business Residential For personal use only • 5,319 settlements1 (including 607 townhome settlements) reflecting customer 5,319 (9.5)% preference for masterplanned communities, strength of the Stockland brand and government stimulus • Increased production le
Slide 32: Strength in demand drivers supports sales performance
Communities Strength in demand drivers supports sales performance Residential For personal use only NET SALES BY QUARTER • FY20 net deposits of 4,995 reflects 14% increase on FY19 1500 311 215 • Strength in demand in June 2020 and July 2020 driven by: 1000 273 198 345 NSW 366 • Government stimulus 4
Slide 33: Agile response to changing market conditions
Communities Agile response to changing market conditions Residential For personal use only Adapted to leverage changes in operational conditions post COVID-19 Responded to changes in customer Accelerated digitisation of Utilised production optionality preferences customer journey • Accelerated produ
Slide 34: Strongly positioned to near term market strength
Communities Strongly positioned to near term market strength For personal use only Residential Customer preferences Competitive advantage 34 House and land market drivers • COVID-19 pandemic has further shifted • Strong brand built on the quality • Affordable, new-build product well placed to custom
Slide 35: Increased customer preference for village living
Communities Increased customer preference for village living Retirement Living For personal use only • Prioritised safety and wellbeing of our residents with ongoing implementation of Emergency Response Plans amidst the COVID-19 pandemic 860 3.6% • Increased customer preference towards safety and se
Slide 36: Disciplined execution of Retirement Living strategy
Communities For personal use only Shine Birtinya, Qld Disciplined execution of Retirement Living strategy Enhance customer Increase returns through Improve quality experience and satisfaction development pipeline and capability of our portfolio • Continued to leverage Salesforce and data • Realign f
Slide 37: Summary
For personal use only Summary Mark Steinert MINTA, Vic 37
Slide 38: Delivering shared value
Summary Delivering shared value Our sustainability approach continues to support our strategy execution and long-term value creation For personal use only Shape thriving communities Optimise and innovate Enrich our value chain Encourage positive health and wellbeing, community Reduce our impact whil
Slide 39: Creating value through our diversified model
Summary For personal use only Creating value through our diversified model, asset development capabilities and brand • Focused strategy to leverage our diversified model to grow returns CAPITAL ALLOCATION2 and improve portfolio quality 30-JUN-20 31-DEC-133 30-JUN-20 TARGET • Clear strategy to addres
Slide 40: FY21 outlook remains uncertain
Summary For personal use only FY21 outlook remains uncertain Newport, Qld 6-12 month strategic priorities • Seamless leadership transition Strategy execution adapting to • Continue our strong focus on health and wellbeing COVID-19 impacts to leverage • Optimise customer experience opportunities • Up
Slide 41: Important Notice
Stockland Corporation Limited For personal use only ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741; AFSL 241190 As responsible entity for Stockland Trust ARSN 092 897 348 LEVEL 25 133 Castlereagh Street SYDNEY NSW 2000 Important Notice While every effort is made to provide accura