Lendlease Group · ASX:LLC
Lendlease — Investor Day (October 2014)
66 slides from Lendlease's investor day presentation, Oct 9, 2014
Slide 1: Lend Lease Investor Day presentations (ASX Announcement)
ASX Announcement Lend Lease Investor Day presentations For personal use only 9 October 2014 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 Rel
Slide 2: Lend Lease Investor Day 2014
LEND LEASE Investor Day 2014 For personal use only 9 October 2014 Image: Artist Impression – 432 Park Avenue, New York
Slide 3: Important Notice
Important Notice For personal use only This presentation has been prepared in good faith, but no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained in the presentation (any of which
Slide 4: Agenda
1 Lend Lease Strategy Overview For personal use only Australian Residential and 2 Investment Management Trends 3 Urban Regeneration 4 Infrastructure Healthcare and 5 US Development Risk Management and Capital 6 Allocation 7 Closing and final Q&A AGENDA Image: Chau Chak Building, UTS Sydney
Slide 5: Strategy
STRATEGY 1 For personal use only Steve McCann Group Chief Executive Officer and Managing Director Image: Amy Dreher – National September 11 Museum Pavilion – New York
Slide 6: The Journey So Far
The Journey So Far For personal use only Since 2009 we have delivered total securityholder returns1 of 19.1 per cent per annum versus 10.6 per cent per annum for the ASX200 In 2009 during a period of economic uncertainty, we set strategic principles to secure future growth Successful execution s
Slide 7: Leadership performance
Leadership performance Critical Impact Leadership in core markets For personal use only 1 Urbanisation creates increasing 11 major projects under development Urban pressure to plan for, and Regeneration accommodate a denser population ~$25b of urban regeneration secured 2 An ageing populatio
Slide 8: Understanding the property cycle
Understanding the property cycle For personal use only Develop platforms and capability Capital recycled and reinvested for earnings growth into key growth platforms Disciplined Origination Efficient recycling Barangaroo Bluewater Elephant & Castle Jem Valemus King of Prussia Dasco G
Slide 9: Evolution of our strategy
Evolution of our strategy For personal use only Deliver optimal Disciplined growth around performance safely our integrated model Focus Focus GrowGrow Disciplined execution of Disciplined origination and existing pipeline delivery of new pipeline of Production of $2.5 billion of opportunities
Slide 10: Focus
Focus Development1 Construction & Infrastructure1 Investments1 For personal use only $37.7b pipeline $16.2b backlog $16.3b FUM Deliver optimal performance safely 1 As at 30 June 2014 9
Slide 11: Grow
Grow Disciplined Growth Integrated platforms For personal use only Focused origination in growth sectors Target sectors where we can differentiate where we have strong capabilities with our integrated model valued by our investors Safety Scale Urban Target opportunities in defined cities Track rec
Slide 12: Depth of management experience
Depth of management experience Dan Labbad Steve McCann Chief Executive Officer, International Operations Group Chief Executive Officer and Managing Director For personal use only Joined Lend Lease in 1997. From July 2012 until August 2014 Dan was Joined Lend Lease in 2005 as CEO Investment Manag
Slide 13: Depth of management experience
Depth of management experience For personal use only Established management team with a proven track record Recent appointments further support our strategic goals Dan Labbad Bob McNamara New Chief Executive Denis Hickey New Chief Risk Officer to International Operations Appointed as Chief Executive
Slide 14: Australian Residential & Investment Management Trends
AUSTRALIAN 2 RESIDENTIAL & INVESTMENT MANAGEMENT For personal use only TRENDS Artist Impression: Barangaroo South, Sydney
Slide 15: Australian residential - trends
Australian residential - trends For personal use only Growth “In Sydney, the city has Undersupply of housing for Australian population growth experienced a residential undersupply, with the rd strongest in OECD past five financial years seeing completed dwellings total only 79,500, against an estima
Slide 16: Affordability ratios below year average
Affordability ratios below 10 year average For personal use only Sydney rent growth and vacancy Affordability ratio – Sydney, Melbourne and Brisbane Quarterly observations Quarterly observations 20% -3% 45% Actual less natural vacancy rate 15% 40% -2% 10% Undersupplied 35% -1% Axis inverted Rental y
Slide 17: Australian residential driving near term growth
Australian residential driving near term growth For personal use only Australian residential pre-sold revenue of $1.5 billion across FY15 – FY17 Record year for Communities settlements. Apartment volumes increasing above original target of circa 700 settlements per annum Undersupply of housing for n
Slide 18: Communities - volumes up strongly in 2014
Communities - volumes up strongly in 2014 Communities residential land lots Backlog units by geography For personal use only Residential land lots settled, up SA 5% WA 3% 32 % VIC 18% ACT & NSW In FY14. Land Lot pre-sales of 1,842 up 40% 18% QLD 56% providing strong platform for growth in FY15 Zoned
Slide 19: Australian apartment pre-sales at record highs
Australian apartment pre-sales at record highs Pre-sold % / Apartments – pre sold and in delivery pre-sold $m FY14 FY15 FY16 FY17+ For personal use only revenue 2 apartment buildings: Anadara and Alexander Barangaroo 159 units 100% South ~$300 million 3 apartment buildings: Darling One, St Leo
Slide 20: Darling Square
Darling Square Circa 1,400 apartments and sky homes For personal use only 5,500 sqm of new retail space First apartment launch in June 2014 – significant interest and 100% pre-sales for the first release of 538 apartments ($580 million of revenue) Pre-sales occurred ahead of schedule Proje
Slide 21: Collins Street
888 Collins Street Residential phase of For personal use only Victoria Harbour progressing well Tallest tower in the Victoria Harbour Precinct – at the intersection of Bourke and Collins Street in Melbourne 40 floor tower, 578 apartments over 36,000 square metres Strong pre-sales leading to
Slide 22: Investment Management - growing platform
Investment Management – growing platform 3 year growth in FUM and AUM For personal use only FUM of 12 FUM AUM 10 billion $10.9 8 $ billion 6 4 Up 6% in 12 months 2 0 FY12 FY13 FY14 9 major Lend Lease projects Institutional investors financed by third party capital in the last 5 years including Darli
Slide 23: Q&A
Q&A AUSTRALIAN RESIDENTIAL & INVESTMENT For personal use only MANAGEMENT TRENDS Artist Impression: Barangaroo South, Sydney
Slide 24: Urban Regeneration
URBAN 3 REGENERATION For personal use only Image: Victoria Harbour, Melbourne
Slide 25: Urban Regeneration - trends
Urban Regeneration - trends For personal use only Growth Urban population in 2014 Since 1990 ten mega-cities “Continuing population accounted for have now grown to growth and urbanisation 28 are projected to add 2.5 54 % Mega cities are billion people to the Up 34% expected to grow world’s urban pop
Slide 26: Urban Regeneration Characteristics
Urban Regeneration Characteristics For personal use only Scale – estimated end development value Location - city and city fringe, typically government owned land Mixed-use – residential, retail, commercial, infrastructure and place making Density - medium to high density development Timefr
Slide 27: Urban Regeneration Origination Process
Urban Regeneration Origination Process – Phase 1 Countries ranked on: For personal use only Economic indicators Urban regeneration indicators Cities ranked on: Operating environment Demographic factors indicators; and Demand drivers Investor confidence Unique factors indicators Prope
Slide 28: Barangaroo
Barangaroo 1970s – Concrete apron created to accommodate bulk For personal use only offloading for shipping containers 1979 – Port Botany constructed, gradually becoming the main port for Sydney 2003 – Government of New South Wales closes the shipping and stevedoring facilities, designating th
Slide 29: Barangaroo
Barangaroo 490,000 sqm 75 For personal use only Over new retail outlets Gross Floor Area New headland park and recreated foreshore with 6,600 sandstone blocks1 Australia’s first large scale 7.7 Hectares Carbon Neutral community Mixed Use Development 1 Headland Park being delivered for the Barangaroo
Slide 30: Elephant & Castle
Elephant & Castle 1974 – Heygate Estate in Elephant & Castle, For personal use only South London completed housing over 3,000 tenants 2004 – Southwark Council announces master-plan for regenerating the site 2007 – Lend Lease selected as preferred developer for the scheme 2011 – Master-plan a
Slide 31: Transforming Elephant & Castle
Transforming Elephant & Castle 3,000 new homes For personal use only Over 50 shops Largest new park in over 70 years ONE THE ELEPHANT ELEPHANT PARK In Central London 284 New Circa 2,500 Homes homes by from 2016 2025 TRAFALGAR PLACE 235 homes from 2015 30
Slide 32: Tun Razak Exchange
Tun Razak Exchange 70-acre development in the centre of Kuala For personal use only Lumpur Master-developer 1MDB 2 years of lead time to securing the opportunity Competitive tender process with 8 other developers bidding Phase 1 - Lifestyle Quarter is the retail/residential led component o
Slide 33: Tun Razak Exchange
Tun Razak Exchange Phase 1 - Lifestyle Quarter Retail Mall over For personal use only 150,000 sqm Gross Floor Area One hotel and 3 Residential Towers Estimated End Development Value 17 Acres RM 8 billion Mixed Use Development 32
Slide 34: Long dated major urban regeneration projects
Long dated major urban regeneration projects 2015 End Value 2020 2025 beyond use only Darling Harbour Live ~$2.5b 2019 (DHL) Barangaroo South ~$6.0b 2020 personalAustralia Victoria Harbour ~$4.5b 2021 Batman’s Hill ~$1.5b 2025 Brisbane (RNA) Showgrounds ~$2.5b 2025 Elephant & Castle ~£1.5b 2025 Euro
Slide 35: Q&A
Q&A URBAN REGENERATION For personal use only Image: Victoria Harbour, Melbourne
Slide 36: Infrastructure
INFRASTRUCTURE 4 For personal use only Image: Hunter Expressway, NSW
Slide 37: Infrastructure - trends
Infrastructure - trends For personal use only Growth Since the late 1980s Forecast Australian “Australia’s buoyant Infrastructure investment1 PPP’s economy, growing population and increasing freight volumes are creating high demand for new infrastructure and $50 billion 127 Have developed more than
Slide 38: Significant Australian Government infrastructure pipeline
Significant Australian Government infrastructure pipeline For personal use only 37 Source: Department of Infrastructure and Regional Development
Slide 39: Australia-wide - major project pipeline
Australia-wide – major project pipeline Major Road Project Construction – Australia $ billion For personal use only Adjusted for cost changes (FY2012 dollars) in work done terms 7.5 Western Sydney Bus and Train Infrastructure (Brisbane) (Badgerys) 6.0 NorthConnex East West East West Link Link Stage
Slide 40: NorthConnex
NorthConnex Transurban road and tunnel facilitated through For personal use only the NSW unsolicited proposals process Efficient bid/tender process Project size ~$2.65 billion Linking the M1 and M2, circa nine kilometres of tunnel and motorway interchanges to the north and south Lend Lease
Slide 41: East West Link
East West Link 18 kilometre cross-city road connecting the For personal use only Eastern Freeway to the Western Ring Road in Melbourne First fully-integrated Engineering project for Lend Lease: Structuring and financing of PPP Design and construction contract 25 year services and maintenan
Slide 42: Future opportunities - WestConnex
Future opportunities - WestConnex Estimated capital cost1 Stages 1a & 1b: ~$3.4b to $3.6b For personal use only Descriptions Stage 2: ~ $3.6b to $3.8b Stage 1a (M4 widening) Parramatta to Homebush Bay Drive 7km motorway widening, 2km of new viaduct, 17 Bridge improvements and 2 Rail crossing
Slide 43: Q&A
Q&A INFRASTRUCTURE For personal use only Image: Hunter Expressway, NSW
Slide 44: Morning tea break
Morning tea break For personal use only Webcast will resume at 11.15am AEDT Image: Adelaide Oval
Slide 45: Healthcare & US Development
HEALTHCARE & 5 US DEVELOPMENT For personal use only Image: Bon Secours St Francis Medical Pavilion
Slide 46: Healthcare - trends
Healthcare - trends For personal use only Growth “The shared, long-term Number of people over 60 has US spending on private health trends of an ageing tripled in the last insurance accounts for population and an increase By 2030 over 60 in people inflicted with 59 % 50 chronic diseases are populatio
Slide 47: Healthcare track record
Healthcare track record For personal use only Europe Developed eight major PPP hospitals in the UK Delivered Italy’s and Spain’s first PPP hospitals Asia Constructed a 7- storey hospital and senior citizen centre Americas in Tokyo 1,500+ healthcare 250-bed hospital in projects delivered, v
Slide 48: Royal Children's Hospital Melbourne
Royal Children’s Hospital Melbourne $1.0 billion hospital completed in 2013 For personal use only 165,000 square metre hospital over seven levels purpose-built for children and the way they are cared for Sustainable solution: Rainwater collection from 75 per cent of new roof areas Blackwat
Slide 49: Sunshine Coast University Hospital
Sunshine Coast University Hospital New public hospital on For personal use only 450 20 hectares at beds by 2016, increasing Kawana, Sunshine Coast to 738 by 2021 $1.8 billion public private partnership 48
Slide 50: Healthcare Development
Healthcare Development Department of Veteran’s Affairs Healthcare Center Winston-Salem , first integrated service For personal use only offering for Lend Lease - designing, building and operating expansive health care center in Kernersville under a 20-year lease Expected to treat 34,000 veterans
Slide 51: US Development
US Development For personal use only Increase the volume of development projects undertaken in the US market Focus residential, office and mixed-use sectors in core gateway cities Leverage existing relationships in these cities and develop alongside joint venture partners or in our own capacity Focu
Slide 52: US Development
US Development We are focusing on core gateway cities as these are the deepest, most diverse markets and have strong Boston For personal use only urban regeneration drivers Supportive economic drivers in education and healthcare/pharmaceutical San Francisco Tech-sector supports Chicago trend bac
Slide 53: Capital model
Capital model Adopt a flexible capital model for US development opportunities For personal use only Fund in our own capacity; Fund through partnership / joint-venture; or Fund through General Partner (GP) / Limited Partner (LP) model, using non-recourse project specific debt GP/LP Investment S
Slide 54: Q&A
Q&A HEALTHCARE & US For personal use only DEVELOPMENT Image: Bon Secours St Francis Medical Pavilion
Slide 55: Risk Management & Capital Allocation
RISK 6 MANAGEMENT & For personal use only CAPITAL ALLOCATION Image: The Dock Library, Victoria Harbour, Melbourne
Slide 56: Enterprise Risk Management Framework
Enterprise Risk Management Framework For personal use only The Lend Lease Enterprise Risk Management framework, Key Objectives identifies, evaluates, Identification addresses, monitors, quantifies and reports material risks to the Risk Management and Audit Governance Growth Focus Committees Assess
Slide 57: Core components of Risk Management
Core components of Risk Management For personal use only Capital Allocation Portfolio approach Risk Adjusted Capital management Benchmarked earnings based on risk profile Focus / Execution Origination Proactive risk Targeted and disciplined management in delivery Investment and risk Focu
Slide 58: Execution Risk
Execution Risk Reducing the impact when a challenging issue occurs For personal use only Proactive Reactive Safety, health & wellbeing, sustainability & innovation investment Dealing with an issue when it occurs Project in Delivery (PiD) system enables Implementing mitigation and contingency
Slide 59: Capital Allocation Framework
Capital Allocation Framework We set capital and earnings benchmarks internally based on the risk profile of our For personal use only portfolio Group benchmarks Return on Equity 12 - 15% Priorities Gearing Up to 20% Ensure Group financial metrics Dividend Payout Ratio 40% - 60% drive long term val
Slide 60: Risk Adjusted Capital
Risk Adjusted Capital As risk profile in each segment increases, we assign a higher capital charge and/or set For personal use only a expected a higher margin Development Construction Investments High Land / infrastructure = long dated At risk lump sum Value-add Risk Production capital = medium Fini
Slide 61: Development capital
Development capital1 Capital requirement remains focused on production to maximise development For personal use only earnings Delivering to maximise value 2% Unsold inc 23% 21% 34% 32% 26% Production cycle continuing in FY15 Bluewater 24% 21% 67% Production capital returned during 24% 28% 50% FY
Slide 62: Indicative net cash flow from major projects in-delivery
Indicative net cash flow from major projects in-delivery For personal use only Overview FY15 FY16 FY17 Net cash proceeds Communities Cash Positive Cash Positive Cash Positive Assuming 2,500 annual lot settlements Net cash proceeds Apartments Investing Cash Positive Cash Positive 19 apartment buildin
Slide 63: Q&A
Q&A RISK MANAGEMENT & For personal use only CAPITAL ALLOCATION Image: The Dock Library, Victoria Harbour, Melbourne
Slide 64: Closing and Final Q&A
CLOSING AND 7 FINAL Q&A For personal use only Image: Dr Chau Chak Building, UTS Sydney
Slide 65: Strategic Outlook
Strategic Outlook For personal use only Understanding the property cycle and successful execution of our strategy since 2009 has delivered outperformance for our securityholders Strong growth trajectory and earnings visibility over coming years, with embedded earnings in our existing pipeline
Slide 66: Lend Lease Investor Day 2014
LEND LEASE Investor Day 2014 For personal use only 9 October 2014 Image: Artist Impression – 432 Park Avenue, New York