Region Group · ASX:RGN
Region — Investor Presentation (February 2021)
37 slides from Region's investor presentation, Feb 9, 2021
Slide 1: First Half FY21 Results Presentation
FIRST HALF FY21 RESULTS PRESENTATION 8 February 2021 slide Auburn Central, NSW
Slide 2: Agenda
AGENDA 1. OVERVIEW OF FIRST HALF FY21 RESULTS 2. FINANCIAL PERFORMANCE 3. OPERATIONAL PERFORMANCE 4. GROWTH OPPORTUNITIES 5. KEY PRIORITIES AND OUTLOOK 6. QUESTIONS 7. APPENDICES slide
Slide 3: Overview of First Half FY21 Results
1 OVERVIEW OF FIRST HALF FY21 RESULTS Anthony Mellowes Chief Executive Officer slide 3
Slide 4: First Half FY21 Highlights
FIRST HALF FY21 HIGHLIGHTS FINANCIAL CAPITAL ACTIVE PORTFOLIO PERFORMANCE MANAGEMENT MANAGEMENT Net Profit After Tax1 Gearing 3 Portfolio occupancy 6 Specialty vacancy 6 $102.9m, up by 14.1% 29.1%, up by 3.5% 98.2% 4.8% FFO per unit 2 Portfolio weighted average cap rate 7 NTA per unit 4 6.72 cpu, do
Slide 5: Key Achievements
KEY ACHIEVEMENTS Our centres are trading strongly • Throughout the COVID-19 pandemic, our convenience-based centres have benefited from the shift to shopping locally – Anchor tenants have experienced strong sales growth and turnover rent has increased – Specialty sales have recovered following the e
Slide 6: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer slide 6
Slide 7: Impact of COVID-19: sales and cash collection
IMPACT OF COVID-19 Strong sales growth continuing, and cash collection rates improving Sales growth trends 40% Month-on-month sales growth (%) 1 • Sales growth has been volatile throughout the COVID-19 period 30% – Australia-wide restrictions significantly impacted tenant sales between March and May
Slide 8: Impact of COVID-19 on earnings
IMPACT OF COVID-19 The earnings impact of COVID-19 is starting to reduce COVID-19 Impact on AFFO Estimated COVID-19 Impact on 1HY FY21 • The estimated impact of COVID-19 on the 1H FY21 results is approximately $6.9 million: Other Direct COVID-19 1H FY21 AFFO COVID-19 – Waived rent of $4.8m during th
Slide 9: Profit & Loss
PROFIT & LOSS 6 months to For the six months ended 31 December 2020 31 Dec 31 Dec $m 2020 2019 % Change Anchor rental income 65.9 63.5 3.8% • Net property income decrease is primarily due to COVID-19 related impacts and an increase in straight-lining expense Specialty rental income 57.0 64.4 (11.5%)
Slide 10: Funds From Operations
FUNDS FROM OPERATIONS For the six months ended 31 December 2020 31 Dec 6 months to 30 June 31 Dec $m 2020 2020 2019 • Funds From Operations (“FFO”) of $72.3m is down by 7.9% compared to the same Net profit after tax (statutory) 102.9 (4.7) 90.2 period last year, primarily due to COVID-19 impacts off
Slide 11: Balance Sheet
BALANCE SHEET As at 31 December 2020 • Value of investment properties increased from $3,138.2m to $3,403.3m due to: $m 31 Dec 2020 30 June 2020 % Change – Acquisition of Auburn Central for $129.5m, Bakewell Shopping Centre Cash 2.9 183.8 (98.4)% and petrol station for $39.4m and vacant land adjacent
Slide 12: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 31 December 2020 31 Dec 2020 30 June 2020 • Gearing of 29.1% is below the target range of 30% to 40%. Our preference is for gearing to Facility limit ($’m) 1 1,232.1 1,457.1 remain below 35% at this point in the cycle. The increase in gearing from June 2020 is due t
Slide 13: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer slide 13
Slide 14: Portfolio Overview
PORTFOLIO OVERVIEW Weighting towards food, health and retail services (non-discretionary) As at 31 December 2020 Number of Number of GLA Site Area Occupancy Value WALE Weighted average centres specialties (sqm) (sqm) (% GLA) ($m) (yrs) cap rate (%) Neighbourhood 77 1,399 485,370 1,670,600 98.4% 2,59
Slide 15: Portfolio Occupancy
PORTFOLIO OCCUPANCY Specialty vacancy is stable despite COVID-19 challenges • Strategic focus on remixing toward non-discretionary categories, reducing long term Portfolio Occupancy (% of GLA) vacancies and maintaining the retention rate on existing tenant renewals despite challenges from COVID-19 r
Slide 16: Sales Growth and Turnover Rent
SALES GROWTH AND TURNOVER RENT Sales growth strong despite specialties impacted by COVID-19 • Supermarket portfolio MAT1 sales growth has increased by 8.6% (June 2020: 5.1%) Comparable Store MAT1 Sales Growth by Category (%) – Continuation of working from home, border closures and restricted travel
Slide 17: Specialty Key Metrics
SPECIALTY KEY METRICS Executing our strategy in a challenging retail market • Sustainable rents and occupancy costs for specialty tenants: Specialty Tenant Metrics – Sales growth was 0.5% due to impact of COVID-19 (June 2020: (1.1%)) – Sales productivity increased to $8,367 psm (June 2020: $8,229 ps
Slide 18: Sustainability
SUSTAINABILITY We continue to focus on long-term sustainable performance ENVIRONMENTALLY STRONGER RESPONSIBLE EFFICIENT COMMUNITIES INVESTMENT CENTRES Our commitment to building stronger community Sustainability focussed investment to drive The next phase of strategic planning and relationships furt
Slide 19: Growth Opportunities
4 GROWTH OPPORTUNITIES Anthony Mellowes Chief Executive Officer slide 19
Slide 20: Portfolio Management: Acquisitions
PORTFOLIO MANAGEMENT Two acquisitions in the six months to 31 December 2020 ACQUISITIONS Bakewell SC & Petrol Station Auburn Central (Bakewell, NT) (Auburn, NSW) • Acquisition of the shopping centre • Acquisition of the shopping centre completed in Sep 2020 for $33.0m completed in Dec 2020 for $129.
Slide 21: Convenience Based Centres
CONVENIENCE BASED CENTRES Fragmented ownership provides acquisition opportunities Indicative CONVENIENCE BASED CENTRE LANDSCAPE Ownership of Convenience Based Centres (number of centres) • There are approximately 1,200 Coles and Woolworths anchored VCX ISPT neighbourhood and sub regional centres in
Slide 22: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE Over $100m of development opportunities identified at more than 30 of our centres over the next 5 years1 Estimated Capital Investment (A$m) 1HY21 DEVELOPMENT TYPE CENTRE(S) Actuals 2HY21 FY22 FY23 FY24 FY25 Greenbank, Warner, North Orange, Wyndham Vale, Epping North,
Slide 23: Funds Management Business – AUM $100.5M
FUNDS MANAGEMENT BUSINESS – AUM $100.5M SURF 1 – successfully ended in October 2020 with an IRR of 11% to unitholders SURF 2 – on track to end in 2021 with an expected IRR of 12% to unitholders • First fund “SURF 1” was launched in October 2015, and has successfully sold the five properties, with th
Slide 24: Key Priorities and Outlook
5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes and Mark Fleming Chief Executive Officer and Chief Financial Officer slide 24
Slide 25: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure and growing long term distributions to our unitholders WEIGHTED TO FOCUS ON CONVENIENCE- LONG LEASES TO NON-DISCRETIONARY BASED RETAIL CENTRES QUALITY ANCHOR TENANTS RETAIL SEGMENTS APPROPRIATE GROWTH CAPITAL STRUCTURE OPPORTUN
Slide 26: Future Impact of COVID-19
FUTURE IMPACT OF COVID-19 Three sub-categories of specialty tenants have experienced subdued sales growth % of Gross Category Rental Income Sales Growth (%) • Three categories of specialty tenants have November 2020 December 2020 December 2020 experienced subdued sales (Apparel, Services Impact (mon
Slide 27: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK “Love local, Shop local, Act local” • Our primary objective over the next 6 months is to ensure that our centres emerge from the COVID-19 pandemic in a stronger position as we get back to business as usual • As such, our focus continues to be: – Serving our local communiti
Slide 28: Questions
6 QUESTIONS slide 28
Slide 29: Appendices
7 APPENDICES slide 29
Slide 30: Portfolio Detail
PORTFOLIO DETAIL Portfolio construction provides high degree of income predictability • Overall, a 7.3 year portfolio WALE combined with investment grade tenants and Overall Lease Expiry (% of Gross Rent) non-discretionary retail categories provides a higher degree of income predictability 29.4% • 2
Slide 31: Anchor Tenants
ANCHOR TENANTS 48% of gross rent generated by anchor tenants • All of our centres are currently anchored by either Woolworths 30 June 2017 30 June 2018 30 June 2019 30 June 2020 31 Dec 2020 Limited, Coles Group Limited or Wesfarmers Limited retailers Woolworths Limited Woolworths 54 54 58 58 60 Big
Slide 32: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Financing Facility Limit Drawn Debt capacity Maturity / Notes $m (A$m) (A$m) (A$m) Bank Facilities Bank bilateral 75.0 75.0 - FY24: $25m Dec 2023 and $50m Jun 2024 Bank bilateral (including Bank Guarantee) 200.0 125.0 75.0 FY25: $50m Mar 2025 and $150m May 202
Slide 33: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Six months to 31 December 2020 Total Anchor Specialty Total Implied Acquisition % GLA Purchase Centre Type GLA GLA GLA Fully Let Date Committed Price (sqm) (sqm) (sqm) Yield ($m) Acquired Properties Bakewell Shopping Centre Neighbourhood Sep 2020 4,854 1,553 6,407 96%
Slide 34: Portfolio List (I)
PORTFOLIO LIST (I) Valuation Completion Total GLA Occupancy Number of WALE Valuation Dec 2020 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Lavington Square NSW Sub-Regional WOW; Big W 2005 20,222 95.4% 58 3.6 7.25% 62.3 Sturt Mall NSW
Slide 35: Portfolio List (II)
PORTFOLIO LIST (II) Valuation Completion Total GLA Occupancy Number of WALE Valuation Dec 2020 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Annandale Central QLD Neighbourhood Coles 2007 6,655 99.1% 21 5.3 7.50% 25.6 Ayr QLD Neighbourh
Slide 36: Portfolio List (III)
PORTFOLIO LIST (III) WALE Valuation Total GLA Occupancy Number of (Years by Valuation Dec 2020 Property State Property Type Anchor Tenant(s) Completion Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Properties Under Management - SURF 1 All assets have been sold and this vehicle was wound up i
Slide 37: Contact Details and Disclaimer
CONTACT DETAILS AND DISCLAIMER For further information please contact: Anthony Mellowes Mark Fleming Chief Executive Officer Chief Financial Officer T: +61 2 8243 4900 T: +61 2 8243 4900 E: anthony.mellowes@scaproperty.com.au E: mark.fleming@scaproperty.com.au Disclaimer This presentation has been p