Slide 1: FY24 Results Presentation
FY24 Results Click icon to add picture Presentation 12 August 2024 Page 1
Slide 2: Agenda
FY24 Results Presentation Agenda 1. Overview and Strategy 2. Operational Performance 3. Financial Performance 4. Value Creation Opportunities 5. Outlook 6. Questions 7. Appendices Page 2
Slide 3: 1. Overview and Strategy
FY24 Results Presentation 1. Overview and Strategy Anthony Mellowes Chief Executive Officer Page 3
Slide 4: FY24 Highlights
FY24 Results Presentation FY24 Highlights Distribution Statutory net Financial FFO per security AFFO per security per security profit/(loss) after tax Performance 15.4 cps 13.6 cps 13.7 cps $17.3m vs 16.9 cps1 vs 15.3 cps1 101% payout of AFFO vs ($123.6m)1 Operational Portfolio Record number of Aver
Slide 5: FY24 Key Achievements
FY24 Results Presentation FY24 Key Achievements Resilient portfolio metrics supported by a healthy balance sheet allows for future investment Future income growth secured through annual Non-discretionary tenants drive portfolio resilience Operational record of 552 leasing deals • 4.0% specialty leas
Slide 6: Our Strategy
FY24 Results Presentation Our Strategy Defensive, Focus on convenience-based retail centres resilient cash flows to support secure Weighted to non-discretionary retail segments and growing long term distributions to our security Long leases to quality anchor tenants holders Optimise value through ta
Slide 7: 2. Operational Performance
FY24 Results Presentation 2. Operational Performance Anthony Mellowes Chief Executive Officer Page 7
Slide 8: Portfolio Overview
FY24 Results Presentation Portfolio Overview 88% of gross rent generated from non-discretionary tenants Yrs 92 2,109 $4,368m 794,425 2,488,771 5.1 years Owned retail No. specialty Total owned Gross lettable Land sqm Weighted average properties tenants portfolio value area sqm lease expiry1 Tenants b
Slide 9: Rental income security
FY24 Results Presentation Rental income security Leasing activity driving higher occupancy and annual fixed rent reviews 98.1% • • Improved portfolio occupancy from 97.8%1 Reduction in specialty vacancy from 5.0% Overall Lease Expiry (% of gross income) Portfolio to 4.7%1 41.0% occupancy • Decrease
Slide 10: Partnering with our anchor tenants to drive sales
FY24 Results Presentation Partnering with our anchor tenants to drive sales Over 46% of supermarkets generating turnover rent 127 • 47% of total gross rent provides income Anchor turnover rent stability ($m) Anchor tenants • We are one of the largest landlords of 1.1 Woolworths and Coles with 60 and
Slide 11: Portfolio Sales Performance
FY24 Results Presentation Portfolio Sales Performance Resilient sales across non-discretionary tenants 4.1% Total portfolio comparable MAT growth by category 30 Jun 20241 30 Jun 2023 Supermarkets 3.0% 3.4% Non-discretionary specialty MAT growth Discount Department Stores 1.1% 9.4% Mini Majors 2.9% 2
Slide 12: Leasing Activity
FY24 Results Presentation Leasing Activity Record number of deals with solid leasing spreads Specialty tenant metrics 552 100,698 Renewals Number 30 Jun 2024 303 30 Jun 2023 267 Total deals1 sqm of GLA leased1 Retention (%) 83% 82% completed GLA (sqm) 34,447 29,506 Average uplift (%) 5.2% 4.7% Incen
Slide 13: Refreshed Sustainability Strategy
FY24 Results Presentation Refreshed Sustainability Strategy Introducing an increased focus on Governance, particularly Procurement and Transparency & Accountability These pillars demonstrate Region Group’s values and commitment to deliver positive change. See the FY24 Sustainability Report for more
Slide 14: Region Group sustainability journey and Net Zero target
FY24 Results Presentation Region Expected to reach Net Zero (scope 1 & 2) target by FY30 Target to be achieved through operational decarbonisation, with no carbon credits purchased to date + + First Region Group Sustainability Strategy launched with 3 pillars + First solar PV project ‘commenced at G
Slide 15: FY24 Sustainability Achievements
FY24 Results Presentation FY24 Sustainability Achievements Highlighting our social responsibility and good governance SOCIAL GOVERNANCE 844 Climate Stronger Communities Risks and opportunities events or initiatives held reported to ARMCC 208 Students supported through our partnership with The Smith
Slide 16: 3. Financial Performance
FY24 Results Presentation 3. Financial Performance Evan Walsh Chief Financial Officer Page 16
Slide 17: Stable underlying FFO per security growth
FY24 Results Presentation Stable underlying FFO per security growth 3% comparable NOI growth is outweighed by increase in cost of debt 3% comparable NOI growth ( 0.6 ) 1.2 0.9% increase in WACD ( 0.6 ) 0.1 ( 1.6 ) 16.9 cps 17.0 cps 15.4 cps FY23 FFO Comparable property Comparable property Non-compar
Slide 18: Financial Results
FY24 Results Presentation Financial Results Elevated cost of debt and inflationary pressure on expenses masks solid underlying growth AFFO 13.6 cps (decrease of 11.1%) with $m 30 Jun 24 30 Jun 23 % change distribution of 13.7 cps Property income 383.5 373.9 2.6% Property expenses (132.3) (124.4) 6.4
Slide 19: Balance Sheet
FY24 Results Presentation Balance Sheet Conservative balance sheet provides flexibility for growth opportunities $4.8bn Assets Under Management $m 30 Jun 24 30 Jun 23 % change Cash and cash equivalents 19.4 23.8 (18.5%) includes the $74.0m acquisition of Cooleman Court and $67.7m disposal of non-cor
Slide 20: Property Valuations Stabilised
FY24 Results Presentation Property Valuations Stabilised Income growth and stable cap rates drove 2H FY24 like-for-like valuation increase Portfolio Value ($m) Total $74.4m like-for-like 91.5 decrease in FY24 ( 153.2 ) 6.8 ( 88.2 ) 13.8 4,411.6 4,282.3 June 2023 Acquisitions (including Disposals (in
Slide 21: Hedging activity mitigates near term interest rate exposure
FY24 Results Presentation Hedging activity mitigates near term interest rate exposure Zero cost hedge restructure and $300m MTN issuance increases FY25 hedging to 96% (from 57%) Impressive pricing on new 7-year Hedge Expiry Profile Based on Debt Drawn ($m) Medium-Term Note (MTN) issuance • $300m fac
Slide 22: Debt Management
FY24 Results Presentation Debt Management FY24 capital management activity provides secure platform for growth Baa1 (stable) 94.2% Key debt metrics maintained of debt fixed / 30 Jun 2024 30 Jun 2023 Moody’s credit hedged in FY24 Facility limit ($m) 1,732.1 1,807.1 rating and 96% in FY25 Drawn debt (
Slide 23: 4. Value Creation Opportunities
FY24 Results Presentation 4. Value Creation Opportunities Anthony Mellowes Chief Executive Officer Page 23
Slide 24: Portfolio Composition Approach
FY24 Results Presentation Portfolio Composition Approach Acquisition of Cooleman Court and current disposal program largely complete Largest owner of convenience-based centres with Disciplined transactions in line with investment criteria a proven transactional track record • Acquired Cooleman Court
Slide 25: Increasing the scale of our funds management platform
FY24 Results Presentation Increasing the scale of our funds management platform Acquired management rights for zero consideration Metro Fund 2 Metro Fund 1 (from Sept 2024) $689m assets 7 centres totalling 6 centres totalling under management $295m $394m with further investment capacity with $750m t
Slide 26: Establishment of $394m Metro Fund
FY24 Results Presentation Establishment of $394m Metro Fund 2 We have committed to a 20% ($39.4m) co-investment in the fund at a cap rate of 5.68% Cameron Park Plaza, NSW Melbourne Square, VIC Byford Village, WA West Village, QLD Omnia Potts Point, NSW Spring Farm Shopping Centre, NSW Page 26
Slide 27: Deploying recycled capital to drive portfolio performance
FY24 Results Presentation Deploying recycled capital to drive portfolio performance Divesting non-core, lower yielding properties and deploying into accretive opportunities Divest non-core properties Reinvest into higher yielding opportunities with any surplus proceeds to enhance the portfolio tempo
Slide 28: Indicative FY25 capital deployment program
FY24 Results Presentation Indicative FY25 capital deployment program Capital expenditure is expected to enhance future returns but could impact short term earnings Indicative spend • Investment in solar and embedded networks with Sustainability ~$15m six currently under construction and two in desig
Slide 29: Solar investment drives sustainability initiatives
FY24 Results Presentation Solar investment drives sustainability initiatives Capital expenditure progresses towards Net Zero target $34.8m Net Zero investment to date 16.1 MW of solar PV completed by the end of FY24 25 MW of solar PV targeted to be completed by the end of FY26 Marketplace Warner, QL
Slide 30: Centre repositioning – life's essentials reimagined
FY24 Results Presentation Centre repositioning – life’s essentials reimagined $35m investment underway across three centres Supporting better communities through life’s essentials by focusing on the right tenant mix, category curation, and space and customer experience optimisation to drive asset va
Slide 31: Investments with anchor tenants and incremental developments
FY24 Results Presentation Investments with anchor tenants and incremental developments Targeted spend to enhance value of existing portfolio Mudgeeraba Market Shopping Centre, QLD Delacombe Town Centre (stage 2), VIC* Investing in e-commerce facilities $14.5m spend to date on stage two of which incl
Slide 32: 5. Outlook
FY24 Results Presentation 5. Outlook Anthony Mellowes and Evan Walsh Chief Executive Officer and Chief Financial Officer Page 32
Slide 33: Portfolio is positioned to take advantage of market conditions
FY24 Results Presentation Portfolio is positioned to take advantage of market conditions Limited new retail space with strong population growth will drive existing centre productivity Retail space rollout (sqm) vs population growth (%) 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000
Slide 34: AFFO Growth Target
FY24 Results Presentation AFFO Growth Target Target growth rate in the medium to longer term is 3-4%+ pa Indicative contribution to AFFO growth rate (% pa) Description and Assumptions Medium to longer term 47% of rental income with 50 anchor tenants in turnover rent Anchors rents ~1% Comparable NOI
Slide 35: FY25 FFO guidance
FY24 Results Presentation FY25 FFO guidance Resilient portfolio performance and accretive transactional activity is offset by short term impact of investing in future growth Establishment of Metro Fund 2 from 1 September, 3% comparable NOI acquisition of Cooleman Short term impact from growth Court
Slide 36: Key Priorities and Outlook
FY24 Results Presentation Key Priorities and Outlook • Non-discretionary retail remains resilient with comparable NOI growth despite elevated expense growth Key priorities/ • Limited interest rate headwinds with 96% of debt hedged in FY25 • Balance sheet is supported with valuations stabilised and g
Slide 37: 6. Questions
FY24 Results Presentation 6. Questions Page 37
Slide 38: 7. Appendices
FY24 Results Presentation 7. Appendices Page 38
Slide 39: Portfolio Overview
FY24 Results Presentation Portfolio Overview 99 retail properties under management including Metro Fund 1 centres Our Portfolio List is available at regiongroup.au/investor-centre/reports-presentations/ Page 39
Slide 40: Anchor Tenants
FY24 Results Presentation Anchor Tenants 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun • Anchor tenants generate 46.5% of portfolio gross rent on a 2020 2021 2022 2023 2024 fully leased basis Woolworths Group − Woolworths Group 28.0%, includes Woolworths 23.4% Woolworths 58 64 62 62 60 and Big W 4.6% Big W 9 1
Slide 41: Income Statement: Statutory Profit to AFFO Reconciliation
FY24 Results Presentation Income Statement: Statutory Profit to AFFO Reconciliation For the year ended 30 June 2024 Statutory profit FFO AFFO AFFO $m 12 months to 12 months to 12 months to % change adjustments 30 Jun 2024 30 Jun 2024 30 Jun 2023 Anchor rental income 152.9 - 152.9 151.5 0.9% Specialt
Slide 42: Outgoings Recoveries
FY24 Results Presentation Outgoings Recoveries 76% recovery rate of recoverable specialty expenses • Total property expenses of $132.3m include: Total property Recoverable Net property Recovery rate − $105.9m of property expenses can be expenses income expenses (%) $m recovered from our tenants with
Slide 43: Covenants
FY24 Results Presentation Covenants Gearing (%) $m 30 Jun 2024 30 Jun 2023 Bilateral and syndicated facilities – unsecured 33.3% 34.0% 32.6% 32.8% 32.9% Bank and syndicated facilities drawn 471.8 503.0 31.4% 31.2% 31.3% 31.3% 471.8 503.0 28.3% AU$ MTN – unsecured 25.6% Unsecured AU$ Medium term note
Slide 44: Debt facilities & interest rate hedging
FY24 Results Presentation Debt facilities & interest rate hedging Financing Facility limit Drawn debt Maturity / Notes capacity A$m A$m A$m Bank and syndicated facilities Bank bilateral (including bank guarantee) 325.0 314.8 10.2 FY27: $50m Jul 2026, $225m Oct 2026, and $50m May 2027 Bank bilateral
Slide 45: Glossary
FY24 Results Presentation Glossary AFFO: Adjusted Funds From Operations is determined by Leasing spread: Achieved gross rent on leasing deal adjusting FFO for other items which have not been adjusted compared to prior expiry rent in determining FFO Look-through gearing: includes our 20% interest in
Slide 46: For further information, please contact:
For further information, please contact: Anthony Mellowes Evan Walsh Nicolette Brice Chief Executive Officer Chief Financial Officer General Manager Investor Relations T: +61 2 8243 4900 T: +61 2 8243 4900 T: +61 2 8243 4900 E: anthony.mellowes@regiongroup.au E: evan.walsh@regiongroup.au E: nicolett