Slide 1: FY18 annual results and strategy update
FY18 annual results and strategy update 15 August 2018 Vicinity Centres | FY18 annual results and strategy update | 15 August 2018
Slide 2: FY18 results overview and strategy update
FY18 results Grant Kelley overview and CEO AND MANAGING DIRECTOR strategy update Financials and Richard Jamieson FY19 guidance CHIEF FINANCIAL OFFICER Portfolio Michael O’Brien CHIEF INVESTMENT OFFICER Stuart Macrae EGM LEASING Justin Mills EGM SHOPPING CENTRE MANAGEMENT Development and Carolyn Vine
Slide 3: FY18 results overview
FY18 results overview Grant Kelley CEO AND MANAGING DIRECTOR Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 Queen Victoria Building, NSW
Slide 4: FY18 results overview
FY18 results overview Positioning Vicinity for long-term growth Results Net profit of $1,218.7m Funds from operations (FFO) of 18.2 cps, reflecting 2.2% comparable growth1 Net tangible assets per security (NTA) up 5.3% to $2.97, total return of 11.1% Portfolio occupancy strong at 99.7% Strategic ini
Slide 5: Strategy update: Unlocking Vicinity's potential
Strategy update: Unlocking Vicinity’s potential Grant Kelley CEO AND MANAGING DIRECTOR Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 Emporium Melbourne, VIC
Slide 6: Vicinity's strategy
Vicinity’s strategy Unlocking Vicinity’s potential Vicinity’s strategy is to deliver strong and sustainable growth via focus on: 1. 1 Market-leading destinations 2. 2 Expanding our wholesale funds platform 3. 3 Realising mixed-use opportunities Destination Listed (VCX) assets Wholesale Land parcel a
Slide 7: Three strategic initiatives announced over the past six months
Three strategic initiatives announced over the past six months Implementing the strategy Divestment of up to $1.0b Establishment1 of ~$1.0b Significant mixed-use Destination assets of non-core assets wholesale fund with opportunities identified Keppel Capital across portfolio Wholesale Mixed-use Non
Slide 8: Delivering on strategy
Delivering on strategy Active capital recycling program driving future growth In progress Completed Strong and sustainable growth Market-leading destinations Wholesale funds management Completing capital recycling strategy Mixed-use opportunities Up to $1.0b of non-core Sub Regional Initial phase of
Slide 9: Market-leading destinations
Market-leading destinations Highly productive portfolio with strong growth potential Post planned divestment of ~$2.0b of assets1 Destination asset portfolio (by value)1 Flagship portfolio ~50 centres Chadstone, premium CBD and DFO Development Chadstone assets represent ~50%1 potential High potentia
Slide 10: Market-leading destinations
Market-leading destinations Flagship and high potential assets have strong growth prospects Flagship portfolio High potential Chadstone Premium CBD assets DFOs Australia’s #1 shopping centre Unrivalled premium CBD retail Australia’s #1 outlet centre portfolio Strong Regional and Sub Regional with ov
Slide 11: Enhancing market-leading destinations
Enhancing market-leading destinations Retail development pipeline is a key growth driver Development pipeline 8 projects Major pipeline projects include The Glen, Chadstone, Chatswood Chase Sydney, Galleria and The Myer Centre Brisbane Improves sales performance and productivity, delivering sustaina
Slide 12: Optimising the portfolio
Optimising the portfolio Potential to further improve operational performance Tenant remixing Ancillary income and operational efficiencies Reweighting portfolio mix towards higher demand, stronger Additional strong growth potential across ancillary income categories performing categories Further op
Slide 13: Leveraging digital to reinforce physical
Leveraging digital to reinforce physical Opportunity to use data insights and technology to drive sales Changing Want a seamless, omni-channel experience Opportunity for Vicinity to use data consumer Shift in spending towards experiences insights and technology to: preferences • Improve retail mix C
Slide 14: Wholesale platform
Wholesale platform Platform provides access to capital and income streams VKF wholesale fund – proposed ~$1.0 billion Expands Vicinity’s funds management of assets from platform Keppel Capital is an aligned partner, External VCX balance sheet investors with strong capital relationships Vicinity to p
Slide 15: Mixed-use opportunities
Mixed-use opportunities Mixed-use development to unlock additional value within Vicinity’s existing portfolio Early stage assessment, potential value upside from mixed-use for Vicinity of ~$1.0b Significant opportunities 12 significant Early stage assessment projects1 Density increasing in catchment
Slide 16: Vicinity's strategy
Vicinity’s strategy Unlocking Vicinity’s potential Vicinity’s strategy is to deliver strong and sustainable growth via focus on: 1. 1 Market-leading destinations 2. 2 Expanding our wholesale funds platform 3. 3 Realising mixed-use opportunities Destination ~50 market-leading destinations assets Whol
Slide 17: Financials and FY19 guidance
Financials and FY19 guidance Richard Jamieson CHIEF FINANCIAL OFFICER Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 QueensPlaza, QLD
Slide 18: Financial results
Financial results FFO per security growth of 2.2% on a comparable basis1 Statutory net profit2 Comparable FFO per security1 FFO per security Net corporate overheads $1,218.7 million 2.2% growth 18.2 cents 2.1% reduction FFO of $708.7m and strong net valuation Development completions, Growth of 1.1%
Slide 19: Financial position
Financial position Strong balance sheet maintained, well positioned for the future NTA of $2.97 Total return1 Increase in investment properties2 Gearing 5.3% growth 11.1% $852.3 million 26.4% Asset valuation gains and securities 5.3% growth in NTA and Net asset valuation gains of $555.1m Up 170 bps
Slide 20: Valuations
Valuations Net valuation gains1 of $555.1m or 3.6% Net valuation gains1 Weighted average capitalisation rate Sydney CBD Centres valuation gains Emporium Melbourne $555.1 million 5.36% 3.1% increase 8.2% uplift 3.6% growth, including strong Tightened 25 bps over the year Net of acquisition costs Gain
Slide 21: Capital management
Capital management Well diversified funding sources, investment grade credit rating New or renegotiated debt Liquidity Weighted average interest rate Weighted average debt duration $1.0 billion 1 $1.1 billion 4.3% 4.4 years Fully repaid FY18 expiries, Sufficient capacity for planned investment and i
Slide 22: FY19 guidance and focus
FY19 guidance and focus Comparable FFO per security growth of 3.4% to 4.6%1 No major change to the current retail environment expected FY19 FFO guidance of 18.0 to 18.2cps over the next 12 months 19 Comparable growth Portfolio well positioned to create long-term value and 3.4% to 4.6% 18.2 sustainab
Slide 23: Portfolio
Portfolio Michael O’Brien CHIEF INVESTMENT OFFICER Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 The Strand Arcade, NSW
Slide 24: Strong progress made since merger
Strong progress made since merger Portfolio significantly repositioned, material value created and balance sheet strengthened Divestments since merger1 Capital reinvested Value created $1.9 billion $1.6 billion $0.3 billion Interests in 24 assets sold at a 2.4% premium Developments of $0.8b, acquisi
Slide 25: Capital strength and disciplined allocation
Capital strength and disciplined allocation Strengthened balance sheet with capacity to invest in FFO per security and NTA accretive opportunities Proforma gearing1 Proforma investment capacity ~18% ~$2.5 billion Adjusting for proposed up to $1.0b To be reinvested into FFO per security of non-core d
Slide 26: Reinvestment opportunities
Reinvestment opportunities Disciplined capital allocation Reinvestment options Rationale Target returns Risk Timeframe Portfolio initiatives Tenant remixing of select assets toward higher demand, 10%-15% IRR Low Near term stronger performing categories driving sales productivity and stronger rental
Slide 27: Leasing
Leasing Stuart Macrae EGM LEASING Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 Emporium Melbourne, VIC
Slide 28: Portfolio highlights
Portfolio highlights Portfolio occupancy improved Occupancy rate Comparable NPI growth Leasing spread2 Specialty occupancy cost3 99.7% 1.0% +0.7% 14.7% Improved from 99.5% Increases to 1.7% excluding Comprising +0.6% for renewals Up marginally from 14.6% in FY17 at June 2017 pre-development centres1
Slide 29: Sales summary
Sales summary Benefiting from ongoing active management Specialty MAT productivity Specialty MAT/sqm growth Total MAT growth Specialty and mini major MAT growth 1 1 $10,133 /sqm1 +7.5% +1.2% +1.6% Up from $9,429/sqm in FY17 Reflecting portfolio repositioning Up from 0.4% growth in the prior year Com
Slide 30: Sales performance
Sales performance Services, food catering and leisure continue to show strong growth Supermarkets and Retail services1 Leisure1 Food catering1 discount department stores +6.1% +5.2% +2.6% +1.4% Hairdressing and beauty +8.1% Sporting goods +9.3% and books +5.3% Cafes and restaurants +3.3% Performance
Slide 31: Data and technology enhancing retailer partnerships and re-mixing
Data and technology enhancing retailer partnerships and re-mixing Market-leading infrastructure providing insights that will significantly improve retailer performance Highly advanced data capture and analysis capability All centres and corporate offices connected to single high-speed digital networ
Slide 32: Active remixing
Active remixing Responding to consumer demand and driving sales productivity FY18 tenant replacements1 Expanding food catering2 Expanding retail services2 48% +59% +19% Actively remixing towards stronger performing Growth over the past five years2 Growth over the past five years2 categories with 360
Slide 33: DFOs actively remixed
DFOs actively remixed Significant value created $9,934 Specialty MAT/sqm up 36% since acquisition 15.6% Annualised total return since acquisition High-profile tenants added over time Including: Furla, Bally, Coach, Michael Kors, New Salvatore Ferragamo, MJ Bale, Tommy Hilfiger, Max Mara, Hugo Boss,
Slide 34: Chadstone is Australia's #1 retail centre with over $2.0b of MAT
Chadstone is Australia’s #1 retail centre with over $2.0b of MAT International flagships, expanded luxury, quality dining and entertainment driving increased visitation #1 MAT across Australia for 17th consecutive year1 >60% higher than next peer Luxury precinct in Australia #1 New: Hermès, Van Clee
Slide 35: Shopping Centres
Shopping Centres Justin Mills EGM SHOPPING CENTRE MANAGEMENT Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 Chadstone, VIC
Slide 36: High growth ancillary income streams benefiting centre operations
High growth ancillary income streams benefiting centre operations Strong pipeline of new initiatives FY18 ancillary income1 Three-year growth1 FY18 growth1 Additional income streams planned $89.9 million 8.0% p.a. 5.4% Four $19m incremental growth since FY15 Consistently strong performance of Driven
Slide 37: Driving operational cost reductions
Driving operational cost reductions Transforming operations through scale, technology and focus on key cost categories Controllable outgoings in FY18 Procurement savings Robotics and automation savings Operational initiatives <1% growth $1.4 million >$1.0 million Five FY18 controllable outgoings Sav
Slide 38: Integrated energy strategy generating significant benefits
Integrated energy strategy generating significant benefits Reducing grid reliance and exposure to volatile energy prices whilst providing strong investment returns Integrated energy strategy developed Largest retail solar investment1 Solar program stage two Strong investment returns Four pillars $28
Slide 39: Development
Development Carolyn Viney EGM DEVELOPMENT Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 The Glen, VIC
Slide 40: Development – A key driver for portfolio enhancement
Development – A key driver for portfolio enhancement An active period of successfully delivering current live projects and planning future projects Projects due to open later this year are all 100% leased DFO Perth is fully leased On track to open in October 2018 Stage three of The Glen due to open
Slide 41: Investing to create long-term value
Investing to create long-term value Extensive development pipeline provides significant opportunities Project cost ($m) Project FY18 FY19 FY20 FY21+ Vicinity Partner Total The Glen, VIC 215 215 430 DFO Perth, WA 75 75 150 Chadstone Victoria’s Secret and atrium dining, VIC 25 25 50 Chadstone hotel, V
Slide 42: Live projects
Live projects Delivering portfolio enhancement Victoria’s Secret and atrium dining Hotel $50m1 redevelopment $130m1 redevelopment Victoria’s Secret flagship store due to open Christmas 2018 Construction commenced in June 2018 and on track • First time the full product range will be sold in Australia
Slide 43: Live projects
Live projects Delivering portfolio enhancement The Glen DFO Perth $430m1 redevelopment $150m1 development Stages one and two opened, trading strongly and exceeding 100% leased expectations. Stage three fully leased, opening October On track for early October 2018 opening 2018. Includes H&M and Uniql
Slide 44: Other near-term retail development pipeline opportunities
Other near-term retail development pipeline opportunities Significant opportunities exist to invest in locations and assets which are positioned to grow strongly Galleria The Myer Centre Brisbane Northland Sunshine Marketplace A strongly performing centre with an CBD asset in the heart of the growin
Slide 45: Other near-term retail development pipeline opportunities
Other near-term retail development pipeline opportunities Significant opportunities exist to invest in locations and assets which are positioned to grow strongly Victoria Gardens Box Hill Central Bankstown Central Chatswood Chase Sydney Shopping Centre Located close to Melbourne CBD Significant resi
Slide 46: Mixed-use
Mixed-use Carolyn Viney EGM DEVELOPMENT Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 The Glen, VIC – Artist’s impression
Slide 47: Mixed-use
Mixed-use Focuses on unlocking latent value within the portfolio and the creation of destinational centres Completed comprehensive review of portfolio to evaluate highest and best use of each site Identified mixed-use potential while retaining flexibility for retail masterplanning Additional uses pr
Slide 48: Mixed-use approach
Mixed-use approach Approach to be determined depending on nature of opportunities Enabling growth in retail income remains priority for each asset Maintain flexibility for retail masterplan Vicinity’s participation in each opportunity to be considered on a case-by-case basis Participation to reflect
Slide 49: Mixed-use development pipeline
Mixed-use development pipeline Delivering portfolio enhancement Box Hill Central Bankstown Central Buranda Village Growing precinct identified as an Activity Centre, Convenient transport links to Sydney CBD, Parramatta, Located 4km south of Brisbane CBD and adjacent with active residential developme
Slide 50: Questions
Questions Grant Kelley CEO AND MANAGING DIRECTOR Vicinity Centres | FY18 annual results and strategy update | 15 August 2018 The Galeries, NSW
Slide 51: Appendices
52 Sustainability 66 Capital management 53 Economic environment 67 Development 54 Destination asset portfolio 68 Asset summaries Appendices 55 Assets under management 76 Key dates 56 Direct portfolio 77 Contact details 61 Financial results Vicinity Centres | FY18 annual results and strategy update |
Slide 52: Sustainability
Sustainability Delivering sustainable long-term value for our communities and securityholders Vicinity’s sustainability approach and performance recognised by #1 retail property company external ratings agencies GRESB1 rated Vicinity as #1 retail property company in Australia and Asia Pacific In Aus
Slide 53: Economic environment
Economic environment 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 continued rising 7% 125 Consumer Sentiment 3
Slide 54: Destination asset portfolio
Destination asset portfolio Indicative portfolio statistics – proforma for the planned sale of ~$2.0b of assets Key metrics Destination assets1 Jun-18 Retail assets ~50 74 Average asset value ($m) ~500 354 Average centre size (GLA, sqm) ~40,000 34,569 Average capitalisation rate (%) ~5.00 5.36 Speci
Slide 55: Assets under management
Assets under management ~8,200 tenants across 82 assets under management1,2 Direct portfolio1,2 Managed Third party/ Total Wholly-owned Co-owned Total co-owned AUM Number of retail assets2 45 29 74 8/29 82 Gross lettable area (000’s)(sqm) 1,113 1,445 2,558 229 2,787 Number of tenants 3,474 4,135 7,6
Slide 56: Direct portfolio
Direct portfolio Key statistics by centre type As at 30 June 2018 Total portfolio Regional1 Sub Regional Neighbourhood Outlet Centre2 Number of retail assets3 74 25 30 13 6 Gross lettable area (m)(sqm) 2.6 1.6 0.7 0.1 0.2 Total value3 ($m) 16,365 10,690 3,429 684 1,562 Portfolio weighting by value3
Slide 57: Direct portfolio
Direct portfolio Well diversified by geographic and retail sub-sector exposure Centre type composition1 Geographic exposure1 13 2 City Centre 4 3 Regional 17 17 Outlet Centre 10% Regional 2 4 Sub Regional Major Regional 2 Sub Regional 2 3 Neighbourhood Super Regional 1 1 Outlet Centre Neighbourhood
Slide 58: Direct portfolio
Direct portfolio Additional sales information Actual Comparable1 growth Jun-182 Jun-17 MAT Proportion of Comparable MAT growth (%)1 MM and SS4 SS4 MM and SS4 SS4 Jun-18 portfolio (%) Jun-182 Jun-17 Apparel (0.4) (1.1) 1.1 0.3 ($m) By sales By rent (%) (%) Food catering 2.6 2.9 3.0 2.2 Specialty stor
Slide 59: Direct portfolio
Direct portfolio Non-comparable centres for sales reporting Centre Comment Broadmeadows Central, VIC Major tenant changeover Chadstone, VIC Development Mandurah Forum, WA Development QueensPlaza, QLD Pre-development The Myer Centre Brisbane, QLD Pre-development Roselands, NSW Development The Glen, V
Slide 60: Direct portfolio
Direct portfolio Key portfolio tenants 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 46 4.0 1 118 9.0 Liquorland, Target, Vintage Cellars Big W, BWS, Dan
Slide 61: Financial results
Financial results FFO per security growth of 2.2% on a comparable basis1 Jun-18 Jun-17 Change Change For the 12 months to ($m) ($m) ($m) (%) Net property income (NPI)2 894.3 887.8 6.5 0.7 Partnerships and other income 76.2 66.0 10.2 15.4 Total income 970.5 953.8 16.7 1.8 Net corporate overheads 73.3
Slide 62: Financial results
Financial results FFO reconciliation to net profit after tax 30-Jun-18 30-Jun-17 For the 12 months to ($m) ($m) Net profit after tax 1,218.7 1,583.6 Property revaluation increment for directly owned properties (634.7) (906.7) Non-distributable gain relating to equity accounted investments (15.2) (9.
Slide 63: Financial results
Financial results Adjusting for acquisitions and divestments, comparable FFO per security growth was 2.2% Reconciliation of actual and comparable FFO per security growth 19 Comparable growth 2.2% FFO (cps) 18 0.39 (0.20) 18.20 18.01 17.81 17 Adjusted Jun-17 Growth from Jun-17 Impact of FY18 FFO per
Slide 64: Financial results
Financial results Strong balance sheet maintained Jun-18 Jun-17 Change As at ($m) ($m) ($m) Cash 42.1 42.2 (0.1) Investment properties held for sale - 33.5 (33.5) Investment properties1 15,892.7 15,633.5 259.2 Equity accounted investments 681.1 88.0 593.1 Intangible assets 594.9 599.4 (4.5) Other as
Slide 65: Financial results
Financial results NTA growth of 5.3% contributing to a 12-month total return1 of 11.1% Key drivers of NTA 3.40 3.20 0.01 NTA growth 5.3% 0.14 (0.16) (0.02) 3.00 0.18 2.80 NTA ($) 2.60 2.97 2.40 2.82 2.20 2.00 Jun-17 FY18 FFO Asset Buy-back Distributions Other Jun-18 NTA per security valuation increm
Slide 66: Capital management
Capital management Strong balance sheet maintained Debt statistics summary Hedging profile5,6 4,000 5.0% As at Jun-18 Jun-17 3,500 4.9% Total debt facilities $5.5b $5.1b 3,000 4.8% 2,500 4.7% Drawn debt1 $4.4b $3.9b Notional A$m Hedge rate 2,000 4.6% Undrawn debt $1.1b $1.1b 1,500 4.5% Weighted aver
Slide 67: Development
Development Vicinity’s share of costs to complete projects under construction is $228m Total Vicinity’s share project Project Spent to Cost to $m cost cost 30-Jun-18 complete The Glen, VIC 430 215 126 89 DFO Perth, WA 150 75 53 22 Chadstone Victoria’s Secret and atrium dining, VIC 50 25 6 19 Chadsto
Slide 68: Asset summaries
Asset summaries Centre statistics Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) New South Wales Chatswood Chase Sydney Major Regional 51 63,764 100.0 557.0 10,044 14,926 14
Slide 69: Asset summaries
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Queensland QueensPlaza2 City Centre 100 39,066 100.0 n.a. n.a. n.a. n.a. The Mye
Slide 70: Asset summaries
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria Chadstone2 Super Regional 50 211,451 100.0 n.a. n.a. n.a. n.a. Bayside
Slide 71: Asset summaries
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate1 (MAT) sales1 sales1 costs1,2 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria (continued) DFO South Wharf Outlet Centre 100 56,192 100.0 409.1 1
Slide 72: Asset summaries
Asset summaries Valuations Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-181 30-Jun-18 30-Jun-17 Movement 30-Jun-18 (%) ($m) ($m) (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regional 51 19.5 586.9 4.75 4
Slide 73: Asset summaries
Asset summaries Valuations (continued) Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-181 30-Jun-18 30-Jun-17 Movement 30-Jun-18 (%) ($m) ($m) (%) (%) (%) Queensland QueensPlaza City Centre 100 (0.2) 774.0 4.75 5.00 (
Slide 74: Asset summaries
Asset summaries Valuations (continued) Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-181 30-Jun-18 30-Jun-17 Movement 30-Jun-18 (%) ($m) ($m) (%) (%) (%) Victoria Chadstone Super Regional 50 346.5 3,050.0 3.75 4.25 (
Slide 75: Asset summaries
Asset summaries Valuations (continued) Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-181 30-Jun-18 30-Jun-17 Movement 30-Jun-18 (%) ($m) ($m) (%) (%) (%) Victoria (continued) DFO South Wharf Outlet Centre 100 56.7 65
Slide 76: Key dates
Key dates Investor calendar Key dates Ex-distribution date for June 2018 distribution 28 June 2018 Record date for June 2018 distribution 29 June 2018 FY18 annual results 15 August 2018 June 2018 distribution payment 29 August 2018 2018 Annual General Meeting 1 November 2018 Ex-distribution date for
Slide 77: Contact details and disclaimer
Contact details and disclaimer For further information please contact: 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 is a presentation of ge