Stockland · ASX:SGP
Stockland — H1 2021 Earnings Presentation
44 slides from Stockland's earnings presentation, Feb 25, 2021
Slide 1: 1H21 Results
1H21 RESULTS PRESENTATION - 1H21 Results 25 February 2021 1 CALLEYA, WA
Slide 2: We acknowledge the Traditional Custodians
1H21 RESULTS PRESENTATION - 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 Aborig
Slide 3: Group update
1H21 RESULTS PRESENTATION - 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 Steinert
Slide 4: Group update
1H21 RESULTS PRESENTATION - Group update Mark Steinert YENNORA DISTRIBUTION CENTRE, NSW 4
Slide 5: Diversified business model delivers value
1H21 RESULTS PRESENTATION - 1H21 result Diversified business model delivers value Residential market rebounds, improved retail metrics Funds from operations1 (FFO) FFO1 per security Adjusted FFO1 (AFFO) AFFO1 per security $386m 16.2 cents $337m 14.1 cents 0.4% on 1H20 0.6% on 1H20 (0.2)% on 1H20 (0.
Slide 6: COVID-19 decisive and proactive response
1H21 RESULTS PRESENTATION - COVID-19 decisive and proactive response Stockland continues to adapt to protect our people and business • Prioritised safety and wellbeing of tenants, customers, contractors and our teams Safety and wellbeing • COVIDSafe operational plans remain active across all assets
Slide 7: Creating value through our diversified business model
1H21 RESULTS PRESENTATION - Creating value through our diversified business model • Managing our diversified business to deliver superior risk-adjusted returns CAPITAL ALLOCATION4,5 • 7-year1 Stockland EPS growth of 7.2% p.a. vs AREIT2 average of 5.2% p.a. • Reweighting our portfolio, predominantly
Slide 8: Strong momentum in delivering strategic priorities
1H21 RESULTS PRESENTATION - Strong momentum in delivering strategic priorities PRIORITY ACHIEVEMENTS • Completed 122 Walker Street, North Sydney (NSW) acquisition in July 2020 Acquisitions • Two Logistics fund-through developments in Melbourne (VIC), cost of $108m (land and development), forecast
Slide 9: Sustainability leadership, a strategic priority
1H21 RESULTS PRESENTATION - Sustainability leadership, a strategic priority Shaping tomorrow by acting today Successful execution of our ESG strategy Shape thriving communities – boosted community health and wellbeing, connection and education • Industry leading Liveability Index – 74% score driving
Slide 10: Financial results and capital management
1H21 RESULTS PRESENTATION - Financial results and capital management Tiernan O’Rourke FORESHORE, QLD 10
Slide 11: Capital position
1H21 RESULTS PRESENTATION - Capital position At 31 December 2020 • Significant headroom in capital metrics to comply with covenants • Strong cashflow and liquidity to support future opportunities Gearing Investment grade credit ratings Weighted average cost of debt Weighted average debt maturity 24.
Slide 12: Strong operating cashflows
1H21 RESULTS PRESENTATION - Strong operating cashflows $m FOCUSED CASHFLOW MANAGEMENT 1,200 • Strong operating cashflow covering distributions and 1,000 333 (261) strengthening our balance sheet (253) 800 597 (217) • 2H20 distribution of 10.3 cps reflected our continued focus on 600 (104) retaining
Slide 13: COVID-19 rental support – accounting treatment
1H21 RESULTS PRESENTATION - COVID-19 rental support – accounting treatment 1H21 RENT COLLECTION 500 447 (396) • Portfolio net collections for 1H21 has reached 90% compared with 450 61% for 4Q20 at 30 June 2020, showing significant improvement in 400 speed of collection, noting 4Q20 net collections h
Slide 14: Funds from operations
1H21 RESULTS PRESENTATION - Funds from operations FFO reflects: • Strong Communities business performance • The impact of COVID-19 on rental collections, particularly retail, driven by abatements and ECL, and the impact of ongoing disposals • Partially offset by growth in Workplace driven by the acq
Slide 15: Statutory profit to FFO and AFFO reconciliation
1H21 RESULTS PRESENTATION - 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 disclosin
Slide 16: Balance sheet
1H21 RESULTS PRESENTATION - Balance sheet Maintenance of strong cash position; stable valuations $m 31 DEC 20 30 JUN 20 CHANGE Cash 434 443 (2.2)% Real estate related assets - Commercial Property 10,054 10,140 (0.8)% - Residential1 3,243 3,395 (4.5)% - Retirement Living 1,155 1,287 (10.2)% - Other 1
Slide 17: Commercial Property
1H21 RESULTS PRESENTATION - Commercial Property Louise Mason ARTIST IMPRESSION OF M PARK, NSW 17
Slide 18: Operating metrics
1H21 RESULTS PRESENTATION - Operating metrics Maintenance of strong cash position; stable valuations • Logistics – portfolio weighting increased from 14% to 24% in three years • Workplace – FFO growth through COVID-19 • Retail – remixed and repositioned to a more resilient portfolio FFO KEY PORTFOLI
Slide 19: Valuation results at December 2020
1H21 RESULTS PRESENTATION - Valuation results at 31 December 2020 Commercial Property Net increase of $25m1 BALDIVIS, WA PICCADILLY, NSW QUARRY ROAD, NSW With 87%2 of assets independently revalued Retail Town Centres Workplace Logistics Net increase $(104)m, (1.7)% $(28)m, (2.7)% $157m, 5.5% Weighte
Slide 20: COVID-19 – rental negotiations advanced
1H21 RESULTS PRESENTATION - COVID-19 – rental negotiations advanced Commercial Property • SME and national tenant negotiations almost complete with unresolved arrangements relating to less than 5% of monthly billings • 1H21 rent collection now ~90% of net billings at 31 January 2021 RENT COLLECTION
Slide 21: Active management drives strong operating metrics
1H21 RESULTS PRESENTATION - Active management drives strong operating metrics Retail Town Centres 1H21 1H20 • Specialty occupancy cost ratio has moderately increased to Occupancy3 98.7% 99.4% 16.0%1 WALE4,5 5.5 yrs 6.0 yrs • Negative rent reversions of 7.8% reflects ongoing impact of COVID-19 and th
Slide 22: Improving sales trends
1H21 RESULTS PRESENTATION - Improving sales trends Retail Town Centres TO 31 DECEMBER 2020 TOTAL PORTFOLIO5 COMPARABLE CENTRES6 • COVID-19 materially impacted the Retail sector; our portfolio benefited from active remixing to convenience based, low and non- Retail sales MAT MAT 1H21 discretionary ca
Slide 23: Digital capabilities – Retail Town Centres
1H21 RESULTS PRESENTATION - Digital capabilities – Retail Town Centres Shaping Australia’s retail future with digitally enabled assets Investments in digital and data have connected our shopper community at home and in-centre Delivery on demand Enhancing digital customer experiences Marketing effici
Slide 24: Solid performance with development opportunity
1H21 RESULTS PRESENTATION - Solid performance with development opportunity Workplace • Comparable FFO growth of 1.0% • Rental growth on new leases and renewals of 12.4% • 91.3% Sydney exposure with 97.1% occupancy • Portfolio WALE of 2.8 years to support the development pipeline, with less than 4% l
Slide 25: $2.6bn development pipeline
1H21 RESULTS PRESENTATION - $2.6bn1 development pipeline Workplace Walker Street North Sydney (NSW) Piccadilly, Sydney (NSW) expected construction expected construction commencement ~1H23 commencement~2H23 ARTIST IMPRESSION ARTIST IMPRESSION Major projects requiring minimal capital in the near We ar
Slide 26: Strong performance demonstrates portfolio quality
1H21 RESULTS PRESENTATION - Strong performance demonstrates portfolio quality Logistics – including Business Parks 1H21 1H20 24% FFO $81m $81m $3.0bn portfolio weighting - Asset value4 Leased area $3,003m 182,019 sqm $2,771m 300,835 sqm asset value4 more than doubled since 2013 Leases under HOA3,5 7
Slide 27: Scaling through development
1H21 RESULTS PRESENTATION - Scaling through development Logistics – including Business Parks Master planning Detailed planning DA lodged DA approved Civil work underway Future proofing Restocking our pipeline Projects development application Projects ready to start developing Projects currently unde
Slide 28: M_Park $1.5bn development gaining momentum
1H21 RESULTS PRESENTATION - M_Park $1.5bn1,2 development gaining momentum M_Park Business Campus, Macquarie Park, NSW Third party site Stage 1 A Johnson & Johnson C development Family of Companies Stage 2 future development stages D (4 Ha / 95,000 sqm GFA) 84,194 sqm NLA leased Stage 1 Building A NL
Slide 29: Strategic priorities
1H21 RESULTS PRESENTATION - Strategic priorities Commercial Property RETAIL TOWN CENTRES WORKPLACE LOGISTICS Strengthen Retail Grow Workplace Grow and execute pipeline • Non-core disposals to reallocate capital • Advanced planning approvals on $2.6bn1 pipeline • $3.3bn1 development pipeline roll out
Slide 30: Communities
1H21 RESULTS PRESENTATION - Communities Andrew Whitson THE GABLES, NSW 30
Slide 31: Strong result reflects market leading business
1H21 RESULTS PRESENTATION - Strong result reflects market leading business Residential • 44% increase in settlements on 1H20; default rate has returned to normalised levels • FFO increase of 1.8%, or 44% excluding one-off earnings in 1H20¹ 3,101 43.7% Total lots settled4 Increase on 1H20 • 17.4% ope
Slide 32: Uniquely positioned to capitalise on market recovery
1H21 RESULTS PRESENTATION - Uniquely positioned to capitalise on market recovery Residential MONTHLY ENQUIRIES • 3,835 net sales – strongest result in four years driven by record low interest rates, shift in customer preferences, and government stimulus 14,000 13,365 12,000 • Increased production by
Slide 33: Market leader in masterplanned communities (MPC)
1H21 RESULTS PRESENTATION - Market leader in masterplanned communities (MPC) Residential Competitive advantage built on three key elements Brand Scale Landbank Our brand is built on the quality of Driving efficiency and deep customer Size and quality of landbank difficult Communities we have created
Slide 34: Our digital capability is a key differentiator
1H21 RESULTS PRESENTATION - Our digital capability is a key differentiator Enhancing the customer experience driving higher sales conversion Website upgrade driving lead conversion +83% End-to-end virtual sales lead conversion from digital1 • Online customer sales journey • Virtual launch for Katali
Slide 35: Market fundamentals remain supportive for MPC
1H21 RESULTS PRESENTATION - Market fundamentals remain supportive for MPC Residential 12 MONTH OUTLOOK STATE PRICE VOLUMES MARKET COMMENTARY • Key drivers continue to support ongoing demand; low • Record sales volumes over 1H21 despite COVID-19 restrictions and less than interest rates, access to cr
Slide 36: Supply and Demand outlook for detached housing
1H21 RESULTS PRESENTATION - Supply and Demand outlook for detached housing Vacant land market to remain undersupplied SUPPLY-DEMAND BALANCE FOR DETACHED DWELLINGS1,2 - AUSTRALIA • Detached dwelling segment (vacant land) to reach equilibrium in 2021 post a prolonged period of undersupply¹ Net Balance
Slide 37: Continued increase in customer preference for village living
1H21 RESULTS PRESENTATION - Continued increase in customer preference for village living Retirement Living • FFO of $36m, compared to $17m in 1H20, reflecting higher established sales and accrued DMF release associated with non-core village disposals 386 $36m Total units settled FFO • Full year FFO
Slide 38: Retirement Living
1H21 RESULTS PRESENTATION - Retirement Living Improve returns from the established retirement village portfolio Digital wellbeing Enhance Retirement Living villages initiative 8.55/10 in pilot • Invested in enhancing the capability of the • Leveraged investment in digital and data operations team to
Slide 39: Retirement Living – Scale up Land Lease Communities
1H21 RESULTS PRESENTATION - Retirement Living ARTIST IMPRESSION OF AURA, QLD Scale up Land Lease Communities Land Lease pipeline growth to over 3,000 lots Land Lease pipeline1 Approx. First settlements yield Aura, QLD 495 FY22 • First Land Lease sales launch at Aura (QLD) by March 2021, Minta (VIC)
Slide 40: Summary
1H21 RESULTS PRESENTATION - Summary Mark Steinert ARTIST IMPRESSION OF CANOPY TIPTON, WA 40
Slide 41: Clear strategic choices underpin strategy execution
1H21 RESULTS PRESENTATION - Clear strategic choices underpin strategy execution 1. Asset weighting 2. Capital partnering 3. Repositioning WATERLEA, VIC To maintain the appropriate strategic To increase access to capital via To reposition our core Retail portfolio and asset weighting to drive resilie
Slide 42: A digital and data driven future
1H21 RESULTS PRESENTATION - A digital and data driven future New revenue opportunities driven by innovation, advanced data analytics and digital experiences for our customers Digital CX enhancement driving Integrated systems and AI Powering Stockland revenue driving operational excellence through in
Slide 43: Outlook
1H21 RESULTS PRESENTATION - Outlook1 AMBERTON, WA Key priorities FY21 guidance • Seamless leadership transition with new MD/CEO to commence 1 June 2021 FFO per security within the range of 32.5c to 33.1c • Optimise customer experience, continue strong focus on safety and wellbeing Distribution per s
Slide 44: Stockland Corporation Limited 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 While every effort is made to provide accurate and complete inform