Stockland · ASX:SGP
Stockland — FY2021 Earnings Presentation
40 slides from Stockland's earnings presentation, Aug 20, 2021
Slide 1: FY21 Results
FY21 Results 20 August 2021 Foreshore, QLD 1
Slide 2: Acknowledgement of Traditional Custodians
We acknowledge the Traditional Custodians of the land on which we meet, work and live. We pay our respects to First Nation Elders past, present and emerging and the care they have given this country. Stockland is committed to supporting organisations and individual Aboriginal and Torres Strait Islan
Slide 3: Agenda
Agenda Group update Tarun Gupta Managing Director & CEO Financial results and Tiernan O’Rourke CFO capital management Commercial Louise Mason Group Executive & CEO, Property Commercial Property Communities Andrew Whitson Group Executive & CEO, Communities Summary Tarun Gupta Managing Director & CEO
Slide 4: Group update
Group update Tarun Gupta The Gables, NSW 4
Slide 5: Strong platform for growth
Strong platform for growth Vision, purpose Strong culture End to end multi Creator of Nationally Leading ESG Strong and values and brand sector capability connected diversified large track record balance sheet communities landbank Our purpose Our vision Our values Community To be a great Australian
Slide 6: ESG leadership – FY21 achievements
ESG leadership – FY21 achievements Proactive approach to long-term environmental, social and governance risks and opportunities Environmental Social Governance Launched 2030 Sustainability Strategy – Living for the Future Net Zero Carbon Target 47% women 2nd Modern Slavery statement brought forward
Slide 7: Our performance
Our performance FY21 Highlights FFO1 FFO1 per security • FFO at top end of guidance range $788m 33.1 cents (4.6)% on FY20 (4.6)% on FY20 • Residential sales volumes (7,700 lots) – up 54.2% vs FY20 and with strong momentum continuing into FY22 • Comparable MAT growth up 2.3%4 vs pre COVID-19 levels,
Slide 8: COVID-19 decisive and proactive response
COVID-19 decisive and proactive response Stockland continues to adapt to protect our people and business • Safety and wellbeing of tenants, customers, contractors and our teams remains #1 priority Safety and wellbeing • COVIDSafe operational plans active across assets as Government restrictions and
Slide 9: Financial results and capital management
Financial results and capital management Tiernan O’Rourke Amberton Beach, WA 9
Slide 10: Capital position
Capital position At 30 June 2021 Gearing Investment grade Operating cashflow Weighted average 21.4% $1.0bn credit ratings cost of debt At the low end of target A-/A3 Stable outlook For FY21 3.7% range of 20-30% S&P / Moody’s For FY21 Available liquidity Weighted average cost Weighted average debt •
Slide 11: Strong operating cashflows
Strong operating cashflows $m Focused cashflow management 2,500 104 • Distribution covered by strong operating cashflows 2,000 (386) • FY21 distribution of 24.6 cps reflecting a payout ratio of 75% and our (523) 568 continued focus on retaining capital for growth 1,500 (477) (91) • Completed $584m o
Slide 12: Funds from operations
Funds from operations FFO reflects: • Strong debt recovery in Commercial Property, Workplace & Logistics income-producing acquisitions and completed developments offset in part by non-core disposals • Strong underlying results in Residential, marginally below last year due to lower transaction profi
Slide 13: 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 FY21 FY20
Slide 14: Commercial Property
Commercial Property Louise Mason Artist impression, M_Park, Macquarie Park, NSW 14
Slide 15: Year in review
Year in review Strong portfolio performance Portfolio rebalancing continued Growth of Workplace and Logistics Construction underway at with comparable FFO growth of with $635m further divestment of non- capital allocation to M_Park (NSW) with agreements 3.9%1 32% core Retail Town Centres, including
Slide 16: Commercial Property operating metrics
Commercial Property Operating metrics Portfolio FFO $9.9bn weighting comparable Key metrics Asset value1 at 30 June 2021 FFO growth2 Occupancy WALE4 Retail Town Asset value1 $5,486m 38% $363m 5.6% 99.1%3 5.3 yrs Centres Workplace $1,011m 7% $60m 1.0% 91.7% 2.5 yrs 25% Logistics portfolio weighting L
Slide 17: Commercial Property valuation results
Commercial Property Valuation results Birtinya, QLD 601 Pacific Highway, NSW Forrester Distribution Centre, NSW Net valuation increase of $432m1 With 99%2 of assets independently revalued in FY213 Retail Town Centres Workplace Logistics FY214 $(82)m, (1.4)% $(31)m, (3.0)% $545m, 19.1% Cap rates Unch
Slide 18: Logistics, Life Sciences & Technology portfolio quality
Logistics, Life Sciences & Technology Portfolio quality • Portfolio growth from 15% to 25% of Stockland capital allocation over 5 years • Comparable FFO growth of 1.0% $3.4bn 408,984 sqm • Leasing demand strong with over 400,000 sqm leased Asset value1 Leased/HOA2 • Delivered 53,700 sqm of new logis
Slide 19: Scaling through development
Logistics, Life Sciences & Technology Scaling through development Master planning Progressed planning Active development $2.8bn1 $1.0bn1 $1.7bn1 Restocking opportunity Detailed planning Projects currently • Altona Industrial Estate (VIC) • Melbourne Business Park (VIC) – under development Lot 452 •
Slide 20: Retail Town Centres resilient performance
Retail Town Centres Resilient performance FY21 FY20 • Specialty occupancy cost 14.9%1 Occupancy6 99.1% 99.0% • Leasing activity returned to pre-pandemic levels, with 6832 deals completed in FY21 WALE7,8 5.3 yrs 5.7 yrs • Negative rent reversion of (6.1)%, improved on the (7.8)% reported at 1H21 Spec
Slide 21: Retail Town Centres strong sales performance
Retail Town Centres Strong sales performance To 30 June 2021 Total portfolio4 Comparable centres5 • Comparable specialty sales of $9,799 sqm1, 8% above the Urbis benchmark2 MAT MAT growth pre growth pre 2H21 Retail sales MAT COVID-19 MAT COVID-19 growth • Comparable MAT growth of 2.3% on the twelve
Slide 22: Workplace strong platform for future growth
Workplace Strong platform for future growth $1.0bn • Stable FFO growth of 1.0% through FY21 despite impact of COVID-19 • Rental growth on new leases and renewals of 5.8% 4 assets portfolio value2 • Portfolio WALE of 2.5 years to support the development pipeline, with less than 13% of leases expiring
Slide 23: Key developments progressing
Key developments progressing M_Park, Affinity Place and Piccadilly Artist impression M_Park, NSW Artist impression M_Park, NSW Artist impression Affinity Place, North Sydney NSW Future of workplace M_Park (NSW) – Stage 1 Affinity Place (NSW) • Commenced construction • Development Application approva
Slide 24: Commercial Property strategy delivery
Commercial Property Strategy delivery Logistics Workplace Retail Town Centres Technology and Life Sciences • Quality portfolio, strong • Strong progress on authority • Resilient essentials driving strong • M_Park (NSW) innovation valuation uplift approvals for $3.9bn1 sales growth precinct dedicated
Slide 25: Communities
Communities Andrew Whitson Providence, QLD 25
Slide 26: Communities year in review
Year in review Growing and reshaping the communities business Residential Retirement Living Land Lease Continued outperformance in MPC Record established sales Acceleration in scale of business • Strong result with ~54.2% growth in net sales • Strongest established sales on record with • Successful
Slide 27: Residential: competitive advantage in MPC
Residential Strong result reflects competitive advantage in MPC • 6,374¹ settlements was 19.8% above FY20 with default rates in line with historical averages $331m (10.9)% over 2H21 • Result demonstrates the strength of the Stockland brand as customers display an ongoing preference for low density M
Slide 28: Residential: demand for MPC to remain strong
Residential Demand for MPC to remain strong over FY22 • FY21 net sales of 7,7001 reflects a 54.2% increase on FY20 Net sales by quarter 2,036 1,974 2,000 1,891 1,799 • Enquiries remain strong despite the roll-off of HomeBuilder stimulus 382 324 314 327 1,500 1,350 1,375 • Strong customer demand for
Slide 29: Significant early cycle restocking
Residential Significant early cycle restocking to underpin future margins ~14,000 lots acquired in early phase of COVID-19 recovery cycle Sydney Melbourne SEQ Perth Armstrong Creek, Wattle 125 Park (VIC) Vacant land price index (Mar-20 Base) 1,300 lots 120 Follett (VIC) 1,420 lots Providence (QLD) T
Slide 30: Uniquely positioned to undersupplied markets
Residential Uniquely positioned to undersupplied markets Undersupply to drive land market relative outperformance Landbank skew to Eastern Seaboard markets Cumulative detached housing undersupply estimate WA, 11% (2022-2025) 0 NSW/ACT, 31% (5,000) (10,000) (15,000) Stockland BV (20,000) $3.5bn1 (25,
Slide 31: Fundamentals to remain strong across Eastern Seaboard
Residential Fundamentals to remain strong across the Eastern Seaboard FY22 market outlook1 State Price Volumes Market commentary • Strong demand for low density MPC product to continue • Chronic undersupply of available land to place a ceiling on volumes with price NSW growth to continue • Potential
Slide 32: Retirement Living record established sales
Retirement Living Record established sales driven by increasing customer demand • Record¹ established sales of 711 and strong growth in settlements of 22.3% 690 22.3% • Result reflects the continued increase in customer preferences towards safety and wellbeing and the strength of the established hou
Slide 33: Land Lease differentiated over 50's product
Land Lease Differentiated over 50’s product offering and business model Typical development project Planning & development phase Rental income phase - stabilised Differentiated model to Retirement Living customer journey Operator and • Attracts younger retirees with lifestyle aspirations Operator Op
Slide 34: Acceleration in ramp-up of land lease
Land Lease Acceleration in ramp-up of land lease Successful entry into land lease business Growth in scale and activity • Successful launch of Aura (QLD) and Minta (VIC) in 2H21 • Stockland pipeline increase of ~1,000 lots to ~4,000 over the last six months driven by: - Incremental yield from existi
Slide 35: Combined portfolio activity to grow beyond FY22
Land Lease Combined portfolio activity to grow beyond FY22 • Good earnings visibility with ~340 contracts on hand including 55 sales secured in July 2021 • Targeting ~300 settlements in FY22, with Halcyon contributions to grow from ~250 in FY22 to ~350 p.a. over the medium term • Combined portfolio
Slide 36: Outlook
Outlook Tarun Gupta Highlands, VIC 36
Slide 37: Focus on future opportunities
Highlands, VIC Focus on future opportunities • Strategic review underway anticipated completion by end 2021 • Well positioned to capitalise on key trends: - Shift in consumer preferences toward suburban living - Continued growth in institutional demand for real property assets - Technological change
Slide 38: Optimise Stockland capital allocation
Optimise Stockland capital allocation Unlock $33bn1 development pipeline EXPAND THIRD PARTY CAPITAL LOGISTICS, LIFE WORKPLACE RETAIL RESIDENTIAL LAND LEASE RETIREMENT LIVING SCIENCES & TOWN CENTRES TECHONOLOGY Create workplaces of the Market leading residential High growth sector with Improved perfo
Slide 39: FY22 outlook
FY22 outlook • Strategic review to be • Strong residential sales momentum • COVID-19 trading restrictions • Continue to investigate completed late 2021 into FY22, production constraints increase near term uncertainty for opportunities to rebalance may defer settlements into FY23 retail portfolio. 2H
Slide 40: Important Notice
Stockland Corporation Limited 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 This Presentation and its accompanying Annexures (“Presentation”)