Stockland · ASX:SGP
Stockland — Debt Investor Presentation (February 2003)
55 slides from Stockland's debt investor presentation, Feb 27, 2003
Slide 1: Stockland Debt Investor Presentation
© Stockland Debt Investor Presentation February 2003
Slide 2: Outline of Presentation
©) OUTLINE OF PRESENTATION * HIGHLIGHTS * GROUP FINANCIAL PERFORMANCE * MANAGEMENT * SUMMARY OF GROUP ASSETS * INVESTMENT PROPERTIES * SHOPPING CENTRES * COMMERCIAL * INDUSTRIAL * OFFICE PARKS * DEVELOPMENT / RESIDENTIAL * APARTMENTS * HOTEL MANAGEMENT * CAPITAL MANAGEMENT * THE FUTURE * DISCLAIMER
Slide 3: Highlights
© Stockland HIGHLIGHTS
Slide 4: Highlights
HIGHLIGHTS = Strong financial performance « Profit growth « Balance Sheet « Strong cashflows, low gearing levels = Maintenance of S&P Credit Rating = Sale of non core office properties into tight investment market = Focus on growing shopping centre portfolio = High levels of tenant retention = Expan
Slide 5: Group Financial Performance
© Stockland GROUP FINANCIAL PERFORMANCE
Slide 6: Group Financial Performance
©) GROUP FINANCIAL PERFORMANCE Substantial growth in revenue and profit ... Revenue Net Profit After Tax $m $m 800 300 5 700 250 a | 200 + 400 4 $388m 450 4 $136m 300 + 400 - 200 + 100 4 50 | 0 Cr 0 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 YEAR YEAR YEAR YEAR HALF YEAR YEAR YEAR YEAR HALF Y
Slide 7: Group Financial Performance: Low gearing underpins A- rating
©) GROUP FINANCIAL PERFORMANCE Low gearing underpins the current A- credit rating... Gearing Interest Cover (Debt*/ Total Assets) (EBIT / Interest) 20% 5 18% 18% 20.0 5 18% 4 16% 15.9 16% 5 12% 5 1% 10.0 | 8.8 76 2 6%, | ° 50 5.7 4% | "| 2% 5 0% T T T 1 0.0 T T T T June June June June Dec June June
Slide 8: Management
© Stockland MANAGEMENT
Slide 9: Management
S, MANAGEMENT « Strong corporate governance with a majority of independent Non-Executive Directors " Significant strengthening of management team over last two years — key senior positions now complete » Flat reporting structure with clear bottom line accountability for senior executives " Continued
Slide 10: Management Structure
S, MANAGEMENT STRUCTURE Non Executive Directors Peter Daly Nick Greiner Bruce Corlett David Fairfull nee Barry Thornton _ Managing Director - _ MatthewQuinn CEO. CEO CEO CEO Chairman Deputy Chairman Director Director Director Finance General Manager Group Manager Shopping Comm & Development Hotels D
Slide 11: Summary of Group Assets
© Stockland SUMMARY OF GROUP ASSETS
Slide 12: Summary of Group Assets
S, SUMMARY OF GROUP ASSETS Asset Diversification 31 Dec 02 31 Dec 01 3% 14% 31% 35% Industrial/ Office Parks Hotels ® Development Division Hi Shopping Centres a m@ Commercial By Book Vaiue 12
Slide 13: Investment Properties
© Stockland INVESTMENT PROPERTIES
Slide 14: Investment Properties
INVESTMENT PROPERTIES Strong growth in underlying rents No over exposure to any individual property or tenant Net rental arrears only 0.5% of annual billings Continued growth in NTA through property revaluations 14
Slide 15: Investment Properties: Revenue and EBIT
C) INVESTMENT PROPERTIES Strong growth in Revenue and Profit ... Revenue EBIT $m $m 250 5 400 5 200 5 300 5 150 4 $113m 200 | $153m 400 | “| | i | “ i I 0 0 1999 2000 2001 2002 2003 1999 2060 2001 2002 2003 YEAR YEAR YEAR YEAR HALF YEAR YEAR YEAR YEAR HALF Year Ended 30 June 15
Slide 16: Investment Properties: Diversification of assets
C) INVESTMENT PROPERTIES Diversification of assets in key markets with strong long term demand ... Asset Diversification Geographic Diversification ACT Office Parks 4% 7% WA VIC Industrial 1% ™% 10% Shopping Centres 44% Commercial 39% Book Value 16
Slide 17: Shopping Centres
© Stockland SHOPPING CENTRES
Slide 18: Shopping Centres: Market Commentary
S, SHOPPING CENTRES — 44% of Investment Portfolio Market Commentary = Strong sales growth in 2002, but signs of a slowdown in rate of growth in 2003 = MAT growth from sub regionals is higher than regionals as the shift by consumers to convenience and value continues = Retailers continue to be attrac
Slide 19: Shopping Centres: Stockland Highlights
S, SHOPPING CENTRES Stockland Highlights = Management team continues to add value through acquisitions, development and leasing = Portfolio continues to perform well with comparable net income growth of 4.3% for the December 2002 half year = High occupancy levels with vacancy rate remaining below 1%
Slide 20: Shopping Centres: Acquisitions
S, SHOPPING CENTRES Acquisitions * Strategy remains focused on acquiring sub regional, district and specialty centres with expansion potential = Two new centres acquired - Cleveland ($59.8m) and Glenrose ($36.7m) with combined GLA of 48,000m? = New assets provide exposure to catchments with strong d
Slide 21: Shopping Centres: Average lease expiry
C) SHOPPING CENTRES Average lease expiry 8.5 years ... 3 FY04 Vacant 3, 5% 1% FYOS 5% ‘ 2 Vacancies 000m? FY06 Ex Piccadilly Food Court 0. 8 ™% 19 ‘specialty shops. 4 9 Total vacancies 2.7 Total NLA 337.9 Vacancy rate 0.8% 79% By NLA as at 31 Dec 02 24
Slide 22: Commercial
© Stockland COMMERCIAL
Slide 23: Commercial: Market Commentary
S, COMMERCIAL - 39% of Investment Portfolio Market Commentary . Sydney CBD (Stockland 50.3%) Vacancy levels have increased to 7.7% from 6.7% in Jun 02 « Net absorption negative 43,000m? in Dec 02 half year + Lease incentives are increasing * Tenants focused on lowering costs, putting pressure on pri
Slide 24: Commercial: Market Commentary
S, COMMERCIAL Market Commentary =» Melbourne CBD (Stockland 17.2%) « Vacancy at 6.2% (down from 7.8% in Jun 02) « 244,000m? under construction « 80% due to be completed in 2003 « Rents expected to fall » Canberra (Stockland 10.4%) « Vacancy rate 6.8% (up from 6.3% in Jun 02) « Rents at relatively lo
Slide 25: Commercial: Stockland Highlights
©) COMMERCIAL Stockland Highlights Proactive leasing strategy with 54,500m? (61 tenants) leased/ renewed in Dec 02 half year Lease expiries in balance of FY03 reduced to 5% of NLA Portfolio comparable net income growth of 2.5% for half year Arrears only 0.4% of annual billings 77 Pacific Highway dev
Slide 26: Commercial: Average lease expiry
C) COMMERCIAL Average lease expiry 3.3 years ... Vacant Vacancies — ‘000m? T% FY03 77 Pacific H’ way ‘Nth ‘Sydney _ 6.7 5% 504 Pacifi ic H way, St 3.4 ; Leonards FY04 Underwood. House, ‘Sydney 2.4 33. Herbert St, St Leonards — 2.2 Piccadilly Tower 2.1 Others _ 5.7 FY05 Total vacancies 22. 5 24% - To
Slide 27: Industrial
© Stockland INDUSTRIAL
Slide 28: Industrial: Market Commentary
C) INDUSTRIAL - 10% of Portfolio Market Commentary = Leasing markets are generally soft, but signs of improvement in Sydney’s west = Vacancy rates are in check due to limited speculative development = Yields have continued to firm and land prices have risen due to lack of stock and keen investor dem
Slide 29: Industrial: Stockland Highlights
C) INDUSTRIAL Stockland Highlights » Yennora - Redevelopment of part Building 1 (65,000m? plus hardstand) due for completion in June 2003 - Capex $40 million - expected return circa 9% - 10,000m? pre leased to blue chip tenant with option for a further 20,000m? - Good leasing enquiry on the balance
Slide 30: Industrial: Average lease expiry
C) INDUSTRIAL Average lease expiry 3.3 years ... Vacancies ‘000m? Vacant so vs 3% FY03 Spearwood" So 105 Dy, Hendra 72 Total vacancies 17.7 . EvO7# Total NLA re sar _— 44% | FY04 on a 13% Vacancy rate 3. 2% Vacancy rate 1 3% excl. Spearwood precommitment * Precommited from May 2004 FY06 18% ** Exclu
Slide 31: Office Parks
© Stockland OFFICE PARKS
Slide 32: Office Parks: Market Commentary
OFFICE PARKS - 7% of portfolio Market Commentary «= North Ryde * Leasing market very weak ¢ Vacancies are increasing ¢ Market will rebound in medium term due to strong fundamentals - location, transport, infrastructure 32
Slide 33: Office Parks: Lease expiry and vacancies
C) OFFICE PARKS Vacant 6% FY03 15% Vacancies *000m2 Centrecourt . 2.2 FYO7+ Othe rs - 2. 0 50% EvO4 Tot 51 Vacancies re — 13% Total NLA 72.7 Vacancy ole annem 5 8% oo FY06 10% 6% 33
Slide 34: Development / Residential
© Stockland DEVELOPMENT / RESIDENTIAL
Slide 35: Development Division: Residential Estates Overview
©) DEVELOPMENT DIVISION Overview of Development Division Business RESIDENTIAL ESTATES « Medium to large scale master planned communities and integrated housing projects, comprising: * Conventional lots (350m2 to 1,000m2) >» Stockland sells the lots as vacant land to either home builder or direct to
Slide 36: Development Division: Apartments and Retail Projects
©) DEVELOPMENT DIVISION Overview of Development Division Business APARTMENTS = Medium to large scale residential and mixed use high density projects = Strong focus on high quality, owner occupier product = Stockland engages major building groups to construct the projects on fixed price, fixed time c
Slide 37: Development Division: Financial Performance
©) DEVELOPMENT DIVISION Financial Performance * Development Division EBIT up by 34% to $41.1 million for December 2002 half year = Majority of EBIT was from the Residential Estates business = Profits from Apartments and Retail Projects businesses will emerge in FY04 onwards as projects currently und
Slide 38: Development Division: Summary of Inventories
DEVELOPMENT DIVISION Summary of Inventories As at 31 December 2002 No. Projects Book Value $m Residential Estates 76 538 Apartments 5 112 Retail Projects 8 60 $710m* * Includes $126 million of land acquired on deferred payment terms, corresponding amount included in creditors 38
Slide 39: Residential Estates: Dwelling Approvals
©) RESIDENTIAL ESTATES Australian Monthly Private Sector Dwelling Approvals 8,000 | Vv 6,000 + Detached 4,000 4 Houses Townhotlse 2,000 + & Apartments 0 r r : r 1 r Nt ise] se] é xr wD 1D oO io] ~ Led oO eo oa co) 2 cS rr band N ON P PP BP QP DP GP GP GP GP Pp Ge oP FP FP FF FF F Ff F > Peal > > > P
Slide 40: Residential Estates: Market Commentary
RESIDENTIAL ESTATES Market Commentary = Demand for new detached housing has moderated but market fundamentals are still strong due to majority of product being owner occupier focused « Level of dwelling approvals in detached housing sector is only slightly above long term average = We do not expect
Slide 41: Residential Estates: Revenue and Profit
©) RESIDENTIAL ESTATES Strong growth in Revenue and Profit ... Revenue EBIT $m $m 350 - 70 300 60 - 250 50 | $43 200 + $177 40 - 150 + 30 + 100 + 20 | 50 | | [ 40 | 0 1 0 1 1999 2000 2001 2002 2003 1999 2000 2004 2002 2003 YEAR YEAR YEAR YEAR HALF YEAR YEAR YEAR YEAR HALF Year Ended 30 June 2002 41
Slide 42: Residential Estates: Inventories across the states
S, RESIDENTIAL ESTATES Good spread of inventories across the states No. of Lots Under Control WA 4,600 QLD | 12,900) NSW 4,100 vic 5,600 Total 27,200 lots Forecast Future Revenue (at current prices) WA $370m NSW $740m vic $660m Total $3,030 million As at 31 December 2002 42
Slide 43: Apartments
© Stockland APARTMENTS
Slide 44: Apartments: Market Commentary
APARTMENTS Market Commentary = Significant amounts of investor driven product has been built in certain “pioneering” locations = Over supply is now clearly evident in these markets and rentals are coming under pressure » Enquiry levels have dropped under the weight of negative press however quality,
Slide 45: Apartments: Stockland Highlights
S, APARTMENTS Stockland Highlights » We remain committed to growing this business but we are adopting a cautious approach to site acquisitions due to prevailing market conditions and unrealistic vendor expectations = We are focused on securing medium to large scale, high quality owner occupier devel
Slide 46: Apartments: Project Status December 2002
C) APARTMENTS Project Status — 31 December 2002 State Location Project Yield Expected Status Expected % Name Revenue Completion Sold NSW StLeonards Abode 190 apartments $116m Under FY04 55% 2,000m? retail construction NSW Balgowlah TBA >200 apartments >$200m Awaiting DA FYO6 Nia 15,500m? retail NSW
Slide 47: Hotel Management
© Stockland HOTEL MANAGEMENT
Slide 48: Hotel Management: Market Commentary
HOTEL MANAGEMENT Market Commentary » Sydney showing signs of improvement = Melbourne market softening due to new supply = Canberra very sluggish » Demand for apartment style hotels such as Saville continues to gain momentum versus traditional hotel rooms 48
Slide 49: Capital Management
© Stockland CAPITAL MANAGEMENT
Slide 50: Capital Management
CAPITAL MANAGEMENT » A-/stable/A-2 rating from S&P » Low gearing gives Stockland significant capacity to capitalise on acquisition and development opportunities = Capacity to draw down approx. $400 million of unused bank facilities/ MTN programme as at 31 December and remain within 25% gearing level
Slide 51: Capital Management: Debt Maturity
©) CAPITAL MANAGEMENT Debt Maturity at 31/12/02 374M Within 1 Year 1-2 Years 2-3 Years 3-4 Years 54
Slide 52: The Future
© Stockland THE FUTURE
Slide 53: The Future
S, THE FUTURE = New expanded management team is delivering results = Management is committed to maintaining at least S&P’s A- Rating = Proactive strategy for acquiring investment property, especially retail = Continuance of conservative approach to development business = Maintenance of strong balanc
Slide 54: The Future: Contacts
S, THE FUTURE Matthew Quinn John Pettigrew Managing Director Finance Director Stockland Stockland Tel: (02) 9321 1502 Tel: (02) 9321 1506 Fax: (02) 9321 1595 Fax: (02) 9321 1582 matthew.quinn@stockland.com.au john.pettigrew@stockland.com.au * Or visit Stockland’s website: www.stockland.com.au * Deta
Slide 55: Disclaimer
S, DISCLAIMER Corporation/ Responsible Entity Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741 16" Floor 157 Liverpool Street SYDNEY NSW 2000 All care has been taken in the preparation of this document but no responsibility is taken for any errors or o
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