Slide 1: FY18 interim results
For personal use only Queen Victoria Building, NSW; Source: IPOH Pty Ltd. FY18 interim results 14 February 2018
Slide 2: Agenda
For personal use only Agenda Grant Kelley Richard Jamieson Michael O’Brien Carolyn Viney CEO and Managing Director Chief Financial Officer Chief Investment Officer EGM Development Overview Grant Kelley Financial results Richard Jamieson Portfolio Michael O’Brien Development update Carolyn Viney Summ
Slide 3: Overview
For personal use only Overview Grant Kelley Chadstone, VIC
Slide 4: FY18 interim results summary
FY18 interim results summary Solid results, with a 12-month total return1 of 13.4% Financial result $755.9m 8.1 cps For personal use only Statutory net profit of $755.9m Statutory net profit after tax Distribution FFO per security up 0.3% impacted by divestments, up 2.2% on a comparable basis4 Dec-1
Slide 5: Successful delivery on strategy
Successful delivery on strategy Ongoing portfolio improvement and active capital management For personal use only Expanding premium asset exposure Exchanging 49% interest in Chatswood Chase Sydney for 50% interests in, and management rights to, three premium Sydney CBD retail assets Progressing ~$30
Slide 6: CEO initial observations
CEO initial observations Strategic direction has been sound and well executed For personal use only Strong platform, well positioned for future performance Comparable specialty store sales 11,000 High calibre team delivering quality outcomes 10,500 Key focus on the retailer and consumer, and optimis
Slide 7: CEO agenda
CEO agenda Creating additional value through enhancing portfolio quality and pursuing selective mixed-use opportunities For personal use only Enhancing portfolio quality Maintain regular reviews of the portfolio Continue to sell assets which fail to meet total return requirements, or do not offer fu
Slide 8: Complementary retail and mixed-use opportunities
Complementary retail and mixed-use opportunities Non-Vicinity proposed development around Box Hill Central For personal use only Box Hill Central (North) Box Hill Central (South) Third party development sites proposed around Vicinity’s Box Hill Central Vicinity Centres | FY18 interim results | 14 Fe
Slide 9: Mixed-use guiding principles
Mixed-use guiding principles Creating securityholder value while maintaining retail sector focus For personal use only Preserve and complement existing retail assets, retaining flexibility for retail master planning, while maximising the value of the ‘site’ Balance sheet strength to be maintained Re
Slide 10: Financial results
For personal use only Financial results Richard Jamieson DFO Homebush, NSW
Slide 11: Financial results
Financial results FFO per security growth of 2.2% on a comparable basis For personal use only Dec-17 Dec-16 Change Change For the six months to ($m) ($m) ($m) (%) 2.2% Net property income (NPI)1 447.9 446.4 1.5 0.3 Comparable FFO per security growth5 Driven by development completions, comparable NPI
Slide 12: Financial position
Financial position Strong balance sheet maintained For personal use only Dec-17 Jun-17 Change As at ($m) ($m) ($m) 3.9% Cash 45.4 42.2 3.2 Growth in NTA to $2.93 Driven by asset valuation gains Investment properties held for sale 41.7 33.5 8.2 Investment properties1 Intangible assets 16,165.3 597.2
Slide 13: Valuations
Valuations Valuation gains1 of $408.5m or 2.6% Strongest valuation gains1 at Chadstone, CBD and DFO centres For personal use only Chadstone valued at $6.0b (100%) with a 3.75% capitalisation rate, driven by continued demand for premium assets, further development potential and strong sales and incom
Slide 14: Capital management
Capital management Well diversified funding sources For personal use only Debt maturity profile ($m)1 Debt sources (%)1 1,500 1,250 16 20 39 1,000 13 750 38 400 454 655 500 200 200 632 555 150 19 250 471 309 367 13 200 40 200 59 0 100 H2 FY18 H1 FY19 H2 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 Beyond
Slide 15: Capital management
Capital management Strong balance sheet maintained For personal use only Strong financial position maintained As at Dec-17 Jun-17 Gearing of 26.6% at lower end of target range of 25% to 35% Total debt facilities $5.1b $5.1b Weighted average interest rate of 4.3%, forecast to average 4.4% over FY18 D
Slide 16: Portfolio
For personal use only Portfolio Michael O’Brien Box Hill Central, VIC
Slide 17: Economic drivers of retail sales
Economic drivers of retail sales Retail sales expected to be boosted by increased consumer sentiment and strengthening labour market Low wages growth and rising living costs have impeded retail sales growth But business confidence is strong and consumer sentiment has rebounded For personal use only
Slide 18: Portfolio summary
Portfolio summary Portfolio remains close to fully occupied despite soft retail trading environment For personal use only Strong leasing outcomes As at Dec-17 Jun-17 Occupancy unchanged at 99.5% Leasing spreads overall softened but remain positive at 0.8%4 Number of retail assets1 742 74 Gross letta
Slide 19: Portfolio sales by store type
Portfolio sales by store type Improvements in supermarkets and discount department store sales offset by weaker specialty and department stores For personal use only Actual MAT Specialty stores Comparable1 Including Chadstone same-store sales and excluding the impact of tenant Proportion of MAT grow
Slide 20: Portfolio specialty store performance
Portfolio specialty store performance Retail services, leisure and food catering showing solid growth Actual Comparable1 Apparel For personal use only MAT MAT growth Adjusting for tenant administrations, growth was -0.8%. MAT % of Men’s apparel (+4.9%) performing strongly, while low to mid-tier wome
Slide 21: Chadstone performing strongly post development
Chadstone performing strongly post development Consumers attracted by quality of experience and expanded luxury, dining and entertainment offer New 1,043 sqm Apple flagship store opened in November 2017 For personal use only Consumer visitation growing strongly Annual visitation up 17.5% to over 22m
Slide 22: Leasing
Leasing Solid spreads given fixed annual rental increases in specialty leases Leasing spread1 (%) 449 lease transactions completed1 For personal use only Six months to 12 months to 31-Dec-17 30-Jun-17 Leasing spread of 0.8% a strong result given fixed annual rental increases2 Leasing spread – renewa
Slide 23: Swap of premium Sydney retail assets with GIC
Swap of premium Sydney retail assets with GIC Three strongly performing Sydney CBD retail assets to be added to portfolio For personal use only Strategic exchange of premium Sydney retail assets Divesting 49% interest in Chatswood Chase Sydney for $562m to GIC Acquiring 50% interests in GIC’s Queen
Slide 24: Strategic partnerships
Strategic partnerships Stable and growing high quality income stream For personal use only 2-yr Strategic partnerships business provides a stable, high quality and Six months to 31-Dec-17 31-Dec-16 31-Dec-15 growing income stream notwithstanding wholesale fund divestments change Property management,
Slide 25: Sustainability
Sustainability Delivering sustainable long-term value for our communities and securityholders For personal use only Integrated energy program in place Solar will be a key element in reducing energy costs and carbon emissions Community investment program centred on addressing youth unemployment Partn
Slide 26: Development update
For personal use only Development update Carolyn Viney The Glen, VIC
Slide 27: Development summary
Development summary Strong progress made on the development pipeline Development pipeline of $2.1b (Vicinity share: $0.9b) For personal use only Key development highlights First stage of The Glen successfully opened in October 2017 and on program to open stage two fully leased in early 2018 Mandurah
Slide 28: Investing to create long-term value
Investing to create long-term value Extensive $2.1b development pipeline (Vicinity share: $0.9b) provides significant opportunities For personal use only $m Vicinity share Partner share Total Mandurah Forum, WA 160 320 The Glen, VIC 215 430 Current DFO Perth, WA 75 150 Midland Gate, WA 100 Chadstone
Slide 29: Mandurah Forum
Mandurah Forum On target to complete in mid-2018 For personal use only $320m major redevelopment1 Complete centre transformation New David Jones and H&M stores to open in 2018 Upgraded Coles and Kmart, together with new Target, now open New food court with adjoining play area, fresh food market hall
Slide 30: The Glen
The Glen First stage completed, stage two on track to open first quarter in 2018 For personal use only $430m major redevelopment1 Complete refurbishment of existing centre Latest format David Jones store New contemporary food gallery with casual dining hub and an outdoor dining precinct Over 500 apa
Slide 31: DFO Perth
DFO Perth Construction ahead of schedule and leasing on program $150m project1 For personal use only Joint venture to develop Perth’s first DFO centre 120 specialty stores and over 1,500 car spaces Construction and leasing progressing well Building structure well advanced and ahead of program Leasin
Slide 32: Chadstone hotel
Chadstone hotel High quality hotel to commence construction in early 2018 For personal use only $130m development1 project AccorHotels Group appointed operator under premium MGallery by Sofitel brand 10-year operating lease structure Premium features 13-level hotel with 250 rooms Conferencing and me
Slide 33: Chadstone major remixes
Chadstone major remixes Significant additional opportunities across the centre For personal use only Three projects totalling $80m1 Luxury tenant remix and cross mall reconfigurations Expanding luxury precinct from 29 to 40 stores capitalising on strong demand and performance Australian designer mal
Slide 34: Roselands
Roselands Centre refurbishment will offer modern fresh food precinct, enhanced consumer amenity and convenience For personal use only Planned $90m refurbishment1 Expected commencement in first half of 2018 Significant reconfiguration of ground floor fresh food offer Proposal for two new supermarkets
Slide 35: Galleria
Galleria Creating one of Perth’s leading destinations For personal use only Total project cost of $500m1 DA approved in September 2016 Minor DA amendment lodged in December 2017 Dominant Major Regional centre in north east Perth Existing centre trades strongly, specialty sales of $10,702 per sqm, in
Slide 36: Mixed-use opportunities
Mixed-use opportunities Significant potential to capture value from selective mixed-use opportunities across the portfolio For personal use only Preliminary portfolio review completed to identify mixed-use potential Significant opportunities identified and further investigation underway Focus on pre
Slide 37: Building the right team to deliver our projects
Building the right team to deliver our projects Expanding capabilities For personal use only Chadstone, VIC – Retail, office and hotel (planned) Vicinity Centres | FY18 interim results | 14 February 2018 37
Slide 38: Summary and FY18 guidance and focus
For personal use only Summary and FY18 guidance and focus Grant Kelley QueensPlaza, QLD
Slide 39: FY18 interim results summary
FY18 interim results summary Continued focus on portfolio enhancement and creating value for securityholders For personal use only Comparable1 FFO per security growth of 2.2% Valuation gains2 of $408.5m or 2.6% Sydney premium retail asset swap announced Further enhanced portfolio quality through ten
Slide 40: FY18 guidance and focus
FY18 guidance and focus Our focus remains on building quality and growth For personal use only Portfolio well positioned to create long-term value and sustainable growth FY18 FFO per security guidance of 18.0 to 18.2 cents1 Assumes securities bought back to date, ~$300m of asset divestments in FY18
Slide 41: Appendices
For personal use only 42 Our strategy 53 Development 43 Acquisitions 54 Tenants 44 Assets under management 55 Non-comparable centres for sales reporting Appendices 45 Direct portfolio 56 Asset summaries 48 Financial results 64 Key dates 51 Capital management 65 Contact details Halls Head Central, WA
Slide 42: Our Strategy: simple and transparent business model
Our Strategy: simple and transparent business model, with a single sector focus Creating value and sustainable growth by owning, managing and developing quality Australian retail assets For personal use only Invest in quality Australian assets across the retail spectrum 82 centres $26.1b Focus on lo
Slide 43: Acquisitions
Acquisitions Acquired three premium Sydney CBD retail assets, settlement expected in first half of 2018 Queen Victoria Building The Galeries The Strand For personal use only Annual retail sales $278.5m Annual retail sales $192.1m Annual retail sales $133.4m Specialty MAT/sqm $25,751 Specialty MAT/sq
Slide 44: Assets under management
Assets under management ~8,200 tenants across 82 assets under management1,2 For personal use only Direct portfolio Managed Third party/ Total Wholly-owned Co-owned Total co-owned AUM Number of retail assets2 47 27 74 8/27 82 Gross lettable area (000’s)(sqm) 1,184 1,376 2,560 227 2,787 Number of tena
Slide 45: Direct portfolio: key statistics by centre type
Direct portfolio Key statistics by centre type For personal use only As at 31 December 2017 Total portfolio Regional1 Sub Regional Neighbourhood Outlet Centre2 Number of retail assets3 74 22 32 14 6 Gross lettable area (m)(sqm) 2.6 1.5 0.7 0.1 0.2 Total value3 ($m) 16,099 10,409 3,488 703 1,499 Port
Slide 46: Direct portfolio: geographic and sub-sector exposure
Direct portfolio Well diversified by geographic and retail sub-sector exposure For personal use only Centre type composition1 Geographic exposure1 14 2 City Centre 4 3 Regional 17 17 Regional 2 4 Sub Regional Outlet Centre 9% Major Regional 1 Sub Regional 2 4 Neighbourhood Regional 2 1 Outlet Centre
Slide 47: Direct portfolio: sales by state
Direct portfolio Sales by state Comparable1 specialty store MAT growth by state (%) Victoria For personal use only 3 2.3 Robust economic conditions continue, with solid growth and strong business 2 confidence and consumer sentiment 0.8 0.4 1 0.0 Most assets showing growth 0 -1 (0.7) -2 (1.0) New Sou
Slide 48: FFO reconciliation to net profit after tax
Financial results Funds from operations reconciliation to net profit after tax For personal use only 31-Dec-17 31-Dec-16 For the 6 months to ($m) ($m) Funds from operations (FFO) 357.7 360.7 Property revaluation increment for directly owned properties 417.0 546.8 Non-distributable gain relating to e
Slide 49: Reconciliation of comparable FFO per security growth
Financial results Adjusting for acquisitions and divestments, comparable FFO per security growth was 2.2% For personal use only Reconciliation of actual and comparable FFO per security growth 10 Comparable growth 2.2% (0.17) 0.20 FFO (cents per security) 9 8 9.11 8.94 9.14 7 Adjusted Dec-16 Dec-16 I
Slide 50: Key drivers of NTA
Financial results NTA growth of 3.9% contributing to a six month total return1 of 6.8% (or 13.4% over 12 months) For personal use only Key drivers of NTA 3.20 0.01 Six-month 3.00 NTA growth 0.10 0.09 (0.08) 3.9% 2.80 NTA ($) 2.60 2.93 2.40 2.82 2.20 2.00 Jun-17 Dec-17 FFO Asset Buy-back Distribution
Slide 51: Interest rate hedging profile
Capital management Interest rate hedging profile For personal use only Hedging profile1,2 Key hedging statistics 4,000 5.00% 3,500 4.90% As at period end 31-Dec-17 30-Jun-17 3,000 4.80% Weighted average hedge rate (%)1 4.5 4.3 2,500 4.70% Notional A$m Hedge rate Proportion of debt hedged (%) 82 90 2
Slide 52: Facilities by maturity
Capital management Facilities by maturity Limit For personal use only Maturity Instrument ($m) Dec-18 Bank debt facilities 100.0 1 Feb-19 USPP 38.0 Feb-19 Bank debt facilities 50.0 Jun-19 Bank debt facilities 582.3 Dec-19 Australian medium term notes (AMTN) 400.0 Dec-19 Bank debt facilities 350.0 Fe
Slide 53: Development: costs to complete
Development Vicinity’s share of costs to complete projects under construction is $203m For personal use only Total Vicinity’s share Identified development pipeline ($m) project Project Spent to Cost to cost cost 31-Dec-17 complete Mandurah Forum 320 160 129 31 The Glen 430 215 86 129 DFO Perth 150 7
Slide 54: Key portfolio tenants
Tenants Key portfolio tenants For personal use only Top 10 tenants Top 10 tenant groups Number % of Number % of Rank Retailer Retailer type of stores income Rank Retailer of leases income Brands Coles, First Choice Liquor, Kmart, 1 Supermarket 49 4.3 1 124 9.3 Liquorland, Target, Vintage Cellars Big
Slide 55: Non-comparable centres for sales reporting
Non-comparable centres for sales reporting For personal use only Centre Comment Broadmeadows Central, VIC Major tenant changeover Chadstone, VIC Development Currambine Central, WA Development Halls Head Central, WA Development Lavington Square, NSW Major tenant changeover Mandurah Forum, WA Developm
Slide 56: Asset summaries: centre statistics
Asset summaries Centre statistics For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) New South Wales Chatswood Chase Sydney Major Regional 100 63,815 99.6
Slide 57: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Queensland QueensPlaza City Centre 100 39,066 100.0 295.9
Slide 58: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria Chadstone2 Super Regional 50 212,899 99.9 n.a. n.
Slide 59: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate1 (MAT) sales1 sales1 costs1,2 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria (continued) DFO South Wharf Outlet Centre 10
Slide 60: Asset summaries: valuations
Asset summaries Valuations For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-171 31-Dec-17 30-Jun-17 Movement 31-Dec-17 (%) ($m) ($m) (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regiona
Slide 61: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-171 31-Dec-17 30-Jun-17 Movement 31-Dec-17 (%) ($m) ($m) (%) (%) (%) Queensland QueensPlaza City Centre 100 (
Slide 62: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-171 31-Dec-17 30-Jun-17 Movement 31-Dec-17 (%) ($m) ($m) (%) (%) (%) Victoria Chadstone Super Regional 50 324
Slide 63: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-171 31-Dec-17 30-Jun-17 Movement 31-Dec-17 (%) ($m) ($m) (%) (%) (%) Victoria (continued) DFO South Wharf Out
Slide 64: Key dates
Key dates Investor calendar For personal use only Key dates Ex-distribution date for December 2018 distribution 28 December 2017 Record date for December 2018 distribution 29 December 2017 FY18 interim results 14 February 2018 December 2017 distribution payment 28 February 2018 Ex-distribution date
Slide 65: Contact details and disclaimer
Contact details and disclaimer For further information please contact: For personal use only Penny Berger Troy Dahms Head of Investor Relations Senior Investor Relations Manager T +61 2 8229 7760 T +61 2 8229 7763 E penny.berger@vicinity.com.au E troy.dahms@vicinity.com.au Disclaimer This document i