Slide 1: FY19 annual results
FY19 annual results 14 August 2019 Discover more Vicinity Centres | FY19 annual results | 14 August 2019
Slide 2: Welcome and agenda
Welcome Agenda 3 FY19 annual results overview 5 Financial results 10 Strategy update Grant Kelley Kah Wong Peter Huddle 15 Portfolio performance CEO AND MANAGING DIRECTOR ACTING CHIEF FINANCIAL OFFICER CHIEF OPERATING OFFICER 22 Strategic growth initiatives 25 Development 31 FY20 guidance and summar
Slide 3: FY19 annual results overview
FY19 annual results overview Vicinity Centres | FY19 annual results | 14 August 2019 Queen Victoria Building, NSW
Slide 4: FY19 annual results overview
FY19 annual results overview Solid results delivered in a challenging retail environment Financial results Developments Statutory net profit of $346.1m DFO Perth completed in October 2018 Funds from operations (FFO) of $689.3m, The Glen final major stage opened in August 2019 or 18.0 cps reflecting
Slide 5: Financial results
Financial results Vicinity Centres | FY19 annual results | 14 August 2019 QueensPlaza, QLD
Slide 6: Financial results
Financial results Statutory net profit of $346.1m, comparable FFO per security growth of 2.0%1,2 Net profit after tax2 Funds from operations2 FFO per security Distribution per security $346.1 million $689.3 million 18.0 cents 15.9 cents Reduction due to valuation declines Underpinned by comparable N
Slide 7: Valuations
Valuations Flagship assets continue to drive valuation growth, overall portfolio result impacted by Western Australia Weighted average capitalisation Net tangible assets per security Total portfolio Flagship portfolio rate (NTA) 1.4% decline 1 3.7% gain 1 5.30% $2.92 Flagship portfolio gain of 3.7%
Slide 8: Balance sheet strength
Balance sheet strength Funding flexibility maintained, with gearing at lower end of target range and stable credit ratings Key balance sheet metrics Jun-19 Jun-18 NTA $2.92 $2.97 Gearing1 27.1% 26.4% Interest cover ratio (ICR) 4.4x 4.8x Debt to EBITDA ratio 5.0x 5.1x Credit ratings/outlook - Moody’s
Slide 9: Capital management
Capital management Well diversified funding sources, with potential benefits from lower interest rates Debt maturity profile ($m)1,2 Debt sources (%)1,2 1,500 $400m six-year MTN issued at ~2.60% coupon to replace FY20 expiries USPP 13 1,250 232 (with ~5.38% coupon) AMTN 25 2 1,000 GBMTN HKMTN 11 750
Slide 10: Strategy update
Strategy update Vicinity Centres | FY19 annual results | 14 August 2019 Chadstone, VIC
Slide 11: Growth strategy
Growth strategy Well positioned to create value from improving retail environment Horizon 1 Market-leading Current value driver destinations Ongoing Strengthening portfolio review the portfolio Accretive developments, Land parcel divestments and Wholesale carve outs acquisitions assets Capital Capit
Slide 12: Portfolio repositioned ahead of the cycle
Portfolio repositioned ahead of the cycle Productive capital recycling from 2015 to 2019 has better positioned the portfolio for the next cycle Portfolio repositioned Capital reinvested Strengthening key metrics Proceeds Reinvestment Specialty MAT/sqm 3.1 +32% (33) Number of assets 1.0 7 Average ass
Slide 13: Update on VKF wholesale fund and further divestments
Update on VKF wholesale fund and further divestments Assets to remain on balance sheet at this time Limited appetite for retail funds compounded with crowded divestment Assets previously tagged for divestment and VKF market globally comprise 7% of portfolio value Vicinity is not proceeding with VKF
Slide 14: External market
External market Economic stimulus to support continued improvement in retail trade Potential for re-allocation towards REITs in low interest rate environment Momentum building for retail spending A-REIT bond spread1,2 Gross disposable income and retail trade3 (annual growth) 1,800 6% 6% 1,600 5% 5%
Slide 15: Portfolio performance
Portfolio performance Vicinity Centres | FY19 annual results | 14 August 2019 Emporium Melbourne, VIC
Slide 16: Portfolio metrics affirm strategy
Portfolio metrics affirm strategy Portfolio strength underpinned by unrivalled Flagship assets, current trading conditions challenging for some Core centres Chadstone, VIC The Galeries, NSW DFO Homebush, NSW Portfolio MAT growth1: 2.7% Portfolio leasing spread2: -2.0% Portfolio comparable NPI growth
Slide 17: Western Australia impacting performance
Western Australia impacting performance Early signs of improvement in Western Australia, with stronger sales growth in Jun-19 quarter Portfolio heavily weighted to metropolitan eastern seaboard states Western Australia is a significant drag on the portfolio currently Portfolio diversification Key me
Slide 18: Retailer mix rebalanced
Retailer mix rebalanced Performance benefiting from extended period of tenant remixing and divesting non-core assets Significant reweighting towards retail services, leisure and food catering Year-on-year improvement across key portfolio metrics Change in portfolio weighting by GLA, past five years
Slide 19: Sales performance improving
Sales performance improving Strong specialty growth across key retail categories continues Jewellery1,2 Leisure1,2 Retail services1,2 Luxury1,2 +9.0% +6.3% +4.4% +40.3% Strong growth from Chadstone Sporting goods +12.2% Hairdressing and beauty +5.0% +5.1% same-store growth and DFOs and other retail
Slide 20: Strong performance in luxury goods
Strong performance in luxury goods Reinforces Vicinity’s strong position in the market and growing demand from Chinese tourism market Luxury offer attracting new consumer segments and brands to Vicinity Chinese tourists spend more than double the amount of other tourists3 Inbound Chinese tourism num
Slide 21: Focusing on sustainable cost efficiency
Focusing on sustainable cost efficiency Using technology and data to drive efficiencies and limit cost growth Operational efficiency drivers In practice Data-driven Data-driven decision making Management, energy and site optimisation Centralised Centralised processes with localised National procurem
Slide 22: Strategic growth initiatives
Strategic growth initiatives Vicinity Centres | FY19 annual results | 14 August 2019 Chadstone, VIC
Slide 23: Data analytics and insights powering retail
Data analytics and insights powering retail Data-led intelligence is improving decision-making Analytics are strengthening a range of management functions Data and analytics use in asset management Leasing Optimised tenant selection, tenant mix and adjacencies in both static and development centres
Slide 24: Ancillary income
Ancillary income A number of new income streams emerging $107m FY19 ancillary income (actual) Up 0.2% on a comparable basis . Vicinity Media (+9.1%), 1 managed parking (+5.8%) and solar generation, partly offset by casual leasing (-0.5%) and impact of new electricity contracts 11.6% Contribution to
Slide 25: Development
Development Vicinity Centres | FY19 annual results | 14 August 2019 The Glen, VIC
Slide 26: Focused development pipeline
Focused development pipeline Driving income and long-term asset values Centre traffic flows aiding design Robust pipeline by value Current development pipeline of $3.3b ($1.9b Vicinity share) Aligning developments to market and customer needs of the future Targeting spend of ~$300m p.a. Targeting st
Slide 27: Development execution
Development execution Portfolio quality enhanced by development Development underpinned by strength of DFO proposition DFO Perth, WA Tenant mix built on the success of East Coast DFOs Opened 100% leased and trading from day 1 $140m1 project completed with development yield2 >12% and IRR >17% Major s
Slide 28: Developments under construction
Developments under construction Current projects reinforce commitment to enhancing the portfolio Nearing completion Hotel Chadstone, VIC 250-room MGallery by Sofitel hotel including conference facilities, ballroom, two restaurants, spa, gym, rooftop lounge and bar Strong enquiry levels for room nigh
Slide 29: Chatswood Chase Sydney transformational development
Chatswood Chase Sydney transformational development Capturing additional value through major redevelopment Strong fundamentals Sydney’s most affluent catchment • Household incomes ~70% above Australian average1 High levels of tourism spending in catchment Proximity to major transport interchange Str
Slide 30: Retail and mixed-use developments in planning
Retail and mixed-use developments in planning Maximising real estate value and creating communities of the future Retail and mixed-use development on major transport nodes Box Hill Central, VIC Site masterplan complete, retail DA to be lodged early 2020 Bankstown Central, NSW Council supportive of m
Slide 31: FY20 guidance and summary
FY20 guidance and summary Vicinity Centres | FY19 annual results | 14 August 2019 The Strand Arcade, NSW
Slide 32: FY20 guidance
FY20 guidance Guidance reflects portfolio repositioning and modest FY20 growth FY20 FFO per security guidance (cents)1 FY20 FFO per security guidance1 of 17.8 to 18.0 cents Comparable Distribution payout ratio1 is expected to be at the upper growth of 1.7% to 2.9% 18.0 end of 95% to 100% of AFFO 18.
Slide 33: Summary
Summary Strategy positions Vicinity well to drive future growth Solid financial results delivered in a challenging retail environment Strong balance sheet with broad funding flexibility Repositioning of existing portfolio largely complete Strong focus on operational efficiency and leveraging data an
Slide 34: Appendices
35 Sustainability 47 Asset summaries 36 Assets under management 55 Key dates Appendices 37 Direct portfolio 56 Contact details and disclaimer 43 Financial results Vicinity Centres | FY19 annual results | 14 August 2019 Emporium Melbourne, VIC
Slide 35: Leading approach to sustainability
Leading approach to sustainability Delivering sustainable long-term value for our communities and securityholders Preparing for Modern Slavery Act #3 REIT globally Conducted Modern Slavery supply chain risk assessment DJSI1 2018 survey, up from #8 in 2017 2019 Clean Energy Council Award Marketing an
Slide 36: Assets under management
Assets under management ~7,600 tenants across 66 assets under management1 Direct portfolio1 Managed Third party/ Total Wholly-owned Co-owned Total co-owned AUM1 Number of retail assets 33 29 62 4/29 66 Gross lettable area (000’s)(sqm) 969 1,485 2,454 133 2,588 Number of tenants 2,986 4,198 7,184 404
Slide 37: Direct portfolio
Direct portfolio Key statistics by centre type Total Portfolio Chadstone Premium CBD DFO1 Core Number of retail assets 62 1 7 6 48 Gross lettable area (000’s)(sqm) 2,454 216 223 211 1,805 Total value2 ($m) 15,815 3,250 2,466 1,738 8,361 Portfolio weighting by value (%) 100 21 16 11 53 Capitalisation
Slide 38: Direct portfolio
Direct portfolio Additional sales information Actual Comparable1 growth Jun-19 Jun-182 Proportion of Comparable MAT growth (%)1 MM and SS5 SS5 MM and SS5 SS5 MAT portfolio (%) Jun-19 Jun-19 Jun-182 Apparel 3.4 2.7 (0.4) (1.1) ($m) By sales By rent (%) (%) Food catering 3.4 2.8 2.6 2.9 Specialty stor
Slide 39: Direct portfolio – Vicinity is strongly positioned now and into the future
Direct portfolio – Vicinity is strongly positioned now and into the future Attractive portfolio a first port of call for Australian and international retailers CHADSTONE DFOs Australia’s #1 Australia’s #1 retail asset Outlet Centre portfolio Chadstone, VIC DFO South Wharf, VIC PREMIUM CBD LEADING LU
Slide 40: Direct portfolio
Direct portfolio Non-comparable centres for sales reporting Non-comparable status Centre Jun-19 Dec-18 DFO Perth, WA Post-development Post-development Mandurah Forum, WA Post-development Post-development QueensPlaza, QLD Under development Under development Roselands, NSW Under development Under deve
Slide 41: Direct portfolio
Direct portfolio Key portfolio tenants Top 10 tenants Top 10 tenant groups Number % of Number % of Rank Retailer Retailer type of stores income Rank Retailer of leases income Brands Big W, BWS, Dan Murphy’s, Woolworths, 1 Supermarket 39 3.5 1 82 4.9 Woolworths Liquor, Woolworths Petrol 2 Supermarket
Slide 42: Direct portfolio
Direct portfolio Lease expiry profile Lease expiry profile (by income) 30% 25% 24% Majors 20% All other retailers 15% 15% 14% 14% 11% 11% 10% 7% 5% 1% 1% 1% 0% 0% 0% Holdover FY20 FY21 FY22 FY23 FY24+ Weighted average lease expiry (years) Jun-19 Jun-18 by Area 4.8 5.0 by Income 3.8 3.9 Northland, VI
Slide 43: Financial results
Financial results FFO of 18.0 cents per security Jun-19 Jun-18 Change Change For the 12 months to ($m) ($m) ($m) (%) Net property income (NPI) 887.6 894.3 (6.7) (0.7) Partnerships and other income 63.0 76.2 (13.2) (17.3) Total income 950.6 970.5 (19.9) (2.1) Net corporate overheads 68.3 73.3 (5.0) (
Slide 44: Financial results
Financial results FFO reconciliation to statutory net profit after tax Jun-19 Jun-18 For the 12 months to ($m) ($m) Statutory net profit after tax 346.1 1,218.7 Property revaluation decrement/(increment) for directly owned properties 237.1 (634.7) Non-distributable loss/(gain) relating to equity acc
Slide 45: Financial results
Financial results Balance sheet Jun-19 Jun-18 Change As at ($m) ($m) ($m) Cash and cash equivalents 34.9 42.1 (7.2) Investment properties1 15,351.8 15,892.7 (540.9) Equity accounted investments 670.1 681.1 (11.0) Intangible assets 591.2 594.9 (3.7) Other assets 345.6 270.8 74.8 Total assets 16,993.6
Slide 46: Financial results
Financial results Capital management – strong balance sheet maintained Debt statistics summary Hedging profile6,7 4,000 As at Jun-191 Jun-18 4.90% 3,500 4.70% Total debt facilities $5.8b $5.5b 3,000 4.50% Drawn debt2 $4.4b $4.4b 2,500 Notional A$m Hedge rate 4.30% 2,000 Undrawn debt $1.4b $1.1b 1,50
Slide 47: Asset summaries
Asset summaries Centre statistics Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) New South Wales Chatswood Chase Sydney2 Major Regional 51 63,620 100.0 n.a. n.a. n.a. n.a. Banks
Slide 48: Asset summaries
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Queensland QueensPlaza2 City Centre 100 39,349 100.0 n.a. n.a. n.a. n.a. The Myer Ce
Slide 49: Asset summaries
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria Chadstone Super Regional 50 215,574 99.7 2,210.5 13,005 20,020 16.3 Bayside
Slide 50: Asset summaries
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Western Australia Galleria2 Major Regional 50 81,454 100.0 n.a. n.a. n.a. n.a. Mandu
Slide 51: Asset summaries
Asset summaries Valuations Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-191 30-Jun-19 30-Jun-18 Movement 30-Jun-19 (%) ($m) ($m) (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regional 51 (12.7) 576.2 4.75
Slide 52: Asset summaries
Asset summaries Valuations (continued) Capitalisation rate Net Value Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-191 30-Jun-19 30-Jun-18 Movement 30-Jun-19 (%) ($m) ($m) (%) (%) (%) Queensland QueensPlaza City Centre 100 (5.7) 790.0 4.75 4.75 -
Slide 53: Asset summaries
Asset summaries Valuations (continued) Capitalisation rate Net Value Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-191 30-Jun-19 30-Jun-18 Movement 30-Jun-19 (%) ($m) ($m) (%) (%) (%) Victoria Chadstone Super Regional 50 98.9 3,250.0 3.75 3.75 -
Slide 54: Asset summaries
Asset summaries Valuations (continued) Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 30-Jun-191 30-Jun-19 30-Jun-18 Movement 30-Jun-19 (%) ($m) ($m) (%) (%) (%) Western Australia Galleria Major Regional 50 (50.6) 337.5 5.50
Slide 55: Key dates
Key dates Investor calendar Key dates Ex-distribution date for June 2019 distribution 27 June 2019 Record date for June 2019 distribution 28 June 2019 2019 annual results 14 August 2019 June 2019 distribution payment and 2019 Annual Tax Statements despatched 28 August 2019 2019 Annual General Meetin
Slide 56: Contact details and disclaimer
Contact details and disclaimer For further information please contact: 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 is a presentation of ge
Slide 57: Discover more
Discover more Vicinity Centres | FY19 annual results | 14 August 2019