Slide 1: 1H18 Results Presentation
1H18 Results For personal use only Presentation Creating sustainable communities Stockland Green Hills, NSW 1
Slide 2: Agenda
Agenda For personal use only TOPIC SPEAKER PAGE GROUP UPDATE Mark Steinert, Managing Director and CEO 03 GROUP FINANCE Tiernan O’Rourke, CFO 06 COMMERCIAL PROPERTY John Schroder, Group Executive and CEO, Commercial Property 11 RESIDENTIAL Andrew Whitson, Group Executive and CEO, Residential 23 RETIR
Slide 3: Community creation driving securityholder returns
Community creation driving securityholder returns For personal use only Leveraging our diverse business model GROW ASSET RETURNS AND CUSTOMER BASE • Create liveable, affordable and sustainable communities 10% pa 3.7% pa 5 year 5 year • Develop and manage resilient retail town centres FFO per securit
Slide 4: Communities strategy delivering strong results
Communities strategy delivering strong results For personal use only Leveraging our diverse business model Grow asset returns and customer base Capital strength and operational excellence 18.2% Funds from operations1 $436m 23.0% Gearing Lower end of 20-30% range 16.9% FFO per security1 18.0c 3
Slide 5: Creating sustainable communities
Creating sustainable communities For personal use only Trust ~70% of assets Corporation ~30% of assets Retail Logistics & Residential Retirement Office Communities Living Town Centres Business Parks Communities Create market leading Grow and develop a Optimise returns Maximise returns by creating Le
Slide 6: Group Finance
Group For personal use only Finance Tiernan O’Rourke Triniti Business Park, Sydney
Slide 7: Strong FFO growth
Strong FFO growth For personal use only • 18% FFO growth driven by strong FUNDS FROM OPERATIONS residential result with skew to 1H COMP 1H18 $M 1H17 $M CHANGE GROWTH • Office lower due to non-Sydney vacancy Retail Town Centres1 209 207 1.1% 2.7% and lease surrender payments received in Logistics &
Slide 8: Statutory Profit to FFO and AFFO reconciliation
Statutory Profit to FFO and AFFO reconciliation For personal use only 1H18 $M 1H17 $M CHANGE Statutory Profit 684 702 (2.6%) • Revalued 48% of our Commercial Adjust for: Property portfolio Amortisation of lease incentives and lease fees 36 35 • Valuation uplift driven by development Straight-line r
Slide 9: Strong operating cash flows
Strong operating cash flows For personal use only Cash Flow Summary 1,400 1,200 309 1,000 (392)1 104 800 (1) 600 (358) 570 400 (244) (53) 200 238 174 - 30 June 2017 Operating cashflow Sale of Net debt Land acquisitions CP and RL capital and Distributions Other 31 December 2017 Opening Cash Balance b
Slide 10: Maintaining a strong balance sheet
Maintaining a strong balance sheet For personal use only • S&P A-/stable metrics maintained for over 10 years KEY DEBT METRICS 1H18 1H17 S&P rating A-/stable A-/stable • Moody's issued a public credit rating of A3 in Aug 2017 Moody’s rating A3 – (equivalent to S&P's A-); further diversifies potentia
Slide 11: Commercial Property
Commercial For personal use only Property John Schroder Stockland Shellharbour, NSW
Slide 12: Commercial Property: Stable recurrent earnings
Commercial Property: Stable recurrent earnings For personal use only Stockland Point Cook, Vic) RETAIL TOWN CENTRES RETAIL • The heart of the community TOWN CENTRES L&BP OFFICE TOTAL ASSET VALUES ($M) 7,339 2,091 817 10,247 FFO (COMP CHANGE) 2.7% 4.6% (2.8%) 2.6% OCCUPANCY 99.5% 98.8% 91.1% WA
Slide 13: Retail Town Centres: Creating market leading centres
Retail Town Centres For personal use only Creating market leading centres Heart of the Remixing #1 in the community portfolio trade area STOCKLAND HARRISDALE, WA STOCKLAND WETHERILL PARK, NSW STOCKLAND GREEN HILLS, NSW Developing greenfield retail town centres anchoring Evolving our retail mix in li
Slide 14: Retail Town Centres: Sales growth improving over the half
Retail Town Centres For personal use only Sales growth improving over the half TOTAL COMPARABLE CENTRES • Key categories in comparable specialty MAT: SALES BY 1 MAT • Fast casual dining/food catering 2.8% CATEGORY MAT ($M) GROWTH MAT GROWTH 2Q18 GROWTH • Retail services 10.0% Total Turnover 6,70
Slide 15: Making our assets more resilient
Retail Town Centres For personal use only Making our assets more resilient – growing food, services, entertainment and health Remixing and redeveloping focused on growth categories 1 Diversified rental income, non-discretionary focus2 Change in gross rent Low reliance on DDS and department store inc
Slide 16: Retail Town Centres: Positive leasing spreads
Retail Town Centres: Continuing to achieve positive leasing spreads For personal use only Actively managing our assets RETAIL LEASING ACTIVITY2 1H18 1H17 Occupancy3 99.5% 99.5% • Positive leasing spreads of 1.9% Specialty retail leasing activity • Rental increase concentrated in growth categories Te
Slide 17: Retail Town Centres: Accretive development pipeline
Retail Town Centres: Accretive development pipeline For personal use only Retail Town Centre development progressing well FUTURE DEVELOPMENT • Green Hills (NSW) Stage 3 delivered Nov 2017 PIPELINE: • ~$530M RETAIL PROJECTS, • Wendouree (Vic) adding new flagship Woolworths, INCLUDING ~$235M NEW TOWN
Slide 18: Retail Town Centres: Evolving our retail mix
Retail Town Centres: Evolving our retail mix For personal use only Entertainment Garden and leisure court Stockland Investor Tour 2017 18
Slide 19: Office: Optimising returns
Office: Optimising returns For personal use only • Predominantly Sydney portfolio with OFFICE 1H18 1H17 development potential, higher and better use Leases executed 11,700 sqm 2,900 sqm opportunity Leases under HOA1 2,400 sqm 2,100 sqm Average rental growth on new leases and renewals (6.2%) 1.5% • A
Slide 20: Logistics & Business Parks: Development led growth
Logistics & Business Parks: Development led growth For personal use only • Strong comparable FFO growth of 4.6% LOGISTICS & BUSINESS PARKS 1H18 1H17 Leases executed 214,700 sqm 160,000 sqm • High occupancy driven by strong demand in Leases under HOA1 30,700 sqm 152,000 sqm Sydney and Melbourne Avera
Slide 21: Logistics & Business Parks: Transforming the portfolio
Logistics & Business Parks: Transforming the portfolio For personal use only Upgrading well located assets and introducing new customers OAKLEIGH INDUSTRIAL ESTATE, HENDRA DISTRIBUTION CENTRE, MELBOURNE BRISBANE • 50% of the site redeveloped • Rolling refurbishment of entire estate • Incremental IRR
Slide 22: Logistics and Business Parks: Accretive development pipeline
Logistics and Business Parks: Accretive development pipeline For personal use only L&BP development repositioning portfolio FUTURE DEVELOPMENT Macquarie Technology Centre, Sydney Artist Impression PIPELINE: • Yennora, Ingleburn Stage 2 (Sydney) and Willawong • ~$590M L&BP PROJECTS (Brisbane), commen
Slide 23: Residential
Residential For personal use only Andrew Whitson Arve, Melbourne
Slide 24: Residential: Maximising returns by creating thriving communities
Residential For personal use only Maximising returns by creating thriving communities Owner occupier Broadening customer Metro over locations 75% reach HIGHLANDS, VIC ARVE, VIC ALTONA NORTH , VIC Creating vibrant, masterplanned communities, Broadening customer reach in middle ring Acquiring land aro
Slide 25: Residential: Delivering strong growth
Residential: Delivering strong growth For personal use only Well positioned in the most resilient markets RESIDENTIAL 1H18 1H17 CHANGE Total lots settled 3,210 2,853 12.5% • Increased ROA as we execute on strategy and benefit from Total revenue $870m $708m 22.9% supportive market conditions - Incl
Slide 26: Residential: Driving returns
Residential: Driving returns For personal use only RESIDENTIAL CORE WORKOUT 1 TOTAL • 1H18 operating profit margin reflects increased Lots settled 3,096 114 3,210 settlements from higher margin Sydney projects Revenue $842m $28m $870m • 2H18 overheads to be higher, leading to new Revenue 97% 3% 100%
Slide 27: Residential: Capital efficient restocking
Residential: Capital efficient restocking For personal use only SYDNEY Upweighted to strong Sydney and Melbourne housing markets • Acquired a further 2,000 lots, • 79% of acquisitions since FY13 on capital efficient terms adjacent to Elara, one of our most successful communities • Restocking in prio
Slide 28: Residential: Market overview
Residential: Market overview For personal use only 1H18 STOCKLAND SUMMARY 2018 MARKET OUTLOOK 1H18 SETTLEMENT VACANT LAND VACANT VOLUMES COMMENTS ON SALES LAND STATE (% CHANGE OVER 1H17) OUR SETTLEMENTS IN 1H18 STATE VOLUMES PRICES COMMENTS ON MARKET OUTLOOK Demand continues to outstrip supply. Volu
Slide 29: Retirement Living
Retirement For personal use only Living Stephen Bull Birtinya, Queensland 29
Slide 30: Retirement Living: Focussing on our customers
Retirement Living: Focussing on our customers For personal use only • Results impacted by timing of superlot sales TOTAL PORTFOLIO 1H18 1H17 CHANGE and lower sales volumes reflecting adverse EBIT $19m $28m (30.4%) sector media coverage Operating Profit $18m $26m (29.7%) Occupancy 94.7% 94.6% •
Slide 31: Retirement Living: Market environment
Retirement Living: Market environment For personal use only Growth in Australia’s ageing population underpins this sector Perception of Retirement Living now improving1 • Media coverage in mid 2017 impacted customer 73% sentiment towards the retirement living sector; now starting to recover 54% 44%
Slide 32: Retirement Living: Leading operator and developer
Retirement Living For personal use only Leading operator and developer Customer Active development Reshaping focus portfolio pipeline MERNDA, MELBOURNE BIRTINYA, SUNSHINE COAST CARDINAL FREEMAN, SYDNEY • Focus on health and wellbeing • Providing contract choice • Future pipeline over 3,000 units • R
Slide 33: Summary and Outlook
Summary For personal use only and Outlook Mark Steinert Oakleigh, Melbourne 33
Slide 34: Strategic priorities
Strategic priorities For personal use only RETAIL TOWN CENTRES • Increase retail town centre resilience; food, services, entertainment and health focus • Complete $300m divestments Wendouree, Vic Community creation Artist Impression driving securityholder returns Hendra, Brisbane RETIREMENT LIVING •
Slide 35: Strategic priorities
Strategic priorities For personal use only L&BP portfolio FY13 1H18 Percent of SGP portfolio 11.6% 13.6% Target 20% LOGISTICS & BUSINESS PARKS • Grow L&BP towards 20% of our portfolio Asset Value $1,326m $2,091m over time Weighted average cap rate 8.5% 6.9% Occupancy 89.5% 98.8% WALE 3.9 years 4.2 y
Slide 36: FY18 outlook
FY18 outlook For personal use only • Reaffirming FFO per security growth of 5 - 6.5% for FY18, assuming Our Purpose: We believe there is a better way to live no material change in market conditions • Underpinned by: • Commercial Property comparable FFO growth of 2 - 3%, impacted by higher outgoings,
Slide 37: Important Notice
For personal use only Important Notice While every effort is made to provide accurate and complete information, Stockland does not warrant or represent that the information in this presentation is free from errors or omissions or is suitable for your intended use. This presentation contains forward-