Stockland · ASX:SGP
Stockland — H1 2023 Earnings Presentation
37 slides from Stockland's earnings presentation, Feb 21, 2023
Slide 1: 1H23 Results
1H23 Results 21 February 2023
Slide 2: Acknowledgement of Traditional Custodians
Stockland acknowledges the Traditional Custodians and knowledge-holders of the land on which we live, work and play and pay our respects to their Elders past, present and emerging. We acknowledge and thank all Aboriginal and Torres Strait Islander People for enriching our nation with their historica
Slide 3: Agenda
Agenda Group update Tarun Gupta MD & CEO Financial results and Alison Harrop capital management CFO Commercial Property Louise Mason CEO, Commercial Property Communities Andrew Whitson CEO, Communities Summary and Tarun Gupta Outlook MD & CEO 3 1H23 Results Figures are rounded to nearest million, un
Slide 4: Group update
Group update Tarun Gupta MD & CEO Aura, QLD
Slide 5: 1H23 Results
1H23 Results On track to deliver FY23 guidance Execution of strategy delivering results Demonstrated strength of the diversified platform Strong operational performance Scaling capital partnerships Balance sheet strength 5 1H23 Results Stockland Head Office, Sydney CBD, NSW
Slide 6: Execution of strategy delivering results
Execution of strategy delivering results Reshape portfolio Accelerate pipeline Scale partnerships Sustainable growth • Executed on ~$266m non-core Town Centre • Enhancing our business through • Capital partnerships delivering returns and • Execution of strategy generating new disposals above book va
Slide 7: 1H23 Result
1H23 Result On track to deliver FY23 guidance Funds From Operations FFO per security NTA per security 1H23 Highlights $353m 14.8 cents $4.31 • FFO per security of 14.8 cents, on track to deliver FY23 guidance 0.7% on 1H22 0.7% on 1H22 vs $4.31 • Execution of strategy generating new high-quality mana
Slide 8: Financial results and capital management
Financial results and capital management Alison Harrop CFO Stockland Head Office, Sydney CBD, NSW
Slide 9: Strong capital position
Strong capital position Robust balance sheet with redeployment capacity Gearing3 Available liquidity Interest Cover2 • Significant headroom under financial covenants1,2 22.1% ~$1.4bn 6.9x Down from 23.4% Cash and undrawn facilities 12-month rolling average to • Capacity to fund the existing secured
Slide 10: Funds from operations
Funds from operations Maintained earnings, with significant 2H23 skew $m 1H23 1H22 Change FFO result reflects: Commercial Property FFO 320 278 15.1% Comparable FFO growth of 3.2%1 across CP portfolio • Strong performance across Commercial Property Communities FFO 113 129 (11.9)% Significant 2H23 set
Slide 11: Segment changes
Segment changes Aligned to our strategy $m 1H23 1H22 Change Commercial Property (CP) FFO 320 278 15.1% Comprises: CP development revenues net of direct costs; profit from disposal of build-to-sell development projects Segment changes reflect: 1H23 includes initial development profit relating to M_Pa
Slide 12: 1H23 operating cashflows
1H23 operating cashflows Operating Cashflow1 Operating Cashflow before land acquisitions1 Focused cashflow management $(174)m $192m • 1H23 distribution reflects payout ratio of 80% of FFO $172m in 1H22 $440m in 1H22 • 1H23 cashflow impacted by: Cash movements between FY22 and 1H23 reflect significan
Slide 13: Commercial Property
Commercial Property Louise Mason CEO, Commercial Property
Slide 14: Commercial Property: Execution of strategy delivering returns
Commercial Property Execution of strategy delivering returns Accelerate Reposition and Focus Maximise Logistics & Workplace Town Centres portfolio Value of our asset base • Delivery of Logistics pipeline generating high quality • Benefiting from active remixing and repositioning • Exploring highest
Slide 15: Commercial Property: Strong performance from high-quality portfolio
Commercial Property Strong performance from high-quality portfolio Commercial Property FFO of $320m and comparable FFO growth of 3.2%1 underpinned by: Asset value3 • Positive comparable FFO growth in Town Centres of 5.0%1 and Logistics 4.4%1 • Execution of strategic initiatives generating meaningful
Slide 16: Valuations underpinned by well-positioned portfolio
Commercial Property Valuations underpinned by well-positioned portfolio Net valuation increase of $30m1 0.3% increase on 30 June 2022 book value Triniti Business Park, NSW Stockland Balgowlah, NSW Oakleigh Industrial Estate, VIC With 86%2 of assets independently revalued over 1H23 Logistics Workplac
Slide 17: Logistics: Strong performance underpinned by high quality portfolio
Logistics Strong performance underpinned by high quality portfolio • Comparable FFO growth of 4.4%1, with well-located assets benefiting from favourable demand-supply dynamics Portfolio value7 - - Re-leasing spreads of 19.6% on new leases and renewals negotiated over the period2,3 Occupancy and rent
Slide 18: Logistics: Delivery of pipeline provides strong earnings visibility
Logistics Delivery of pipeline provides strong earnings visibility Total development pipeline ~$6.4bn2 Targeting ~$1.2bn2 development completions by the end of FY24 FY23 target completions ~$550m2, ~92% pre-leased5 Targeting ~5-6% Yield on cost 1. Subject to approvals and where applicable, the acqui
Slide 19: Workplace: Platform for future growth
Workplace Platform for future growth • Majority of portfolio currently being positioned for future development, including mixed use Development pipeline7,8 • Comparable FFO growth of (3.4)%1 ~$5.8bn • Re-leasing spreads of (1.1)% on new leases and renewals negotiated in 1H232,3 with 2.1% re-leasing
Slide 20: Workplace: Adding value and maintaining optionality
Workplace Adding value and maintaining optionality • Leveraging our asset creation strengths to provide a clear point of difference and attract capital partners and tenants • Opportunity to create the workplaces of the future via activation of ~$5.8bn1,2 development pipeline • Progressing the existi
Slide 21: Town Centres: Strong performance from essentials-based portfolio
Town Centres Strong performance from essentials-based portfolio • Total comparable sales growth of 13.7%, and comparable specialty sales growth of 19.1%, with the prior corresponding period impacted by COVID-19 trade restrictions1,2 Comparable centres annual MAT growth vs pre-COVID-192,3 • Total com
Slide 22: Town Centres: Well positioned portfolio
Town Centres Well positioned portfolio 1H23 1H22 Town Centres FFO $185m $156m • Strong comparable FFO growth of 5.0%1, with improved tenant confidence and demand reflected in: Asset value $5,490m $5,613m • Positive leasing spreads of 2.5%2 Occupancy5 99.4% 99.1% • Improved occupancy costs3 of 15.2%
Slide 23: Commercial Property: Outlook and FY23 focus
Commercial Property Outlook and FY23 focus Coopers Paddock, NSW Artist impression, M_Park, NSW Stockland Rockhampton, QLD Logistics Workplace Town Centres Deliver pipeline Maintain optionality Portfolio optimisation • Maximise income generation opportunities through rental • Create value and maintai
Slide 24: Communities
Communities Andrew Whitson CEO Communities
Slide 25: Communities: Significant progress on executing our strategy
Communities Significant progress on executing our strategy Extend Grow Optimise returns Residential leadership Land Lease Communities Future opportunities • 1H23 net sales of 1,804, reflecting 2Q23 improvement on • Performance tracking in line with FY23 guidance, with 1744 • Execution of strategy de
Slide 26: Communities: Solid FFO results
Communities Solid FFO results Resilient performance in a moderating residential environment, underpinned by: • 1H23 settlements of 1,8721 in Masterplanned Communities • 1742 Land Lease Communities settlements in 1H23 • $6m in high quality rental income, from the established LLC portfolio and stand-a
Slide 27: Masterplanned Communities: Resilient performance
Masterplanned Communities Resilient performance from well positioned business • FY23 targets impacted by extreme wet weather on Eastern Seaboard - 1,8721 settlements in 1H23 1H23 Development 1H23 Development EBIT FFO - Expecting ~5,500 settlements in FY23, with a significant 2H23 skew - 43 days lost
Slide 28: Masterplanned Communities: Sales volumes improving during 1H23
Masterplanned Communities Sales volumes improving during 1H23 Net sales by quarter 2,036 1,974 1,947 1,891 • Net sales of 1,804 lots, reflecting improvement in 2Q23 vs 1Q23 1,799 1,868 382 314 180 324 250 1,562 1,545 327 • 1H23 enquiries in line with pre-COVID-19 levels 1,350 1,375 219 697 204 1,149
Slide 29: Masterplanned Communities: Competitive advantages
Masterplanned Communities Competitive advantages driving relative outperformance vs broader market Quarterly market share vs national vacant land sales3 • Average age of the landbank ~10 years Increased market share in moderating markets • Strong embedded margins from strategic restocking at the ons
Slide 30: Masterplanned Communities: Market outlook
Masterplanned Communities Market outlook 12-month outlook State Price Volumes Market commentary • Structural drivers remain supportive, including low unemployment rates and a rebound in net overseas • Price moderating from an elevated base, with affordability migration, with continued constrained la
Slide 31: Land Lease Communities: Solid FFO result
Land Lease Communities Solid FFO result • FFO of $38m reflecting 1H23 Development Total settlements FFO in 1H23 - Development income from 1741 settlements of new homes, in line with expectations - Transfer of Stockland Halcyon Nirimba, QLD and Stockland Halcyon Berwick, VIC into SRRP $38m 1741 gener
Slide 32: Land Lease Communities: Resilient demand supporting price growth
Land Lease Communities Resilient demand supporting price growth Net sales by quarter • 1H23 net sales of 127 homes impacted by reduced releases to allow production to catch up • Resilient demand and ongoing preference for over-50s lifestyle communities reflected in: 136 • Price growth on LLC develop
Slide 33: Land Lease Communities: Accelerated development activity
Land Lease Communities Accelerated development activity • Total development pipeline of ~7,2001 homes • Activation of pipeline and accelerated development activity to drive future settlement volumes - ~1,130 homes currently under development across six communities - Launched Stockland Halcyon Promen
Slide 34: Communities: Outlook and FY23 focus
Communities Outlook and FY23 focus Willowdale, NSW Stockland Halcyon Lakeside, QLD Masterplanned Communities Land Lease Communities Activation of landbank Accelerated development activity • Good visibility into 2H23 and FY24 with 5,840 contracts on hand • Good visibility into 2H23 with 452 contracts
Slide 35: Summary and Outlook
Summary and Outlook Tarun Gupta MD & CEO
Slide 36: Summary and outlook
Summary and outlook Outlook: On track to deliver FY23 guidance • Strength of diversified platform and execution of strategy delivering results • Growth in new business lines to provide further meaningful income contribution • Optimised Town Centres portfolio delivering strong performance • Expected
Slide 37: Important Notice
Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741; AFSL 241190 As a responsible entity for Stockland Trust ARSN 092 897 348 Important Notice This Presentation and its accompanying Annexures (“Presentation”) has been prepared and issued by Stockland Corp