Slide 1: FY17 annual results
For personal use only FY17 annual results 16 August 2017
Slide 2: Agenda
For personal use only Agenda Angus McNaughton Richard Jamieson Michael O’Brien Carolyn Viney CEO and Managing Director Chief Financial Officer Chief Investment Officer EGM Development Overview Angus McNaughton Financial results Richard Jamieson Portfolio Michael O’Brien Development update Carolyn Vi
Slide 3: Overview
For personal use only Overview Angus McNaughton Chadstone, VIC
Slide 4: FY17 summary
FY17 summary Solid result reflecting implementation of strategy For personal use only Solid financial result $1,583.6m 15.5% $1,583.6m statutory net profit Statutory net profit after tax Total return1 Underlying earnings in line with guidance at 18.7 cps, with 4.6% comparable3 growth Jun-16: $960.9m
Slide 5: Two years of delivering on strategy since forming in June 15
Two years of delivering on strategy since forming in June 2015 Portfolio enhancement strategy significantly progressed and continuing For personal use only Successful delivery of merger synergies and integration Improvement in metrics over past two years Merger synergies exceeded and delivered ahead
Slide 6: Active capital management supporting future growth
Active capital management supporting future growth FFO and AFFO adopted as principal policy measures effective from FY18 For personal use only Funds from operations (FFO) to be adopted as primary earnings measure from FY18 FFO measure excludes rent lost from undertaking developments Revised distribu
Slide 7: Strong fundamentals position the Australian retail property market well
Strong fundamentals position the Australian retail property market well Unique characteristics of the Australian market support long-term sustainable growth For personal use only Tight Australian town planning regime drives lower retail floorspace Retail floorspace per capita per capita resulting in
Slide 8: Retail trends continue to evolve
Retail trends continue to evolve Capturing opportunities from structural changes For personal use only Changing consumer preferences Driven by demographic shifts and technological change Shift in spending towards experiences Physical stores enabling delivery of unique and relevant experiences Strong
Slide 9: Our response to changing retail trends
Our response to changing retail trends Building a resilient portfolio and a focus on enhancing the retail experience For personal use only Our consumers – creating unique and relevant experiences Introducing the latest retail concepts and responding to changing consumer needs Reweighting offer towar
Slide 10: Economic drivers of retail
Economic drivers of retail Retail sales environment largely driven by cyclical factors Wages growth below trend and higher costs of living… … resulting in softer consumer sentiment and retail sales growth… For personal use only 7% 125 9% Consumer Sentiment Wages Growth 120 Retail Turnover (MAT) Grow
Slide 11: Financial results
For personal use only Financial results Richard Jamieson DFO South Wharf, VIC
Slide 12: Financial results
Financial results Underlying earnings per security in line with guidance For personal use only Jun-17 Jun-16 Change For the 12 months to ($m) ($m) (%) $1,583.6m 7.3% Net property income (NPI) 916.7 953.6 (3.9) Statutory net profit after tax Reduction in net corporate Strong valuation gains overheads
Slide 13: Balance sheet
Balance sheet Strong growth in NTA driven by valuation gains For personal use only Jun-17 Jun-16 Change As at ($m) ($m) ($m) 8.9% $48.5m Cash 42.2 52.8 (10.6) Growth in NTA to $2.82 Decrease in borrowings Investment properties held for sale 33.5 232.1 (198.6) Strong valuation gains Net repayments fr
Slide 14: Valuations
Valuations Strong valuation gains1 of $852.5m or 6.0% Strong valuation gains over the year1 For personal use only 1H: $507.6m, up 3.5% 2H: $345.0m, up 2.3% WACR tightened 34 bps over the 12 months to 5.61% 13.5% uplift for Chadstone Capitalisation rate tightened 50 bps to 4.25% in December 2016, unc
Slide 15: Capital management
Capital management Credit rating raised on portfolio quality improvement Standard & Poor’s raised Vicinity’s credit rating For personal use only As at Jun-17 Jun-16 ‘A/stable’ from ‘A-/positive’ Total debt facilities $5.1b $5.1b Strengthened and diversified debt profile Drawn debt1 $3.9b $3.9b Issue
Slide 16: Capital management
Capital management Well diversified debt with no expiries in FY18 For personal use only Debt maturity profile ($m)1 Debt sources (%)1 1,600 USPP 1,200 13 AMTN EMTN 30 192 Bank debt drawn 800 19 Bank debt undrawn 655 383 727 200 200 400 725 16 22 200 400 367 309 38 150 198 40 200 59 0 FY18 FY19 2 FY2
Slide 17: Portfolio
For personal use only Portfolio Michael O’Brien Emporium Melbourne, VIC
Slide 18: Portfolio summary
Portfolio summary Solid performance despite retailer administrations and softer sales environment Portfolio quality enhanced over the period For personal use only As at Jun-17 Jun-16 Divested interests in 10 retail assets for $586m4,5 at a 2.3% premium to book value Increased ownership in DFO South
Slide 19: Portfolio sales by store type
Portfolio sales by store type Low sales growth environment has impacted most categories For personal use only Actual MAT Specialty stores Comparable1 Impacted by tenant administrations and increased competition for some centres Proportion of MAT growth Excluding Dick Smith3 specialty store closures,
Slide 20: Portfolio specialty store performance
Portfolio specialty store performance Retail services and food catering the strongest performers For personal use only Actual Comparable1 Apparel MAT MAT growth Solid growth for men’s apparel (+6.1%), fashion accessories (+2.7) and footwear (+3.5%) offset by women’s apparel (-3.3%) MAT % of Jun-17 s
Slide 21: Portfolio sales by state
Portfolio sales by state Growth moderating across most states over the year Comparable1 specialty store MAT growth by state (%) Victoria For personal use only 6 5.0 Sales growth driven by population, employment and house price growth. Infrastructure expenditure to remain above the national average 4
Slide 22: Leasing
Leasing Re-weighting the portfolio to categories with strongest demand For personal use only Leasing spread1 (%) 1,276 lease transactions completed2 For the 12 months to Jun-17 Jun-16 Solid spreads on renewals across the portfolio, particularly DFOs Leasing spread – renewals 3.7 0.9 Replacements spr
Slide 23: Chadstone's leading position reinforced
Chadstone’s leading position reinforced A world class retail, dining and entertainment destination For personal use only Strong trading performance Total MAT up 19.8% to $1.73b without full year of trading post development Same-store specialty MAT up 3.2%, predominantly driven by apparel (+10.5%), r
Slide 24: Intensive asset management driving tangible benefits
Intensive asset management driving tangible benefits Vicinity’s broad portfolio provides significant opportunities to test and implement new initiatives For personal use only Ancillary income represents 10.6% (or $97m) of NPI Strong growth in ancillary income of 6.4%1 driven by casual mall leasing,
Slide 25: A focus on creating shared value for Vicinity and our stakeholders
A focus on creating shared value for Vicinity and our stakeholders Our sustainability agenda has generated significant benefits For personal use only Strong sustainability survey results FY17 achievements Included in DJSI World, Asia Pacific and Australia leaders lists Scored 83/100 in Global Real E
Slide 26: Development update
For personal use only Development update Carolyn Viney Mandurah Forum, WA
Slide 27: Development summary
Development summary Strong progress made on the development pipeline Development is a key driver of portfolio enhancement For personal use only Active response to changing consumer preferences Enables Vicinity to introduce latest retail concepts and revitalise offer Development pipeline of $2.0b (Vi
Slide 28: Investing to create long-term value
Investing to create long-term value Extensive $2.0b development pipeline (Vicinity share: $0.9b) provides significant opportunities For personal use only $m Vicinity share Partner share Total Mandurah Forum, WA 175 350 The Glen, VIC 230 460 Current 75 150 DFO Perth, WA Midland Gate, WA 100 0 1 Rosel
Slide 29: Mandurah Forum redevelopment on track
Mandurah Forum redevelopment on track Improving product offer and experience Key metrics For personal use only Cost1 $350m GLA 64,500 sqm Mid-2018 project Initial yield >6% +26,000 sqm completion Expected IRR >10% New 850 space multi-deck car park opened in December 2016 • Centre to have >3,000 spac
Slide 30: Mandurah Forum
Mandurah Forum First retail stage open For personal use only Vicinity Centres | FY17 annual results | 16 August 2017 30
Slide 31: DFO Perth
DFO Perth Retail construction commenced Key metrics For personal use only Cost1 $150m Total GLA 2018 Initial yield >10% 24,000 sqm completion Expected IRR >15% Joint venture to develop the first DFO in Perth • 120 specialty stores • Over 1,500 car spaces Reinforces Vicinity’s market leadership posit
Slide 32: The Glen redevelopment underway
The Glen redevelopment underway Major redevelopment to capitalise on high income trade area and capture escape expenditure Key metrics For personal use only Cost1 $460m Total GLA 2020 Initial yield >6% 78,000 sqm target +18,900 sqm completion Expected IRR >10% First stage fully leased and due to ope
Slide 33: Chadstone – the evolution continues
Chadstone – the evolution continues High quality hotel and significant additional remix opportunities For personal use only Hotel $120m development1 proposed Targeting 4 to 4.5 stars with full service amenity and conference facilities Proposal for 250 rooms over 13 levels Focused on business and tou
Slide 34: Galleria progressing through project validation phase
Galleria progressing through project validation phase Creating one of Perth’s leading destinations For personal use only $500m DA approval FY18 redevelopment1 obtained target commencement Dominant Major Regional centre in north east Perth Existing centre trades strongly in well-defined and growing c
Slide 35: Summary and FY18 guidance and focus
For personal use only Summary and FY18 guidance and focus Angus McNaughton QueensPlaza, QLD
Slide 36: FY17 summary
FY17 summary Another active period For personal use only Comparable1 underlying EPS growth of 4.6% Strong valuation gains2 of $852.5m or 6.0% Enhanced portfolio quality through tenancy remixing, developments, divestments and acquisitions Maintained strong balance sheet Connected centres and corporat
Slide 37: FY18 guidance and focus
FY18 guidance and focus Our focus remains on building quality and strength across our business For personal use only Well positioned to create long-term value and sustainable growth FY18 FFO guidance of 18.0 to 18.2 cps 19 Retail environment expected to remain challenging over the next Comparable 12
Slide 38: Appendices
For personal use only 39 Our strategy 49 Tenants 40 Assets under management 50 Non-comparable centres for sales reporting 41 Direct portfolio 51 Asset summaries Appendices 43 Financial results 59 Key dates 46 Capital management 60 Contact details 48 Development pipeline Halls Head Central, WA
Slide 39: Our Strategy: simple and transparent business model, with a single sector focus
Our Strategy: simple and transparent business model, with a single sector focus Creating value and sustainable growth by owning, managing and developing quality Australian retail assets For personal use only Invest in quality Australian assets across the retail spectrum 84 centres $25.3b Focus on lo
Slide 40: Assets under management
Assets under management ~8,300 tenants across 84 assets under management1,2 For personal use only Direct portfolio Managed Third party2/ Total Wholly-owned1 Co-owned Total co-owned AUM2 Number of retail assets 48 26 74 10/26 84 Gross lettable area (000’s)(sqm) 1,190 1,377 2,567 256 2,823 Number of t
Slide 41: Direct portfolio
Direct portfolio Key statistics by centre type For personal use only As at 30 June 2017 Total portfolio Regional1 Sub Regional Neighbourhood Outlet Centre Number of retail assets 74 22 32 15 5 Gross lettable area (m)(sqm) 2.6 1.5 0.7 0.1 0.2 Total value ($m) 15,549 10,000 3,447 728 1,374 Portfolio w
Slide 42: Direct portfolio
Direct portfolio Well diversified by geographic and retail sub-sector exposure For personal use only Centre type composition Geographic exposure 14 2 City Centre 4 3 Regional 16 17 Regional 2 4 Sub Regional Outlet Centre 9% Major Regional 1 Sub Regional 2 4 Neighbourhood Regional 2 1 Outlet Centre S
Slide 43: Underlying earnings reconciliation to net profit after tax
Financial results Underlying earnings reconciliation to net profit after tax For personal use only 30-Jun-17 30-Jun-16 For the 12 months to ($m) ($m) Underlying earnings 741.8 757.5 Property revaluation increment for directly owned properties 906.7 733.0 Non-distributable gain/(loss) relating to equ
Slide 44: Reconciliation of underlying earnings to AFFO
Financial results Reconciliation of underlying earnings to AFFO For personal use only For the 12 months to 30-Jun-17 30-Jun-16 ($m) ($m) Underlying earnings 741.8 757.5 Less: Rent lost from undertaking developments (28.9) (18.0) Funds from operations (FFO) 712.9 739.5 Less: Maintenance capex and ten
Slide 45: Reconciliation of actual and comparable FY17 underlying earnings growth
Financial results Reconciliation of actual and comparable FY17 underlying earnings growth For personal use only $m 800 Comparable growth 750 4.6% (73.1) 31.4 700 26.0 757.5 741.8 650 684.4 600 FY16 Impact of Adjusted FY16 Impact of Stable business and FY17 underlying earnings portfolio changes under
Slide 46: Interest rate hedging profile
Capital management Interest rate hedging profile For personal use only Hedging profile1,2 Key hedging statistics 4,000 6.50% 3,500 6.00% As at period end 30-Jun-17 30-Jun-16 3,000 5.50% Weighted average hedge rate (%)1 4.3 4.23 2,500 5.00% Hedge rate (%) Proportion of debt hedged (%) 90 91 Notional
Slide 47: Facilities by maturity
Capital management Facilities by maturity Limit For personal use only Maturity Instrument ($m) Dec-18 Bank debt facilities 100.0 1 Feb-19 USPP 38.0 Feb-19 Bank debt facilities 50.0 Jun-19 Bank debt facilities 582.3 Dec-19 Australian medium term notes (AMTN) 400.0 Dec-19 Bank debt facilities 350.0 Fe
Slide 48: Development pipeline
Development pipeline Vicinity’s share of costs to complete projects under construction is $344m For personal use only Total Vicinity’s share Identified development pipeline ($m) project Project Spent to Cost to cost cost 30-Jun-17 complete Mandurah Forum 350 175 93 82 The Glen 460 230 25 205 DFO Per
Slide 49: Key portfolio tenants
Tenants Key portfolio tenants For personal use only Top 10 tenants Top 10 tenant groups Number % of Number % of Rank Retailer Retailer type of stores income Rank Retailer of leases income Brands Coles, First Choice Liquor, Kmart, 1 Supermarket 49 4.3 1 124 9.3 Liquorland, Target, Vintage Cellars Big
Slide 50: Non-comparable centres for sales reporting
Non-comparable centres for sales reporting For personal use only Centre Comment Broadmeadows Central, VIC Major tenant changeover Chadstone, VIC Development Cranbourne Park, VIC Development Currambine Central, WA Development Elizabeth City Centre, SA Major tenant changeover Halls Head Central, WA De
Slide 51: Asset summaries: centre statistics
Asset summaries Centre statistics For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) New South Wales Chatswood Chase Sydney Major Regional 100 63,715 98.1
Slide 52: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Queensland QueensPlaza City Centre 100 39,066 97.9 296.1 8
Slide 53: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) sales sales costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria Chadstone Shopping Centre2 Super Regional 50 211,
Slide 54: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate1 (MAT) sales1 sales1 costs1,2 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria (continued) DFO South Wharf Outlet Centre 10
Slide 55: Asset summaries: valuations
Asset summaries Valuations For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-171 30-Jun-17 30-Jun-16 Movement 30-Jun-17 (%) ($m) ($m) (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regiona
Slide 56: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-171 30-Jun-17 30-Jun-16 Movement 30-Jun-17 (%) ($m) ($m) (%) (%) (%) Queensland QueensPlaza City Centre 100 2
Slide 57: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-171 30-Jun-17 30-Jun-16 Movement 30-Jun-17 (%) ($m) ($m) (%) (%) (%) Victoria Chadstone Shopping Centre Super
Slide 58: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-171 30-June-17 30-Jun-16 Movement 30-Jun-17 (%) ($m) ($m) (%) (%) (%) Victoria (continued) DFO South Wharf Ou
Slide 59: Key dates
Key dates Investor calendar For personal use only Key dates FY17 annual results 16 August 2017 June 2017 distribution payment 30 August 2017 2017 Annual General Meeting 16 November 2017 Ex-distribution date for December 2017 28 December 2017 distribution Record date for December 2017 distribution 29
Slide 60: Contact details and disclaimer
Contact details and disclaimer For further information please contact: For personal use only Penny Berger Troy Dahms Head of Investor Relations Senior Investor Relations Manager T +61 2 8229 7760 T +61 2 8229 7763 E penny.berger@vicinity.com.au E troy.dahms@vicinity.com.au Disclaimer This document i