Slide 1: FY16 interim results
For personal use only Emporium Melbourne, VIC FY16 interim results December 2015 17 February 2016
Slide 2: Overview
For personal use only Overview Angus McNaughton DFO Homebush, NSW
Slide 3: Agenda
FY16 interim results December 2015 For personal use only Agenda Angus McNaughton CEO and Managing Director Richard Jamieson Chief Financial Officer Michael O’Brien Chief Investment Officer Jonathan Timms EGM Development Overview Angus McNaughton Financial results Richard Jamieson Portfolio update Mi
Slide 4: Group highlights and FY16 interim results
Group highlights and FY16 interim results Strong financial performance, well ahead on merger synergies and firmed FY16 guidance For personal use only Strong financial performance and firmed FY16 guidance • Statutory net profit of $424.6m • Underlying earnings of $377.6m, up 10.1%1 • Underlying earni
Slide 5: Group highlights and FY16 interim results
Group highlights and FY16 interim results Strong performance in first six months post merger For personal use only Portfolio improving • Occupancy improved 30 bps to 99.2%1 • NPI growth2 of 3.7%, up from 2.5% • Improved specialty store moving annual turnover (MAT) growth3 to 3.4% • Acquired4 two hig
Slide 6: Merger integration on track and well ahead of program on synergies
Merger integration on track and well ahead of program on synergies 90% of total targeted synergies achieved to date reaching the June 2017 target For personal use only Merger operational cost synergies well ahead of program P&L synergy savings ($m)1 • $44m (90%) of targeted synergies1 achieved to da
Slide 7: Strategic focus
Strategic focus Creating value and sustainable growth by owning, managing and developing quality Australian assets across the retail spectrum For personal use only Key financial objectives set Key financial objectives (‘through cycle’ basis) Group investment principles affirmed • Simple and transpar
Slide 8: Financial results
For personal use only Financial results Richard Jamieson Warnbro Centre, WA
Slide 9: Financial summary
Financial summary Strong result reflecting solid fundamentals and merger benefits For personal use only Statutory net profit of $424.6m For the six months to 31-Dec-15 31-Dec-14 Change Strong underlying earnings growth of 10.1%, Underlying earnings ($m) 377.6 342.91 10.1% driven by steady income gro
Slide 10: Underlying earnings
Underlying earnings Merger synergies driving strong underlying earnings growth For personal use only 31-Dec-15 31-Dec-141 Change NPI growth of 3.7% on a comparable2 basis For the six months to ($m) ($m) (%) Material reduction of 18.7% in corporate Net property income (NPI) 472.9 465.5 1.6 overheads
Slide 11: Balance sheet
Balance sheet Strong balance sheet For personal use only 31-Dec-15 30-Jun-15 Change Direct property increase driven by valuation As at gains and acquisitions ($m) ($m) ($m) Cash 119.9 107.4 12.5 Intangible assets have reduced by $296.6m, Direct property 14,816.2 14,109.7 706.5 with merger-related go
Slide 12: Capital management
Capital management Merger refinancing program complete resulting in lower costs and an extended debt duration For personal use only Merger refinancing program completed As at 31-Dec-15 30-Jun-15 • $1.8b bridge facility repaid and cancelled • $4.5b of financing completed in relation to the merger Wei
Slide 13: Capital management
Capital management An active period of debt capital management For personal use only Total facilities reduced to $6.0b, decreasing Debt maturity profile ($m)2 excess liquidity position by $1.0b to $1.4b FY16 440 Liquidity in place to repay $440m of MTNs maturing in May 2016 FY17 960 178 Drawn debt c
Slide 14: Portfolio update
For personal use only Portfolio update Michael O’Brien DFO South Wharf, VIC
Slide 15: Retail environment
Retail environment Solid economic growth outlook, improving consumer sentiment and a lower AUD support improving retail sales Domestic economic growth outlook remains solid Retail sales growth has benefited from improving consumer sentiment For personal use only 25% 130 12% Australian nominal GDP GD
Slide 16: Portfolio summary
Portfolio summary Broad improvement in portfolio metrics For personal use only Comparable NPI growth1 of 3.7% As at 31-Dec-15 30-Jun-15 Portfolio occupancy has improved 30 bps to 99.2% Number of shopping centres 85 88 Specialty MAT growth2 of 3.4% continues to improve Gross lettable area (m)(sqm) 2.
Slide 17: Portfolio sales by store type
Portfolio sales by store type Specialty stores the strongest category For personal use only Actual MAT 31-Dec-15 Solid portfolio result with two prime assets (Chadstone Comparable1 and Emporium Melbourne) not in comparable basket Proportion of MAT growth • Chadstone specialty stores up 5.0%4, notwit
Slide 18: Portfolio specialty store performance and trends
Portfolio specialty store performance and trends Specialty store sales growth underpinned by continued growth in apparel For personal use only Actual MAT 31-Dec-15 Comparable1 MAT growth Apparel • Footwear (up 7.7%), Men’s apparel (up 7.1%) and % of Children’s apparel (up 3.8%) showing solid growth
Slide 19: Portfolio sales by state
Portfolio sales by state Eastern seaboard assets continue to outperform and comprise 82% of the portfolio’s value For personal use only Comparable1 specialty store MAT growth by state (%) Victoria • Strength in housing market providing confidence 6.0 5.9 • Strong growth across the portfolio, particu
Slide 20: Leasing
Leasing Improving comparable NPI growth, leasing spreads and WALE For personal use only Leasing spread1 and NPI growth (%) NPI growth has improved significantly since FY15 • Solid base rent growth from fixed rental increases For the six/twelve months to 31-Dec-15 30-Jun-15 • Strong growth in ancilla
Slide 21: Portfolio valuation
Portfolio valuation Solid valuation gains across majority of portfolio, totalling1 $422m For personal use only Capitalisation rate compression across all retail sub-sectors • Weighted average capitalisation rate reduced 20 bps to 6.10% Strong demand for retail assets, supported by historically low i
Slide 22: Procurement
Procurement Strong progress made to date on tenders for key spend categories For personal use only Managed portfolio FY16 budgeted spend ~$500m Procurement philosophy Targeting 5-10% controllable expenses saving by FY18 through: • Leveraging scale and moving to a consolidated supplier base • Renegot
Slide 23: Other income opportunities
Other income opportunities Significant potential across the portfolio For personal use only Ancillary income increased by 10% to $45m for the six-month period Further potential remains across the portfolio • Casual mall leasing – scope to increase sites and occupancy • Retail media – roll out of add
Slide 24: Development update
For personal use only Development update Jonathan Timms Cranbourne Park, VIC
Slide 25: Development highlights
Development highlights A key driver of our portfolio enhancement strategy For personal use only • Development pipeline of $3.1b1 • $109m Cranbourne Park project2 completed and trading strongly • Three projects totalling3 $193m to open by mid-2016 • Two minor projects to be completed in 2016 totallin
Slide 26: Development pipeline
Development pipeline Extensive pipeline drives future growth $3.1b development pipeline ($1.5b Vicinity share)1 For personal use only $m Vicinity share Partner share Total Chadstone Retail and Office 2 333 666 Warriewood Square 87 Colonnades (Stage 1) 51 Current Halls Head Central 55 Minor projects
Slide 27: Project completed at Cranbourne Park
Project completed at Cranbourne Park Returns in excess of Board approval and trading above expectation For personal use only • Project successfully completed in September 2015 • 100% leased and trading on opening • New Coles and Target stores, refurbished Kmart, new mini majors (Cotton On Mega, JB H
Slide 28: Chadstone development
Chadstone development Scope further expanded and project leasing well progressed Key metrics For personal use only Cost (Retail and Office)1 $622m Yield >6% Expected IRR >10% • World-class entertainment and leisure precinct around a central atrium with five international flagship stores, an expanded
Slide 29: Chadstone development
Chadstone development Construction progress For personal use only Food court Retail Office and bus interchange Entertainment precinct Vicinity Centres | FY16 interim results – December 2015 | 17 February 2016 29
Slide 30: Chadstone development
Chadstone development Aerial view of the retail expansion For personal use only Retail Vicinity Centres | FY16 interim results – December 2015 | 17 February 2016
Slide 31: Development projects nearing completion
Development projects nearing completion Other current projects – on track to complete by June 2016 Colonnades, SA Halls Head Central, WA Warriewood Square, VIC NSW For personal use only Chadstone, VIC Chadstone, Artist’s impression Artist’s impression Artist’s impression • New fresh food mall anchor
Slide 32: Mandurah Forum development project on track to commence
Mandurah Forum development project on track to commence Complete centre refurbishment and expansion For personal use only Key metrics Cost1 $350m Yield >6% Expected IRR >10% • Major proposed redevelopment including a complete centre refurbishment, new David Jones department store, Target, mini major
Slide 33: The Glen major development planning is well progressed
The Glen major development planning is well progressed Project remains on track to commence in 2017 For personal use only • $450m1 major redevelopment, including complete refurbishment and repositioning of the centre • Featuring a relocated David Jones department store, international retailers and l
Slide 34: Key planned projects
Key planned projects Progressing to program For personal use only Roselands, NSW – $480m • Major repositioning of centre as a modern major regional centre in south western Sydney • Redevelopment includes upgraded department store, new discount department store, new supermarket, international retaile
Slide 35: FY16 guidance and focus
For personal use only FY16 guidance and focus Angus McNaughton Carlingford Court, NSW
Slide 36: FY16 guidance and focus
FY16 guidance and focus Firmed FY16 guidance and well positioned to create value and sustainable growth For personal use only Firmed FY16 underlying EPS guidance to 19.1 cents1, the top end of the previously announced guidance range • Payout ratio is expected to be 90% to 95% of underlying EPS Conti
Slide 37: Appendices
For personal use only Appendices 38 Financial results 45 Direct portfolio 41 Sustainability 48 Asset summaries 42 Acquisitions 56 Organisational chart 43 Development pipeline 57 Key dates 44 Assets under management 58 Contact details Myer Bourke Street, VIC
Slide 38: Underlying earnings reconciliation to net profit
Financial results Underlying earnings reconciliation to net profit For personal use only For the six months to ($m) 31-Dec-15 31-Dec-14 Underlying earnings 377.6 342.9 Subtract Federation underlying earnings prior to the Merger - (129.9) Non-distributable items: Property revaluation increments for d
Slide 39: Distribution reconciliation to earnings measures
Financial results Distribution reconciliation to earnings measures For personal use only 31-Dec-15 Per security Payout ratio1 Payout ratio is expected to be 90% to 95% For the six months to of underlying earnings ($m) (cents) (%) • 1H FY16 distribution at the mid-point of this range Underlying earni
Slide 40: Interest rate hedging profile
Financial results Interest rate hedging profile For personal use only Average hedging profile1 Key hedging statistics 4.0 8.0% 31-Dec-15 30-Jun-15 3.5 7.0% 3.0 6.0% Weighted average hedge rate1 (%) 3.5 3.8 2.5 5.0% Proportion of debt hedged (%) 80 74 Notional (A$b) Hedge rate 2.0 4.0% 1.5 3.0% 1.0 2
Slide 41: Sustainability
Sustainability On the path to best practice For personal use only Well advanced on formulating the Group Sustainability strategy, which will include establishing a consistent approach to community investment The Group is well positioned with significant scope for further improvement Portfolio is und
Slide 42: Acquisitions
Acquisitions High quality acquisitions positioned in strong catchments with development potential Two high quality shopping centres acquired for $320m1 For personal use only Settled in December 2015 Acquisitions in line with our investment criteria • Located in attractive catchments, with strong pop
Slide 43: Development pipeline
Development pipeline Vicinity’s share of cost to complete1 projects under construction is $222m Total Vicinity share For personal use only Identified development pipeline ($m) project Project Spent Cost cost cost to date to complete Chadstone Retail and Office1 666 333 155 178 Warriewood Square 87 4
Slide 44: Assets under management
Assets under management Over 9,500 leases across 95 assets under management For personal use only Direct portfolio Managed Third party / Total Wholly-owned Co-owned Total co-owned AUM Number of shopping centres 57 28 85 10 / 28 95 Gross lettable area (000’s, sqm) 1,370 1,391 2,761 232 2,993 Number o
Slide 45: Direct portfolio
Direct portfolio Well diversified by geographic and retail sub-sector exposure For personal use only Centre type composition Geographic exposure 17 5 2 City Centre Regional 2 4 Regional 17 Sub regional 2 5 Sub regional Neighbourhood 1 5 Neighbourhood <1% Bulky Goods Major Regional 1 1 Bulky Goods Ou
Slide 46: Direct portfolio: key statistics by centre type
Direct portfolio Key statistics by centre type For personal use only Outlet Centre/ As at 31 December 2015 Total portfolio Regional1 Sub Regional Neighbourhood Bulky Goods Number of shopping centres 85 25 36 19 5 Gross lettable area (m) (sqm) 2.8 1.6 0.8 0.2 0.2 Total value ($b) 15.0 9.6 3.6 0.7 1.0
Slide 47: Key portfolio retailers
Direct portfolio Key portfolio retailers For personal use only Top 10 retailers Top 10 retail groups Number % of Number % of Rank Retailer Retailer type of stores income Rank Retailer of leases income Brands 1 Supermarket 56 4.7 1 138 10.1 Coles, Kmart, Liquorland, Target Big W, BWS, Dan Murphy’s, 2
Slide 48: Asset summaries
Asset summaries Centre statistics For personal use only Moving Specialty Occupancy annual Centre Specialty occupancy Centre type Interest GLA rate turnover sales sales costs (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%)1 New South Wales Chatswood Chase Sydney Major Regional 100 63,715 99.8 566.8 9,823 13,3
Slide 49: Asset summaries
Asset summaries Centre statistics (continued) For personal use only Moving Specialty Occupancy annual Centre Specialty occupancy Centre type Interest GLA rate turnover sales sales costs (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%)1 Queensland QueensPlaza City Centre 100 39,062 99.5 307.1 8,579 22,379 14.5
Slide 50: Asset summaries
Asset summaries Centre statistics (continued) For personal use only Moving Specialty Occupancy annual Centre Specialty occupancy Centre type Interest GLA rate turnover sales sales costs (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%)1 Victoria Chadstone Shopping Centre Super Regional 50 154,218 99.8 1,451.1
Slide 51: Asset summaries
Asset summaries Centre statistics (continued) For personal use only Moving Specialty Occupancy annual Centre Specialty occupancy Centre type Interest GLA rate turnover sales sales costs (%) (sqm) (%)² ($m) ($/sqm)² ($/sqm)² (%)1,2 Victoria (continued) Bentons Square Neighbourhood 50 10,029 94.6 133.
Slide 52: Asset summaries: Valuations
Asset summaries Valuations For personal use only Net Value Capitalisation rate Discount rate revaluation As at As at As at As at Centre type Interest movement 31-Dec-15 30-Jun-15 31-Dec-15 Movement 31-Dec-15 (%) ($m)1,2 ($m)1 (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regional 100 6.5
Slide 53: Asset summaries: Valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate revaluation As at As at As at As at Centre type Interest movement 31-Dec-15 30-Jun-15 31-Dec-15 Movement 31-Dec-15 (%) ($m)1,2 ($m)1 (%) (%) (%) Queensland QueensPlaza City Centre 100 34.8 705.0
Slide 54: Asset summaries: Valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate revaluation As at As at As at As at Centre type Interest movement 31-Dec-15 30-Jun-15 31-Dec-15 Movement 31-Dec-15 (%) ($m)1,2 ($m)1 (%) (%) (%) Victoria Chadstone Shopping Centre Super Regional
Slide 55: Asset summaries: Valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate revaluation As at As at As at As at Centre type Interest movement 31-Dec-15 30-Jun-15 31-Dec-15 Movement 31-Dec-15 (%) ($m)1,2 ($m)1 (%) (%) (%) Victoria (continued) Bentons Square Neighbourhood
Slide 56: Organisational chart
Organisational chart Structured to support strategy execution For personal use only CEO and Managing Director Angus McNaughton Executive GM Executive GM Chief Financial Chief Investment Executive GM Executive GM Executive GM Business General Counsel Digital, Marketing, Officer Officer Leasing Develo
Slide 57: Key dates
Key dates For personal use only Key dates FY16 interim results 17 February 2016 December 2015 distribution payment 2 March 2016 Ex-distribution date for June 2016 distribution 28 June 2016 Record date for June 2016 distribution 30 June 2016 FY16 annual results 17 August 2016 June 2016 distribution p
Slide 58: Contact details and disclaimer
Contact details and disclaimer For further information please contact: For personal use only Investor enquiries: Media enquiries: Penny Berger Brandon Phillips Head of Investor Relations GM External Affairs T +61 2 8229 7760 T +61 3 9236 6321 E penny.berger@vicinity.com.au E brandon.phillips@vicinit