Region Group · ASX:RGN
Region — Shopping Centres Australasia Property Group — H1 FY22 Earnings Presentation
37 slides from Region's earnings presentation, Feb 7, 2022
Slide 1: 1H FY22 Results Presentation
Is 1H FY22 RESULTS PRESENTATION 7 February 2022 slide Raymond Terrace, NSW
Slide 2: Agenda
AGENDA 1. OVERVIEW OF 1H FY22 RESULTS 2. FINANCIAL PERFORMANCE 3. OPERATIONAL PERFORMANCE 4. GROWTH OPPORTUNITIES 5. KEY PRIORITIES AND OUTLOOK 6. QUESTIONS 7. APPENDICES slide
Slide 3: Overview of 1H FY22 Results
1 OVERVIEW OF 1H FY22 RESULTS Anthony Mellowes Chief Executive Officer slide slide 3
Slide 4: 1H FY22 Highlights
1H FY22 HIGHLIGHTS FINANCIAL CAPITAL ACTIVE PORTFOLIO PERFORMANCE MANAGEMENT MANAGEMENT Net Profit After Tax Gearing Portfolio occupancy Specialty vacancy $432.4m, up by 320.2%1 32.5%, up by 1.2%2 98.1%3 5.0%3 FFO per unit NTA per unit Portfolio weighted average cap rate 8.57 cpu, up by 27.5%1 $2.84
Slide 5: Key Achievements
KEY ACHIEVEMENTS Resilient performance, progress on sustainability, and new funds management JV • Resilient performance from our convenience-based centres – Tenant sales above pre-COVID levels – Specialty tenant MAT sales growth was up by 5.5% despite lockdowns in NSW and VIC – Supermarket MAT sales
Slide 6: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer slide slide 6
Slide 7: Impact of COVID-19
IMPACT OF COVID-19 Sales growth and collection rates show resilience Moving annual turnover growth (%) 1 Sales growth trends • Sales growth continues to be impacted by the COVID-19 environment – Lockdowns in NSW and VIC during much of 1H FY22 – Supermarket/DDS MAT growth is compared to elevated leve
Slide 8: Profit & Loss
PROFIT & LOSS For the six months ended 31 December 2021 31 Dec 31 Dec % Change $m 2021 2020 • Net property income increase on the prior year is primarily due to acquisitions Anchor rental income 73.6 65.9 11.7% • Funds management income for SURF 3 includes $0.5m disposal fee, $0.4m Specialty rental
Slide 9: Funds From Operations
FUNDS FROM OPERATIONS For the six months ended 31 December 2021 31 Dec 31 Dec $m 2021 % Change 2020 • Funds From Operations (“FFO”) of $94.3m is up by $22.0m or 30.4% 432.4 102.9 320.2% Net profit after tax (statutory) primarily due to acquisitions • Adjusted FFO (“AFFO”) of $80.9m is up by $18.5m o
Slide 10: Balance Sheet
BALANCE SHEET At 31 December 2021 31 Dec 30 June • Value of investment properties increased from $4,000.0m to $4,426.4m due $m 2021 2021 % Change to: Cash 12.4 11.6 6.9% – Acquisitions of $347.5m (excluding transaction costs); – Valuation increase of $386.5m being like-for-like fair value increase o
Slide 11: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT At 31 December 2021 • Gearing of 32.5% is within the target range of 30% to 40%. Our preference is 31 Dec 2021 30 June 2021 for gearing to remain below 35% at this point in the cycle Facility limit ($’m) 1,757.1 1,582.1 • Key movements in drawn debt (net of cash) during t
Slide 12: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer slide slide 12
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW Weighting towards food, health and retail services (non-discretionary) At 31 December 2021 Number of Number of GLA Site Area Occupancy Value WALE Weighted average centres specialties (sqm) (sqm) (% GLA) ($m) (yrs) cap rate (%) Neighbourhood 77 1,417 500,748 1,718,730 98.2% 3,144.2
Slide 14: Portfolio Occupancy
PORTFOLIO OCCUPANCY Resilient speciality occupancy Portfolio Occupancy (% of GLA)1 98.4% 98.2% 98.2% 97.4% 98.1% • Continued strategic focus on remixing toward non-discretionary categories and reducing long term vacancies where deals are accretive • Total portfolio occupancy has increased to 98.1% f
Slide 15: Sales Growth and Turnover Rent
SALES GROWTH AND TURNOVER RENT Turnover rent increasing due to strong supermarket sales • Overall MAT growth for 2021 (compared to 2020) was 0.3% – Panic buying from 2020 has not been repeated Comparable Store MAT Sales Growth by Category (%) – Lockdowns in NSW and VIC during 1H FY22 – Compared to p
Slide 16: Specialty Key Metrics
SPECIALTY KEY METRICS Resilient leasing and sales productivity Specialty Tenant Metrics • Sales productivity and occupancy costs remain stable across the portfolio – Sales productivity in-line with prior period at $9,842 psm (June 2021: $9,954 Total Portfolio 31 December 2021 30 June 2021 psm) – Ave
Slide 17: Sustainability Strategy
SUSTAINABILITY STRATEGY We are targeting our efforts in six key areas where we can have maximum impact1 slide slide 17 1. See slide 18 for a more detailed update on progress during the half year, and our FY21 Sustainability Report for more information.
Slide 18: Sustainability Update
SUSTAINABILITY UPDATE Good progress on our sustainability commitments over the last 6 months Energy & Carbon Progress Since launching our Sustainability Strategy in August 2020 we have made a great start to achieving our 42 Net Zero 2030 (Scope 1 & 2) On Program sustainability commitments by moving
Slide 19: Growth Opportunities
4 GROWTH OPPORTUNITIES Anthony Mellowes and Mark Fleming Chief Executive Officer and Chief Financial Officer slide slide 19
Slide 20: Funds Management
FUNDS MANAGEMENT New JV with GIC and successful conclusion of SURF GIC Fund (SCA Metro Fund) • Announced on 2 December 2021, with start date expected during 2H FY22 – GIC has received FIRB approval for the acquisition of the initial properties, debt funding package negotiations progressing well • Ke
Slide 21: Acquisitions
ACQUISITIONS Seven convenience centre acquisitions completed during the half year Raymond Terrace (Raymond Terrace, NSW) Moama Marketplace (Moama, NSW) • Acquired Jul 21 for $87.5m (5.9% implied fully let • Acquired Nov 21 for $23.4m (4.9% implied fully yield) let yield) • % of income from Anchors:
Slide 22: Convenience Based Centres
CONVENIENCE BASED CENTRES Fragmented ownership provides continuing acquisition opportunities Indicative Convenience Based Centre Landscape Ownership of Convenience Based Centres (number of centres) • There are approximately 1,200 Coles and Woolworths anchored ISPT VCX neighbourhood and sub regional
Slide 23: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE Over $250m of development opportunities identified at more than 30 of our centres over the next 5 years1 Estimated Capital Investment (A$m) 1H FY22 DEVELOPMENT TYPE CENTRE(S) Actual 2H FY22 FY23 FY24 FY25 FY26 Greenbank, Warner, North Orange, Belmont, Whitsundays SC,
Slide 24: Key Priorities and Outlook
5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes and Mark Fleming Chief Executive Officer and Chief Financial Officer slide slide 24
Slide 25: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure and growing long term distributions to our unitholders WEIGHTED TO FOCUS ON CONVENIENCE- LONG LEASES TO NON-DISCRETIONARY BASED RETAIL CENTRES QUALITY ANCHOR TENANTS RETAIL SEGMENTS APPROPRIATE GROWTH CAPITAL STRUCTURE OPPORTUN
Slide 26: Longer Term AFFO Growth Target
LONGER TERM AFFO GROWTH TARGET Indicative target growth rate for AFFO in the medium-longer term is 2% to 4%+ pa Indicative Contribution to AFFO Growth Rate (% pa) Description and Assumptions – medium to longer term – • Anchors represent 48% of rental income. 34% of anchors in turnover rent and expec
Slide 27: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to drive resilient performance from our centres, make further progress on sustainability initiatives, and grow the SCA Metro Fund • Our focus continues to be: – Serving our local communities for their everyday needs – Partnering with our supermarket anchors to imp
Slide 28: Questions
6 QUESTIONS slide slide 28
Slide 29: Appendices
7 APPENDICES slide slide 29
Slide 30: Track Record of Acquisitions
TRACK RECORD OF ACQUISITIONS On average we have acquired 6 properties for $260m each financial year Completed Acquisitions ($m)1 677.92 452.4 347.5 274.9 $260m average annual acquisitions 233.1 135.8 117.8 145.3 78.4 26.3 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 1H FY22 7 Properties 6 Properties
Slide 31: Online Retail Implications
ONLINE RETAIL IMPLICATIONS Convenience based centres are becoming last mile logistics hubs • Our centres are located within local communities, well suited for last mile logistics hubs • We believe the store-based fulfilment model will remain the predominant model for online grocery fulfilment in Aus
Slide 32: Anchor Tenants
ANCHOR TENANTS 48% of gross rent generated by anchor tenants 30 June 30 June 30 June 30 June 31 Dec • All centres are anchored by either Woolworths Limited, 2018 2019 2020 2021 2021 Coles Group Limited or Wesfarmers Limited retailers Woolworths Limited Woolworths 54 58 58 64 68 Big W 7 9 9 11 11 • G
Slide 33: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Facility Limit Drawn Debt Financing capacity Maturity / Notes (A$m) (A$m) (A$m) Bank and Syndicated Facilities Bank bilateral and syndicated facilities 50.0 50.0 - FY24: $50m Jun 2024 Bank bilateral 50.0 50.0 - FY25: $50m Dec 2024 Bank bilateral 150.0 125.0 25
Slide 34: Acquisitions During the Half Year
ACQUISITIONS DURING THE HALF YEAR 31 December 2021 Total Purchase Implied Acquisition Anchor GLA Specialty GLA Total GLA Occupancy Centre Type Price Fully Let Date (sqm) (sqm) (sqm) (% GLA) ($m) Yield Acquired Properties Raymond Terrace Sub Regional Jul 2021 10,892 3,596 14,488 98% 87.5 5.9% Drayton
Slide 35: Portfolio List (I)
PORTFOLIO LIST (I) Completion Total GLA Occupancy Number of WALE Valuation Valuation Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate Dec 2021 ($m) Lavington Square NSW Sub-Regional WOW; Big W 2005 20,222 94.6% 58 2.7 6.00% 76.5 Marketown East N
Slide 36: Portfolio List (II)
PORTFOLIO LIST (II) Completion Total GLA Occupancy Number of WALE Valuation Valuation Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate Dec 2021 ($m) Carrara QLD Neighbourhood WOW 2011 3,717 98.0% 6 6.3 4.75% 21.5 Chancellor Park Marketplace QLD
Slide 37: Contact Details and Disclaimer
CONTACT DETAILS AND DISCLAIMER For further information please contact: Anthony Mellowes Mark Fleming Chief Executive Officer Chief Financial Officer T: +61 2 8243 4900 T: +61 2 8243 4900 E: anthony.mellowes@scaproperty.com.au E: mark.fleming@scaproperty.com.au Disclaimer This presentation has been p
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