Region Group · ASX:RGN
Region — Shareholder Meeting (November 2018)
55 slides from Region's shareholder meeting presentation, Nov 21, 2018
Slide 1: 2018 Annual General Meeting cover letter to ASX
Level 5, 50 Pitt Street Sydney NSW 2000 Tel: (02) 8243 4900 Fax: (02) 8243 4999 www.scaproperty.com.au 21 November 2018 The Manager ASX Market Announcements Office ASX Limited Level 4, Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam 2018 Annual General Meeting | SCA Property Group (A
Slide 2: Chairman's Address: Welcome and Agenda
Annual General Meeting Wednesday 21 November 2018 Chairman’s Address Welcome (Slide 1) Good afternoon ladies and gentlemen, and welcome to SCA Property Group’s 2018 Annual General Meeting. I would like to remind all AGM participants to turn off their mobile phones and will now take the opportunity t
Slide 3: Introductions of directors and management
Then we will progress to the formal business of the meeting, where the resolutions provided in the Notice of Meeting will be put to the members. We will allow time for questions and answers relating to each resolution before proceeding to vote on that resolution. Lastly, I will open the floor to gen
Slide 4: Chairman's Introduction
Also present in the audience are: • Sid Sharma, Chief Operating Officer; • Campbell Aitken, our Chief Investment Officer; • Melissa Kingham, Fund Manager for SURF Funds; and • Greg Inkson, General Manager Finance. We also have present, from the Group’s auditors Deloitte, Andrew Coleman as well as re
Slide 5: Market Capitalisation, NTA, MER and Debt
Market Capitalisation (Slide 7) The Group’s market capitalisation has grown consistently. It has increased by 115% over the last five years to $2.19 billion at 1 November 2018. Net Tangible Assets (NTA) (Slide 8) NTA has also grown consistently. It has increased by 40% over the last five years. Mana
Slide 6: Shopper insights and data analytics
As we grow, we are investing in our data analytics capability and learning more about what drives our business. I’ll present a few facts and figures about people who visit our shopping centres, courtesy of our COO Sid Sharma. Sid has done a great job managing this initiative and will be happy to ans
Slide 7: Unit Purchase Plan update
In structuring the UPP Offer, the Board honoured its commitment to provide retail investors with the opportunity to acquire additional units in SCP, on no less favourable terms to those offered to institutional investors, where that is consistent with our capital management strategy. Key features of
Slide 8: Board renewal, conclusion and outlook
Dr Ian Pollard retired as a Director earlier this year to spend more time with his grandchildren and his vintage boat. Ian was an outstanding director and I would like to take this opportunity to thank him for his significant contribution. We are well advanced with our planning for renewal and succe
Slide 9: CEO's Address: High Quality Portfolio
Annual General Meeting Wednesday 21 November 2018 CEO’s Address CEO’s Address (Slide 19) Good afternoon Ladies and Gentlemen. My name is Anthony Mellowes, and I am the Chief Executive Officer of SCA Property Group (SCP). I am very pleased to be presenting to you at the sixth (6th) Annual General Mee
Slide 10: FY18 results highlights
• This enabled us to pay distributions to unitholders of 13.9cpu, which was up 6.1% on the prior year. This represented a payout ratio of around 91%. • Our gearing as at 30 June 2018 was 31.2%, which is well within our stated policy range of 30-40% and we have chosen this relatively conservative set
Slide 11: Acquisitions, developments and funds management
Acquisitions: We remained disciplined with respect to acquisitions, as we were in a highly competitive market for convenience based centres. Accordingly, we only acquired one (1) neighbourhood centre in Cairns for $28.4m, a development property in Shell Cove NSW and two (2) smaller properties that a
Slide 12: Vicinity transaction and investment rationale
We were able to secure Sturt Mall, Wagga Wagga in NSW off-market for $73m in August 2018, and we were also successful in acquiring the Coles centre at Miami on the Gold Coast for $32m in October 2018. In June 2018, Vicinity Shopping Centres had commenced a public Expression of Interest campaign to d
Slide 13: Financial impact of the acquisition
5. there is a compelling financial impact for SCP. Financial Impact (Slide 31) This acquisition is over 5% accretive to SCP on a FY19 annualised pro forma basis. We have increased our guidance on Funds from Operations & Distributions per unit to 16.2 and 14.7cpu, respectively. This acquisition also
Slide 14: Value creation opportunities
Our weighting towards WA has also increased to 15%, while our weighting towards QLD, SA and TAS has decreased slightly, the larger states of NSW and VIC remain the same. Value Creation Opportunities (Slide 34) SCP has a proven track record of creating value for unitholders through an active manageme
Slide 15: Responsible Investment and ESG
Finally, Responsible Investment will see us manage the environmental, social and governance (ESG) risks that are material to investment values and communicate our performance on this. During the 12 months to 30 June 2018, SCP has: - concluded our initial solar project with another three (3) close to
Slide 16: FY19 priorities and outlook
• increasing specialty rent per sqm by optimising the tenancy mix and achieving rental uplifts on renewals; and • Managing our expenses (both at a centre and corporate level) to grow at a level that is no greater in percentage terms than our income growth We will also focus on our three (3) growth i
Slide 17: SCA Property Group Annual General Meeting
SCA PROPERTY GROUP ANNUAL GENERAL MEETING
Slide 18: Agenda
AGENDA Chairman’s Address CEO’s Address Formal Business General Questions 2
Slide 19: Chairman's Address
CHAIRMAN’S ADDRESS Philip Marcus Clark AM
Slide 20: Five-Year Performance
CHAIRMAN’S ADDRESS FIVE-YEAR PERFORMANCE 4
Slide 21: Unit Price Performance
UNIT PRICE PERFORMANCE SCP’s unit price has outperformed the ASX200 AREIT Index over the last 5 years 180 170 160 150 SCP’s unit price has outperformed the ASX 200 AREIT Index by 29.8% over 140 the last 5 years 130 120 110 100 90 01-Nov-13 01-Nov-14 01-Nov-15 01-Nov-16 01-Nov-17 01-Nov-18 SCP S&P/AS
Slide 22: Total Unitholder Return
TOTAL UNITHOLDER RETURN SCP delivered an annualised total unitholder return1 of 18.4% during FY18, and 16.4% p.a. over the last 5 years Year to 30 June 2018 Five years to 1 November 2018 SCP outperformed by 5.4%pa SCP outperformed by 5.6%pa 1. Total unitholder return includes both distributions to u
Slide 23: Five-Year Performance: Market capitalisation
FIVE-YEAR PERFORMANCE Market capitalisation has increased by 115% Market capitalisation ($bn) SCP market capitalisation as at 1 November 2018: $2.19bn $2.53 per unit SCP market capitalisation as at 1 November 2013: $1.02bn $1.58 per unit November 2013 November 2018 Source: IRESS (01 November 2018) 7
Slide 24: Net Tangible Assets
NET TANGIBLE ASSETS Net Tangible Assets per unit has consistently increased NTA per unit ($/unit) 2.30 2.20 The underlying net tangible 1.92 asset value per unit has increased by 40% over the last five years 1.77 1.64 30 June 2014 30 June 2015 30 June 2016 30 June 2017 30 June 2018 8
Slide 25: Management Expense Ratio
MANAGEMENT EXPENSE RATIO Corporate costs have been controlled Management expense ratio (%) 0.65% 0.55% 0.51% 0.45% 0.43% The Group’s management expense ratio (MER), which measures corporate costs as a percentage of total assets, has consistently reduced due to a significant increase in the value of
Slide 26: Cost of Debt
COST OF DEBT Debt costs have been actively managed Weighted average cost of debt (%) 4.9% 4.0% 3.8% 3.8% 3.7% Debt costs have been actively managed and now rank amongst the lowest in the sector FY14 FY15 FY16 FY17 FY18 10
Slide 27: Earnings & Distributions Growth
EARNINGS & DISTRIBUTIONS GROWTH Earnings and Distributions to unitholders have consistently increased Consistent EPU growth (cents per unit) 16.20 15.30 14.70 13.75 12.80 12.40 FY14 FY15 FY16 FY17 FY18 FY19 Forecast1 SCP has delivered consistent and growing earnings and distributions, Consistent DPU
Slide 28: The SCP Business
CHAIRMAN’S ADDRESS THE SCP BUSINESS 12
Slide 29: Our Shopper: how often customers shop
OUR SHOPPER Insights into the average SCP shopper HOW OFTEN CUSTOMERS SHOP IN OUR CENTRES Customer visitation 2 – 3 visits per week 60 million visits per year Our Customers use our centres as their pantry 13
Slide 30: Our Shopper: how long customers spend
OUR SHOPPER Insights into the average SCP shopper HOW LONG CUSTOMERS SPEND IN OUR CENTRES Average dwell time 61% of our customers will travel up to 15 mins to shop at one of our centres 20 mins neighbourhood centre 30 mins sub-regional centre 14
Slide 31: Our Shopper: how much customers spend
OUR SHOPPER Insights into the average SCP shopper HOW MUCH CUSTOMERS SPEND AT OUR CENTRES $4 billion plus per annum in total Average spend centre sales $70 per visit 15
Slide 32: Unit Purchase Plan Update
CHAIRMAN’S ADDRESS UNIT PURCHASE PLAN UPDATE 16
Slide 33: Board Review Update
CHAIRMAN’S ADDRESS BOARD REVIEW UPDATE 17
Slide 34: Conclusion and Outlook
CHAIRMAN’S ADDRESS CONCLUSION AND OUTLOOK 18
Slide 35: CEO's Address
CEO’S ADDRESS Anthony Mellowes
Slide 36: Portfolio Overview
CEO’S ADDRESS PORTFOLIO OVERVIEW 20
Slide 37: Portfolio key statistics as at 1 November 2018
As at 1 November 2018: 96 Properties under management $3,050.4m Investment Properties Total Value1 8.3 yrs Weighted Average Lease Expiry 1,776 Specialty Tenants 9.7 yrs Average Age of Portfolio 98.3% Portfolio Occupancy 1. Excluding Currambine Central, due to delayed settlement. 652,781m2 Gross Lett
Slide 38: FY18 Financial Results
CEO’S ADDRESS FY18 FINANCIAL RESULTS 22
Slide 39: FY18 Highlights
FY18 HIGHLIGHTS Financial Capital Active Portfolio Performance Management Management $114.3m, up by 5.4% 31.2% 98.4% 4.8% Funds from operations1 Gearing3, lower end of 30 – 40% target range Portfolio occupancy6 Specialty vacancy6 15.3 cpu, up by 4.1% $2.30, up by 4.5% 6.33% FFO per unit 1 NTA per un
Slide 40: Key Achievements – Delivering on Strategy for FY18
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY FOR FY18 • Anchor tenant sales growth remains robust, with annual sales growth of 1.9% Optimising the • Specialty tenants continue to perform well Core Business – Sales growth of 3.3% – 6.1% average rental increase across 123 renewals completed during the pe
Slide 41: Portfolio Occupancy
PORTFOLIO OCCUPANCY Portfolio occupancy has now normalised Portfolio occupancy (%) 97.8% 98.9% 98.6% 98.4% 98.4% SCP successfully leased considerable specialty vacancies in our portfolio before the expiry of the Woolworths rent guarantee 30 June 30 June 30 June 30 June 30 June 2014 2015 2016 2017 20
Slide 42: Specialty Rents
SPECIALTY RENTS Average specialty rents have been increasing Average specialty rent/sqm ($/sqm) $716 $700 $676 $630 The portfolio specialty rent per square metre has increased $625 consistently over the last five years 30 June 30 June 30 June 30 June 30 June 2014 2015 2016 2017 2018 26
Slide 43: Acquisitions Since 1 July 2018
ACQUISITIONS SINCE 1 JULY 2018 Sturt Mall, Wagga Wagga, NSW $ 73m Miami Coles, Miami Gold Coast, QLD $ 32m 10 Assets from Vicinity $573m Total $678m 27
Slide 44: Vicinity Portfolio Acquisition
VICINITY PORTFOLIO ACQUISITION Ten convenience-based shopping centres acquired for $573 million New South Wales: Queensland: Victoria: 28
Slide 45: Vicinity Portfolio Acquisition: Western Australia
VICINITY PORTFOLIO ACQUISITION Western Australia: 1. Currambine Central settled on 20 November 2018 29
Slide 46: Vicinity Acquisition – Investment Rationale
VICINITY ACQUISITION - INVESTMENT RATIONALE Consistent with 1 SCP’s core • All assets in the portfolio are anchored by Woolworths or Wesfarmers/Coles owned tenants strategy • Purchase price represents an initial yield of 7.47% on a fully-let basis including the rental guarantee and Attractive 7.24%
Slide 47: Summary of Financial Impact
SUMMARY OF FINANCIAL IMPACT The acquisition delivers a compelling financial outcome for SCP unitholders Earnings Impact Pro-forma Balance Sheet Accretive to Over 5% accretive1 Increase in $3.1bn, up by 23%3 FFO Annualised pro-forma FY19 FFO per unit portfolio scale Total portfolio value Increase in
Slide 48: Acquisition Portfolio Overview
ACQUISITION PORTFOLIO OVERVIEW Attractive purchase price with an initial fully-let yield of 7.47% Asset Details Operational Metrics Anchor Tenants Valuation Metrics Centre Ownership GLA Occupancy Anchor Tenants Anchor Purchase Price Implied Fully-Let Asset State Type (%) (sqm) (%) % of Gross Rent Te
Slide 49: Portfolio Impact
PORTFOLIO IMPACT Acquisition portfolio is consistent with SCP’s core strategy of focusing on non-discretionary retail segments Key Portfolio Statistics SCP Pre1 SCP Post Tenants by Category (by gross rent)1,2 SCP Pre1 Acquisition SCP Post Woolworths Woolworths 32% 29% Properties 74 10 84 Specialties
Slide 50: Value Creation Opportunities
VALUE CREATION OPPORTUNITIES SCP has a proven track record of creating value for unitholders through an active asset management approach • SCP management has delivered compelling returns for unitholders since listing in December 2012: • Proven asset management capabilities, through the ongoing deliv
Slide 51: Sustainability
CEO’S ADDRESS SUSTAINABILITY 35
Slide 52: Sustainability objectives
SUSTAINABILITY We continue to focus on long-term sustainable performance Our Sustainability Objectives SCP has established a sustainability strategy (environment, social and governance) that aims to reduce risks, improve operations and enhance stakeholder relationships for the long-term. SCP has: St
Slide 53: Sustainability: Solar Panels at Mount Gambier, SA
SUSTAINABILITY SOLAR PANELS AT MOUNT GAMBIER, SA 37
Slide 54: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure distribution growth Weighted to Focus on convenience- Long leases to non-discretionary based retail centres quality anchor tenants retail segments Appropriate Growth capital structure opportunities 38
Slide 55: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY19 • Successful integration of the Vicinity portfolio acquisition • Continue to optimise our existing centres: Optimising the ‒ Increase specialty rent per sqm by optimising tenancy mix and achieving rental uplifts Core Business on rene