Lendlease Group · ASX:LLC
Lendlease — Investor Day (October 2013)
57 slides from Lendlease's investor day presentation, Oct 22, 2013
Slide 1: Lend Lease Investor Day presentations ASX Announcement
ASX Announcement Lend Lease Investor Day presentations For personal use only 22 October 2013 Attached are the presentations to be given today by Lend Lease senior executives at its Investor Day. The event will be webcast live via www.lendlease.com For further information, please contact: Investor Re
Slide 2: Lend Lease 2013 Investor Day
LEND LEASE 2013 Investor Day For personal use only October 2013
Slide 3: Important Notice
Important Notice This presentation has been prepared in good faith, but no representation or warranty, express or implied, is made as to the For personal use only accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained in the presentation (any of which
Slide 4: For personal use only
8.30 Opening / Overview - Steve McCann For personal use only 9.00 Australian Construction & Infrastructure – David Saxelby 9.20 Australian Property – Tarun Gupta 9.40 Panel Q&A session 1 10.10 Coffee break 10.40 The Americas & Asia – Steve McCann 11.00 Europe / Operational Excellence – Dan Labbad 11
Slide 5: Opening Overview
For personal use only 1 OPENING OVERVIEW 4
Slide 6: Delivering on our strategy
Delivering on our strategy From 2009 To 2013 For personal use only Countries 40+ Countries 14 EBITDA $396 million EBITDA $744 million 2009 Restore Decentralised management Regional management Pipeline Pipeline Development: $25.6 billion* Development: $37.4 billion Construction:
Slide 7: Five core trends
For personal use only Five core trends Key position What we have done Next steps 1 Urbanisation $22.3 billion of urban regeneration Secured $17.8 billion major Strong execution focus Seek further select urban projects projects in the last five years opportunities in core markets 2 Ageing L
Slide 8: Our model
For personal use only Our model How we create value D C IM S O Integrated Development (D) projects deliver flywheel benefits and Active maximise returns Execution Construction (C) capability to support Investment Capital partners to Management (IM) support returns Recurring Services (S) Operational
Slide 9: Our focus over the next three years
For personal use only Our focus over the next three years Focus AU Property AU C&I UK Barangaroo Engineering - Elephant & Castle Disciplined Focus on delivering RNA Showgrounds economic The International Execution project returns Waterbank infrastructure /PPP Quarter Development Constr
Slide 10: Disciplined execution
For personal use only Disciplined execution Delivery / Execution 2013 - 2016 11 apartment towers underway – all reaching pre-sales greater than 60% Lend Lease International Towers Sydney Trust established; strong pre- Development leasing over 70% and construction tracking on schedule Reduced l
Slide 11: Development activities – strategic capital deployment
Development activities – strategic capital deployment For personal use only Capital requirement is now focused on production phase to generate development earnings Our Focus Past Future Type of Capital Investment FY09-13 Capital FY14-16 Capital capital Trend Trend Buy Land and Long Secured new Secur
Slide 12: Our target portfolio
For personal use only Our target portfolio Investment Development Construction Services Ownership Management Earnings Active 70 – 80% Recurring 20 – 30% target Property Earnings 60 – 70% mix Infrastructure 30 – 40% Risk- adjusted 35-45% 30-40% 5-15% <5% 10-20% capital Australia Geographic 60 – 70% S
Slide 13: Outlook across our markets
For personal use only Outlook across our markets -ve = +ve Comments D Strong growth in Development from key projects including Barangaroo South, Darling Harbour Live (formerly SICEEP) Australia C Tougher macro conditions in Construction but stronger pipeline of economic infrastructure and PPP pr
Slide 14: Australian Construction & Infrastructure
AUSTRALIAN 2 CONSTRUCTION & INFRASTRUCTURE For personal use only Image: Darling Harbour Live Convention Centre & Hotel , Sydney 13
Slide 15: Delivering on our strategy
For personal use only Delivering on our strategy From 2009 To 2013 Strong building and Valemus acquisition delivering project management additional capability – now capability – but operating on an integrated 2009 Restore underweight engineering sector platform across Building, Engineering and S
Slide 16: Key focus areas
For personal use only Key focus areas Key Focus Progress 1 Business Restructuring into three sector based businesses Leveraging capability and skills in each Phase one complete - business structure in place; strong market Transformation sector opportunities emerging in NSW Grow business of s
Slide 17: Providing end-to-end solutions
Providing end-to-end solutions Infrastructure Development For personal use only Lend Lease’s Building, Engineering and Services business, together with Capella Capital, can provide full end-to-end solutions for clients and offer alignment through-out the life of a project via equity investment Capab
Slide 18: Pipeline - Engineering
Pipeline - Engineering Potential Significant Engineering Projects Possible release to market For personal use only NSW CBD and South East Light Rail EOI released F3-M2 Short-listed WestConnex (M4 Widening) EOI in Q1 2014 WestConnex (M4 East Tunnel) EOI in Q2 2014 Pacific Highway – Woolgool
Slide 19: PPP Outlook
PPP Outlook For personal use only 6 New Federal Transport - last 5 years Average size of PPP ($ billion) Government has 5 Transport - Known Pipeline committed to a large Social - last 5 years infrastructure spend 4 Social - Known Pipeline NSW alone estimates it Other - last 5 years 3 will spend
Slide 20: Industry Trends
For personal use only Industry Trends State Governments are changing PPP financing Shifting patronage risk back to government from private sector WestConnex motorway (linking M4 to M5 via Sydney Airport) – solely funded by NSW Government in initial phase. Possible PPP for later stages Once tra
Slide 21: Australian Property
AUSTRALIAN 3 PROPERTY For personal use only 20 Image: Artist Impression only as at October 2013. Subject to planning approval
Slide 22: Core trends
For personal use only Core trends Key position What we have done Next steps 1 Urbanisation $17.4 billion of urban regeneration projects Secured 5 major projects, increasing pipeline by $11.4 billion in the last five years Execute well to deliver embedded value diversified across Australia Ge
Slide 23: Urban Regeneration
Urban Regeneration For personal use only Project End Value1 Mixed Use Pipeline breakdown3 4% 1% 4% Barangaroo South, Sydney A$6.0 billion 46% Hotel Darling Harbour Live Other A$1.5 billion (formerly SICEEP) Retail Apartments Victoria Harbour, Melbourne A$4.5 billion Commercial 45% Richmond, Melbourn
Slide 24: Barangaroo South, Sydney
Barangaroo South, Sydney For personal use only Agreements with tenants for 77%* of floor space of first two commercial buildings Secured $2 billion of equity commitments for the first two commercial buildings Construction on first two commercial towers well underway Launch of first two resid
Slide 25: Residential – Apartments, Communities and Retirement Living
Residential – Apartments, Communities and Retirement Living For personal use only Solid market outlook – low interest rates, improving affordability and consumer sentiment Increase in volumes – circa 20% growth in September quarter compared to June quarter 2013 Strong portfolio position across
Slide 26: Investment Management
For personal use only Investment Management Growth in funds under management to $10.3 billion 17% increase in FY13, with 16% average growth over last five years $2.2 billion equity raised in FY13, with $5.2 billion raised in last five years Capital markets remain strong with domestic and inter
Slide 27: Delivering on our strategy
Delivering on our strategy For personal use only From 2009 To 2013 Urban regeneration: $6.0 billion $17.4 billion 2009 Restore Apartments: Communities: 3,980 9,500 backlog Zoned 20,830 55,545 Unzoned 47,390 - Total 68,220 55,545 backlog lots Retirement living : 12,200 1 12,417 units FUM: $7.1 billio
Slide 28: Asia
ASIA 4 For personal use only Image: Jem®, Singapore 27
Slide 29: Delivering on our strategy
For personal use only Delivering on our strategy From 2009 To 2013 Consolidated operations in Demonstrated how to four key Asian hubs that leverage all of Lend Restore met our growth targets: Lease’s capabilities and 2009 Singapore, China, established a proven Malaysia and Japan track-record in
Slide 30: Jem – Fully integrated development
Jem – Fully integrated development Jem Development details For personal use only Site Total retail NLA: ~53,420 sqm Total office NLA: ~28,800 sqm Size S$1.8 billion Sustainability The retail component is the third largest suburban shopping mall in Singapore Fully leased on opening in June 2013
Slide 31: Fully integrated project – leveraging all of Lend Lease's capabilities
Fully integrated project – leveraging all of Lend Lease’s capabilities For personal use only 5. Ownership Capital profit from 25% stake Co-investment via ARIF 4. Asset Management Site asset management fees 1. Development 4 1 Development margin 5 3 2 3. Investment Management 2. Construction
Slide 32: Future trends and outlook
For personal use only Future trends and outlook Funds growth and increasing The amount of funds under management compared to capital flows across the Asian population, highlights the opportunity for growth in FUM in region the Asia region Singapore is a key hub to funds 70% flows across the Asian
Slide 33: The Americas
THE AMERICAS 5 For personal use only Image: St Francis Watkins Center, Virginia 32
Slide 34: Delivering on our strategy
For personal use only Delivering on our strategy From 2009 To 2013 Number one in high rise Reduced US presence condominium construction back to seven cities (from in the US – 22 high rise 2009 Restore 23) where growth trends were evident towers currently under construction across the Adjusted
Slide 35: Growing momentum in Healthcare Development
Growing momentum in Healthcare Development First public sector project For personal use only July 2013 – selected by the Department of Veterans Affairs to design, build and manage a new VA Healthcare Center in North Carolina 280,000 net usable square feet, four storey healthcare centre providing
Slide 36: Future trends and outlook
Future trends and outlook Major urbanisation occurring in the For personal use only Americas* 80% of the US population live in large cities New York, Los Angeles, Philadelphia and Boston grew faster in the two years between 2010 and 2012 than they did in the decade between 2000 and 2010* Almos
Slide 37: Europe
EUROPE 6 For personal use only Image: Elephant & Castle, London 36
Slide 38: Delivering on our strategy
For personal use only Delivering on our strategy From 2009 To 2013 Reduced presence across Major urban regeneration the EMEA region – closing projects of Elephant & Castle Restore offices where outlook or (E&C) and The International 2009 market conditions were not Quarter (TIQ) ~$5 billion in co
Slide 39: Elephant & Castle
Elephant & Castle Development details For personal use only Site Elephant & Castle – Southwark, London UK Value £1.5 billion Project Life ~15 years 170 acre regeneration site – Size approximately 3,000 new home and 50,000 square feet office space; including the largest green area to be created the h
Slide 40: Future trends and outlook
For personal use only Future trends and outlook Residential and commercial development in the UK to be a leading driver for our business in coming years Key urban regeneration projects at Elephant & Castle and The International Quarter will deliver over the next 10 years Repositioned the busines
Slide 41: Operational Excellence
OPERATIONAL 6 EXCELLENCE For personal use only Image: Elephant & Castle, London 40
Slide 42: Centres of excellence – since 2009
For personal use only Centres of excellence – since 2009 Monitor pipeline and Origination support bids Lessons learned and best practices shared across the group Development, Construction and Best Practice Investment Delivery Management Monitor performance Regular project reviews Manage our People r
Slide 43: Risk management control and review process
Risk management control and review process Construction – control and review process For personal use only Stage Business Project Submit Execute development conversion proposal contract Delivery pipeline process Commit to Authority to Changes to Review Point Project Construction Bi-month
Slide 44: Sustainability
For personal use only Sustainability buildings constructed in FY2013 were recognised as Green Buildings Over of Green Certified office space is Of the major project development occupied by Lend Lease pipeline has achieved or is targeting green certification Three projects recognised this year in the
Slide 45: Safety
For personal use only Safety 2013 - our first fatality free year on record Of our operations around the world did not experience a Critical Incident this year 44
Slide 46: Development and Cash Flow
DEVELOPMENT 7 AND CASH FLOW For personal use only Image: Olympic Park, London 45
Slide 47: Delivering on our strategy
For personal use only Delivering on our strategy From 2009 2013 onwards Portfolio management Portfolio management introduced framework fully operational 2009 Restore Fragmented systems and Consistent systems and processes processes group wide Multiple general ledger Moving to a single ge
Slide 48: How we cost capital – risk adjusted
For personal use only How we cost capital – risk adjusted Development Construction Ownership High Land / infrastructure = long dated At risk lump sum Value-add Risk Production capital = medium Finished goods Fee for service Core = low Low High Return Low As risk profile increases, we assign a higher
Slide 49: Development activities – strategic capital deployment
Development activities – strategic capital deployment Capital requirement is now focused on production phase to generate development earnings For personal use only Our Focus Past Future Type of Capital Investment FY09-13 Capital FY14-16 Capital capital Trend Trend Buy Land and Long Secured new Secur
Slide 50: Development production cycle and capital velocity
Development production cycle and capital velocity For personal use only Typical duration of Indicative capital turnover capital in production each year Communities 4-6 months 2x – 3x Apartments 18-30 months 0.4x – 0.66x Retail / Commercial 24-36 months 0.33x – 0.5x Infrastructure 36-48 months 0.25x
Slide 51: Development risk management – overview
For personal use only Development risk management – overview Origination Delivery Approach Product market Typical capital Portfolio targets Income/Sale Production cycle structure Land Pre-sales Management Communities target by JV Establish Acquire / divest stage portfolio targets based on inte
Slide 52: Major development projects – schedule and profit timing
Major development projects – schedule and profit timing For personal use only Key drivers FY14 FY15 FY16 8 projects underway (NSW) 7 projects underway (VIC) Communities 9 projects underway (QLD) 2 projects underway (SA) 2 projects underway (WA) Barangaroo Stg 1 – 2 towers (159 units) R
Slide 53: Indicative net cash flow from major projects
Indicative net cash flow from major projects currently in production at start of FY14 For personal use only Segment Overview FY14 FY15 FY16 Total Net cash proceeds Cash Cash Cash Cash Communities Assuming 2,500 annual lot sales Positive Positive Positive Positive Net cash proceeds Cash Cash Apartmen
Slide 54: Closing Outlook
For personal use only 8 CLOSING OUTLOOK 53
Slide 55: Summary and outlook
Summary and outlook $37.4 billion pipeline of development projects, the largest in Lend Lease’s 50+ year history For personal use only Strong medium term outlook – disciplined execution will extract significant embedded earnings Leverage capacity and strong access to third party capital – enab
Slide 56: Appendices
For personal use only Appendices
Slide 57: Depth of management experience
Depth of management experience Steve McCann Rod Leaver For personal use only Group Chief Executive Officer and Managing Director Chief Executive Officer, Asia More than 15 years experience in funds management and Over 30 years experience in the property industry and has capital markets transacti