Stockland · ASX:SGP
Stockland — FY2020 Earnings Presentation
64 slides from Stockland's earnings presentation, Aug 25, 2020
Slide 1: FY20 Annexure
About Group Commercial Communities Research Stockland Finance Property FY20 Annexure 25 August 2020 AURA, QLD
Slide 2: Agenda
About Group Commercial Communities Research Stockland Finance Property Agenda About Stockland 03 Financial result and capital management 06 Commercial Property 17 Communities 29 Research 50 Figures are rounded to nearest million, unless otherwise stated. Percentages are calculated based on the figur
Slide 3: Stockland quick facts
About Group Commercial Communities Research Stockland Finance Property Stockland quick facts TRUST – $9.9bn1 CORPORATION – $4.7bn2 Stockland Shellharbour, NSW Stockland Piccadilly PiccadillyShellharbour, Complex, Complex,Sydney NSW Sydney Warwick Farm, Sydney Highlands, Vic Mernda Retirement Village
Slide 4: Strategic mix
About Group Commercial Communities Research Stockland Finance Property Strategic mix ASSETS OPERATING PROFIT Recurring Target FY20 FY19 FY20 FY19 Commercial Property 68% 68% 55% 60% Retirement Living 7% 7% 6% 5% Unallocated corporate overheads - - (3)% (3)% Total recurring 70 – 80% 75% 75% 58% 62% T
Slide 5: We are well positioned with a diverse portfolio
About Group Commercial Communities Research Stockland Finance Property We are well positioned with a diverse portfolio1,2 BOOK VALUE BY STATE WA - $1.0bn | 6% of portfolio Qld - $2.8bn | 19% of portfolio 6 8 1 17 18 9 Commercial Residential Retirement Commercial Residential Retirement3 SA & ACT - $0
Slide 6: Group finance
About Group Commercial Communities Research Stockland Finance Property Group finance Annexure THE GABLES, NSW 6
Slide 7: Profit summary
About Group Commercial Communities Research Stockland Finance Property Profit summary $m FY20 FY19 CHANGE Residential Communities EBIT (before interest in COGS) 500 455 9.8% Commercial Property EBIT 523 607 (13.8)% Retirement Living EBIT 65 62 6.5% Consolidated segment EBIT 1,088 1,124 (3.2)% Amorti
Slide 8: Net interest gap
About Group Commercial Communities Research Stockland Finance Property Net interest gap DEFERRED INTEREST – RESIDENTIAL $m FY20 FY19 Interest Deferred Total Interest Deferred Total Interest expense Interest Interest Interest income (2) - (2) (4) - (4) Interest expense 176 33 209 192 40 232 • Non-cas
Slide 9: Return on assets, return on equity
About Group Commercial Communities Research Stockland Finance Property Return on assets, return on equity KEY METRICS FY20 FY19 Cash Avg. Cash Cash Avg. Cash Return Return profit ($m) invested ($bn) profit ($m) invested ($bn) Retail Town Centres 331 5.4 6.2% 421 5.5 7.7% Logistics 155 2.2 7.1% 159 2
Slide 10: Reconciliation between return on equity table values and accounting results
About Group Commercial Communities Research Stockland Finance Property Reconciliation between return on equity table values and accounting results RECONCILIATION OF GROUP RETURN IN ROE CALCULATION TO FFO RECONCILIATION OF CAPITAL EMPLOYED IN ROE CALCULATION TO STATUTORY NET ASSETS $m FY20 FY19 $bn A
Slide 11: Cost management
About Group Commercial Communities Research Stockland Finance Property Cost management $m FY20 FY19 • Diligent approach to managing cost across the Group Residential 193 199 • Reduction in unallocated corporate costs largely attributable to the business restructure Retirement Living 38 42 and other
Slide 12: Long dated, diverse debt
About Group Commercial Communities Research Stockland Finance Property Long dated, diverse debt LONG DATED DRAWN DEBT MATURITY PROFILE DRAWN DEBT OF $4.3BN1 COMMITTED FACILITIES OF $5.9BN1 (WADM 5.7 YEARS)1 $m’s Bank debt, Commercial 1,000 75m, 2% Paper 10m, 0% 900 Bank debt, USPP 1,650m, 28% 2,106m
Slide 13: Cost of debt and hedge profile
About Group Commercial Communities Research Stockland Finance Property Cost of debt and hedge profile COST OF DEBT FOR FY20 FORECAST HEDGE RATE3 $b DEBT1 TOTAL DEBT2 INTEREST RATE Hedged debt $3,118m 72% 2.3% 3.5 4.4% Floating debt $1,200m 28% 0.2% 4.2% Total debt $4,318m 2.5% 3.0 Fixed Margin 1.2%
Slide 14: Covenant calculations
About Group Commercial Communities Research Stockland Finance Property Covenant calculations STATUTORY GEARING AT 30 JUNE 2020 BALANCE SHEET ADJUSTMENTS $m COVENANT $m BALANCE SHEET $m All lenders have consistent covenants Assets • Financial Indebtedness/Total Tangible assets (FI/TTA): less than 50%
Slide 15: Balance sheet summary
About Group Commercial Communities Research Stockland Finance Property Balance sheet summary $m FY20 FY19 CHANGE Cash 443 140 216.1% Real estate related assets - Commercial Property 10,140 10,323 (1.8)% - Residential1 3,395 3,411 (0.5)% - Retirement Living 1,287 1,452 (11.3)% - Other 130 36 262.5% R
Slide 16: Stockland Corporation income tax reconciliation
About Group Commercial Communities Research Stockland Finance Property Stockland Corporation income tax reconciliation FY20 FY19 Net profit before tax 33 358 Less: Trust profit and Intergroup eliminations 70 (229) Corporation profit/(loss) before tax B 103 129 Prima facie tax expense @ 30% (31) (39)
Slide 17: Commercial Property
Commercial Property Annexure M_PARK, NSW 17 Artist Impression
Slide 18: Portfolio weightings
About Group Commercial Communities Research Stockland Finance Property Portfolio weightings Commercial Property ASSETS BY BOOK VALUE $9.9bn1 Retail Town Centres: - $6.0bn Logistics - $2.9bn Workplace - $1.0bn ($6.2bn under management) ($3.1bn under management) ($1.0bn under management) 30 properties
Slide 19: Funds from operations
About Group Commercial Communities Research Stockland Finance Property Funds from operations Commercial Property RETAIL LOGISTICS WORKPLACE NET OVERHEAD COSTS TOTAL $m FY20 FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20 FY19 Operating EBIT 2851 382 140 144 46 36 (20) (21) 451 541 Adjust for: Amortisation o
Slide 20: Average weighted cap rates over time
About Group Commercial Communities Research Stockland Finance Property Average weighted cap rates over time Commercial Property 9% RETAIL 8% 7% 7.3% 7.4% 7.2% 6% 7.1% 7.0% 6.8% 6.5% 6.1% 5.8% 6.1% 5.9% 5.9% 5% FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 LOGISTICS 9% 8% 7% 8.4% 8.4% 8
Slide 21: Top tenants by income
About Group Commercial Communities Research Stockland Finance Property Top 10 tenants by income Commercial Property RETAIL TOWN CENTRES LOGISTICS PORTFOLIO WORKPLACE PORTFOLIO Rank Tenant Portfolio Tenant Portfolio Tenant Portfolio 1 Woolworths 9.3% Optus Administration Pty Ltd 10.2% Stockland Devel
Slide 22: Acquisitions and Disposals
About Group Commercial Communities Research Stockland Finance Property Acquisitions and Disposals Commercial Property PROPERTY DISPOSED1 ASSET CLASS SETTLEMENT DATE DISPOSAL VALUE2 $m Tooronga Vic Retail Sep 2019 62.8 Cammeray NSW Retail Oct 2019 39.2 Jesmond NSW Retail Oct 2019 118.0 North Shore Ql
Slide 23: Performance: Logistics
About Group Commercial Communities Research Stockland Finance Property Performance Logistics OCCUPANCY AND LEASE EXPIRY BY INCOME1 FFO MOVEMENTS BETWEEN ASSETS BY BOOK VALUE2 FY19 AND FY20 $m FY20 FY19 Business Parks Logistics (1) $0.9bn $2.0bn Occupancy 96.3% 96.5% 6 (9) WALE 5.2 yrs 5.2 yrs LEASE
Slide 24: Development pipeline: Workplace & Logistics
About Group Commercial Communities Research Stockland Finance Property Development pipeline Workplace & Logistics EST. TOTAL GROSS EST. EST. FULLY DEVELOPMENT COST SPENT TO EST. COST TO EST. TOTAL INCREMENTAL LETTABLE AREA COMPLETION LEASED YEAR EST. RETURN3 TYPE DATE ($M) COMPLETE ($M) RETURN4 COST
Slide 25: Growing and activating the development pipeline
About Group Commercial Communities Research Stockland Finance Property Growing and activating the development pipeline Workplace & Logistics COMPLETED ACTIVE DEVELOPMENT PLANNING UNDERWAY FUTURE WAVE DA approvals received M_Park • Yatala (Qld) (Stage 2) (Stage 2-4) • M_Park (NSW) (Stage 1) and preci
Slide 26: Performance: Workplace
About Group Commercial Communities Research Stockland Finance Property Performance Workplace FFO MOVEMENTS BETWEEN OCCUPANCY AND LEASE EXPIRY BY INCOME1 ASSETS BY LOCATION2 FY19 AND FY20 $m FY20 FY19 Sydney Occupancy 93.6% 94.7% (8) 91.2% 12 WALE 3.2 yrs 3.7 yrs 2 LEASE EXPIRY PROFILE1 40% $1.0bn3 5
Slide 27: Diversified rental income and FFO movement
About Group Commercial Communities Research Stockland Finance Property Diversified rental income and FFO movement Retail Town Centres DIVERSIFIED RENTAL INCOME, NON-DISCRETIONARY FOCUS1 - LOW RELIANCE ON DDS AND DEPARTMENT STORE INCOME Department DDS Supermarkets Mini-majors Apparel Specialty Food S
Slide 28: Redevelopment pipeline focused on continuous growth categories
About Group Commercial Communities Research Stockland Finance Property Redevelopment pipeline focused on continuous growth categories Retail Town Centres NEIGHBOURHOOD SUB-REGIONAL REGIONAL MAJOR REGIONAL DA approvals received ACTIVITY CENTRES • Elara (NSW) • Birtinya Night Quarter (Qld) Under Const
Slide 29: Communities
About Group Commercial Communities Research Stockland Finance Property Communities Annexure WATERLEA, VIC 29
Slide 30: Margins driven by 2H20 skew of Sydney projects
About Group Commercial Communities Research Stockland Finance Property Margins driven by 2H20 skew of Sydney projects Residential Communities OPERATING PROFIT MARGIN KEY METRICS FY20 FY19 CHANGE 25.0% Total lots settled 5,3191 5,878 (9.5)% 1.0% (0.1)% Total revenue $1,871m $1,819m 2.8% 20.0% (3.6)%
Slide 31: Development pipeline – Major projects
About Group Commercial Communities Research Stockland Finance Property Development pipeline – Major projects Residential Communities Anticipated settlements APPROXIMATE APPROX. REMAINING STATE PROJECT STATE PERCENTAGE TOTAL PROJECT LOTS SETTLEMENTS PER FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 PROJECT
Slide 32: Retail sales price
About Group Commercial Communities Research Stockland Finance Property Retail sales price1 Residential Communities FY20 SETTLEMENTS FY19 SETTLEMENTS State No. Lots Av. Size per lot sqm Av. Price per lot $k $/sqm No. Lots Av. Size per lot sqm Av. Price per lot $k $/sqm NSW 844 386 414 1,072 1,185 370
Slide 33: Lots settled by location
About Group Commercial Communities Research Stockland Finance Property Lots settled by location Residential Communities 6,604 6,438 6,135 5,876 1,371 5,878 1,035 1,557 5,219 771 5,319 1,459 531 950 NSW 1,704 2,018 1,894 1,812 2,144 1,483 Qld 2,079 1,591 1,899 1,108 2,111 1,761 2,213 Vic 1,561 1,768
Slide 34: Net deposits by quarter
About Group Commercial Communities Research Stockland Finance Property Net deposits by quarter Residential Communities NET DEPOSITS BY BUYER 78.3% 79.1% 86.1% 86.5% 75.6% 86.3% 87.3% % Owner 83.9% 83.8% 80.0% 77.3% 74.8% Occupier 1,672 1,561 1,535 408 1,337 213 1,293 1,295 1,350 1,375 338 1,149 1,12
Slide 35: Leads and enquiry levels
About Group Commercial Communities Research Stockland Finance Property Leads and enquiry levels Residential Communities LEAD VOLUMES MAJORITY OF OUR CUSTOMERS ARE OWNER OCCUPIERS 12,000 Composition of Stockland new leads Average monthly leads 75% 10,000 First Home Buyers Upgraders Retail Investors 6
Slide 36: Summary table of residential stimulus packages
About Group Commercial Communities Research Stockland Finance Property Summary table of residential stimulus packages WA Qld HOMEBUILDER FHOG1 HOMEBUILDER FHOG1 $25k $30k2 $25k $15k5 NSW HOMEBUILDER FHOG1 TOTAL BENEFIT GRANT TOTAL BENEFIT GRANT $25k $10k7 $55k $40k TOTAL BENEFIT GRANT OTHER SAVINGS
Slide 37: Key short term residential drivers – Rates and Credit Growth
About Group Commercial Communities Research Stockland Finance Property Key short term residential drivers – Rates and Credit Growth AUSTRALIAN HOUSE PRICES VS. MORTGAGE RATES AUSTRALIAN HOUSE PRICES VS. CREDIT GROWTH Price growth House price Growth (LHS) (LHS) Mortgage rate Rate(RHS) (RHS) House pri
Slide 38: Market overview
About Group Commercial Communities Research Stockland Finance Property Market overview Residential Communities STOCKLAND SUMMARY FY20 SETTLEMENT VOLUMES COMMENTS ON STATE (% CHANGE OVER FY19) OUR SETTLEMENTS IN FY20 FY21 MARKET COMMENTARY NSW settlement volumes are lower primarily due to lower sales
Slide 39: Providing affordable product
About Group Commercial Communities Research Stockland Finance Property Providing affordable product Residential Communities STOCKLAND PRICING RELATIVE TO LOCAL MEDIAN HOUSE AND UNIT PRICE ($) Stockland House and Land Median house price3 805k entry price1 760k 725k 694k 608k 586k 559k 553k 560k 553k
Slide 40: Composition of residential landbank
About Group Commercial Communities Research Stockland Finance Property Composition of residential landbank1 NET FUNDS EMPLOYED: $2.1bn BOOK VALUE: $3.4bn Apartments 5% NSW2 20% NSW2 37% 54% ~51,450 Active lots Qld 21% Residential 78% Aura 6% Qld communities 19% Active within 14% Aura 1% two years ~8
Slide 41: Key communities, located in connected, population growth corridors (Sydney)
About Group Commercial Communities Research Stockland Finance Property Key communities, located in connected, population growth corridors1 SYDNEY Average annual growth 2016 – 2021 by LGA (per annum) Greater than 2% 1.5% - 2% 1% - 1.5% 0.5% - 1% Less than 0.5% 1. State Government Population Projectio
Slide 42: Key communities, located in connected, population growth corridors (Melbourne)
About Group Commercial Communities Research Stockland Finance Property Key communities, located in connected, population growth corridors1 MELBOURNE Average annual growth 2016 – 2021 by LGA (per annum) Greater than 2% 1.5% - 2% 1% - 1.5% 0.5% - 1% Less than 0.5% 1. State Government Population Projec
Slide 43: Key communities, located in connected, population growth corridors (Brisbane, Perth)
About Group Commercial Communities Research Stockland Finance Property Key communities, located in connected, population growth corridors1 BRISBANE PERTH Greater than 2% 1.5% - 2% 1% - 1.5% 0.5% - 1% Less than 0.5% 1. State Government Population Projections. 43
Slide 44: Workout contribution and impairment provision balance
About Group Commercial Communities Research Stockland Finance Property Workout contribution and impairment provision balance Residential Communities RESIDENTIAL IMPAIRMENT PROVISION UTILISATION AS AT 30 JUNE 2020 WORKOUT CONTRIBUTION TO RESIDENTIAL ($m) Residential Core Workout1 Total Net increase /
Slide 45: Profit driven by development settlements and village disposals
About Group Commercial Communities Research Stockland Finance Property Profit driven by development settlements and village disposals Retirement Living NET RESERVATIONS KEY METRICS FY20 FY19 1200 Retirement Living FFO $58m $56m 794 (854) Occupancy 93.4% 93.3% 1000 204 Cash ROA 5.1% 4.5% (290) Develo
Slide 46: Established portfolio
About Group Commercial Communities Research Stockland Finance Property Established portfolio Retirement Living NET FUNDS EMPLOYED PORTFOLIO STATISTICS FY20 FY19 $1,509m Established villages 63 62 38 $1,309m 172 Established units 9,412 9,167 110 Established units settlements 564 551 221 372 Withheld
Slide 47: Retirement Living: strong demand drivers
About Group Commercial Communities Research Stockland Finance Property Retirement Living: strong demand drivers COMPELLING DEMAND FUNDAMENTALS Australian population aged 65+ growing at significantly faster pace than under 65 population 1 Over 65: 2.7% CAGR over next 15 years 3.5% 3.1% 2.9% Under 65:
Slide 48: Development pipeline: Retirement Living
About Group Commercial Communities Research Stockland Finance Property Development pipeline Retirement Living GEOGRAPHICALLY DIVERSE DEVELOPMENT PIPELINE DEVELOPMENT PIPELINE BREAKUP 2% DEVELOPMENT PIPELINE FY20 Development villages 21 10% Total development pipeline units 3,325 - Greenfield pipeline
Slide 49: Retirement Living pipeline
About Group Commercial Communities Research Stockland Finance Property Retirement Living pipeline FUTURE CONSTRUCTION TIMEFRAME FY21 FY22 FY23 FY24 FY25+ SETTLEMENTS Completed Gillin Park, Vic Mernda, Vic Cardinal Freeman The Residences, NSW Elara Aspire, NSW Lightsview, SA Newport, Qld Shine Birtin
Slide 50: Research
Research Annexure MINTA, Vic 50
Slide 51: Retail environment remains challenging
About Group Commercial Communities Research Stockland Finance Property Retail environment remains challenging MONTHLY RETAIL TRADE – Y/Y GROWTH1 CONSUMER SENTIMENT TRENDING DOWN PRE-COVID2 130 2019 2020 12% 120 8% 4% 110 0% 100 -4% 90 -8% -12% 80 January February March April May June 70 2007 2008 20
Slide 52: Online retail will grow, supported by continued investment by multichannel retailers
About Group Commercial Communities Research Stockland Finance Property Online retail will grow, supported by continued investment by multichannel retailers ANNUAL RETAIL TURNOVER – ONLINE RETAIL GROWTH BRICKS & MORTAR VS. ONLINE Bricks & mortar (LHS) Online retail (LHS) 80% Monthly growth (YoY) Annu
Slide 53: Population growth hit heavily by COVID-19 and forecast to be weak until 2022
About Group Commercial Communities Research Stockland Finance Property Population growth hit heavily by COVID-19 and forecast to be weak until 2022 AUS POPULATION GROWTH INTERSTATE MIGRATION FALLING FOR NSW & VIC PRE-COVID1 (Annual year to June)1,2 Annual rolling sum (‘000s) 500,000 2.5% 45,000 NSW
Slide 54: Government stimulus is a highly effective lever
About Group Commercial Communities Research Stockland Finance Property Government stimulus is a highly effective lever AUSTRALIAN HOUSE PRICES (QUARTERLY)…. 20.00% First Home Owners First Home Grant established Owners Boost ends 15.00% 10.00% Additional First Home Owners 5.00% Scheme ends 0.00% 1996
Slide 55: Government stimulus is a highly effective lever
About Group Commercial Communities Research Stockland Finance Property Government stimulus is a highly effective lever AUSTRALIAN LAND SALES (QUARTERLY, NO.) CoreLogic Land Sales (LHS) 35,000 First Home Owners 2020 stimulus initiatives Boost ends 30,000 25,000 20,000 Various state government stimulu
Slide 56: Longer term residential drivers – labour market and migration
About Group Commercial Communities Research Stockland Finance Property Longer term residential drivers – labour market and migration AUSTRALIAN HOUSE PRICE GROWTH VS. AUSTRALIAN HOUSE PRICE GROWTH VS NET OVERSEAS UNEMPLOYMENT MIGRATION House House Price price Growth growth (LHS) Unemployment Unemplo
Slide 57: Dwelling commencements weak, undersupply to persist
About Group Commercial Communities Research Stockland Finance Property Dwelling commencements weak, undersupply to persist DWELLING COMMENCEMENTS ARE DOWN HEAVILY, DWELLINGS FORECAST TO REMAIN UNDERSUPPLIED2 NOW BELOW LONG TERM AVERAGE ON TOTAL & PER CAPITA BASIS1 250 30 Dwelling commencements (LHS)
Slide 58: National building approvals
About Group Commercial Communities Research Stockland Finance Property National building approvals NSW DWELLING APPROVALS1 VIC DWELLING APPROVALS 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 0 0 1985 1989 1993 1997 2001 2005 2009 2013 2017 1985 1989 1993 1997 2001 2005 2009 2013 2017 QLD DWELLING
Slide 59: National house and land prices
About Group Commercial Communities Research Stockland Finance Property National house and land prices Prices held relatively well in June quarter for both houses and land LAND PRICE PER SQM1 CAPITAL CITY HOUSE PRICES – ROLLING ANNUAL CHANGE2 1400 45% Metro Sydney SEQ Perth Melbourne NSW VIC QLD WA 1
Slide 60: Vacant land sales up across the country in June
About Group Commercial Communities Research Stockland Finance Property Vacant land sales up across the country in June1 NSW VACANT LAND VIC VACANT LAND Quarterly sales Quarterly sales 4,000 7,000 3,500 6,000 3,000 5,000 2,500 4,000 2,000 3,000 1,500 1,000 2,000 500 1,000 0 0 Jun-09 Jun-10 Jun-11 Jun
Slide 61: Residential vacancy rates
About Group Commercial Communities Research Stockland Finance Property Residential vacancy rates Rental vacancy rates1 moving down across the country 6% 5% 4% Sydney 3% Melbourne Brisbane 2% Perth 1% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 1. SQM Research June 2020. 61
Slide 62: Housing finance
About Group Commercial Communities Research Stockland Finance Property Housing finance Heaviest falls in lending for investors, with first-home buyer lending holding up best since COVID-19 RESIDENTIAL LOAN APPROVALS ($M, MONTHLY)1 14,000 Investor First Home Buyer Owner Occupier (excl. FHB) 12,000 10
Slide 63: Household affordability improves as prices and mortgage rates fall while wages grow
About Group Commercial Communities Research Stockland Finance Property Household affordability improves as prices and mortgage rates fall while wages grow HOUSEHOLD DEBT-TO-ASSET AND DEBT-TO-INCOME RATIOS EASED IN SECOND HALF 20191 MORTGAGE REPAYMENTS AS % OF HOUSEHOLD INCOME2 200% 30% 60% Debt-to-I
Slide 64: 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