Slide 1: SCA Property Group FY18 Results Presentation
SCA PROPERTY GROUP FY18 Results Presentation 6 August 2018 Sugarworld Shopping Centre, QLD
Slide 2: Agenda
AGENDA 1 Overview of FY18 Results 2 Financial Performance 3 Operational Performance 4 Growth Initiatives 5 Key Priorities and Outlook 6 Questions 7 Appendices 2
Slide 3: Overview of FY18 Results
1 OVERVIEW OF FY18 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: FY18 Highlights
FY18 HIGHLIGHTS Financial Capital Active Portfolio Performance Management Management $114.3m, up by 5.4% 31.2% 98.4% 4.8% Funds from operations1 Gearing3, lower end of 30 – 40% target range Portfolio occupancy6 Specialty vacancy6 15.3 cpu, up by 4.1% $2.30, up by 4.5% 6.33% FFO per unit 1 NTA per un
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY • Anchor tenant sales growth remains robust, with both Supermarkets and Discount Department Stores recording annual sales growth of 1.9% Optimising the • Specialty tenants continue to perform well Core Business – Sales growth of 3.3% and occupancy cost of 9.
Slide 6: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer
Slide 7: Profit & Loss
PROFIT & LOSS For the Year Ended 30 June 2018 • Net property income: $m FY18 FY17 % Change – Anchor rental income increase due to contracted base rent increases (half year benefit of 5% increases for 30% of anchor Anchor rental income 108.6 106.3 2.2% tenants), acquisitions and developments, partial
Slide 8: Funds From Operations
FUNDS FROM OPERATIONS For the Year Ended 30 June 2018 $m FY18 FY17 % Change • Funds From Operations of $114.3m is up by 5.4% on the same period last year Net profit after tax (statutory) 175.2 319.6 (45.2%) – Non-cash and one-off items have been excluded – $0.9m net unrealised profit from associates
Slide 9: Balance Sheet
BALANCE SHEET As at 30 June 2018 • Value of Australian investment properties increased from $m 30 June 2018 30 June 2017 % Change $2,364.6m to $2,453.8m, primarily due to acquisitions, Cash 3.7 3.6 2.8% developments and positive revaluations (see slide 31 for further Assets held for sale 57.9 - nm d
Slide 10: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 30 June 2018 • Gearing of 31.2% is within target range of 30% to 40%. Our preference is for gearing to remain below 35% at this point in the $m 30 June 2018 30 June 2017 cycle Facility limit1 964.8 1,054.8 – Look through gearing (including the CQR and SURF investmen
Slide 11: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 12: Portfolio Overview
PORTFOLIO OVERVIEW Continued weighting towards food, medical and services As at 30 June 2018 Number of Number of GLA Occupancy Value WALE Weighted average centres specialties (sqm) (% GLA) ($m) (yrs) cap rate (%) Neighbourhood 65 1,013 382,190 98.4% 1,855.7 8.6 6.32 Sub-regional 6 309 136,150 98.8%
Slide 13: Portfolio Occupancy
PORTFOLIO OCCUPANCY Stable at 98.4% • Total portfolio occupancy is 98.4% of GLA Portfolio Occupancy (% of GLA) – Specialty vacancy of 4.8% is within the target 98.6% 98.4% 98.4% range of 3-5% – Excluding acquisitions, specialty vacancy is 4.6% • In FY18 the only Anchor tenant expiring was Burnie Kma
Slide 14: Sales Growth & Turnover Rent
SALES GROWTH & TURNOVER RENT • Supermarket MAT1 sales growth has moderated slightly due to impact of new competition on some stores. Both Woolworths and Coles are showing Comparable Store MAT1 Sales Growth by Category (%) positive sales growth As at As at • Discount Department Store MAT sales growth
Slide 15: Specialty Key Metrics
SPECIALTY KEY METRICS Positive rent reversions are expected to continue • Specialty sales and renewal spreads continue to perform strongly Specialty Tenant Metrics relative to peers. Average specialty occupancy cost and average rent / 30 June 2018 30 June 2017 sqm remains sustainable Comparable sale
Slide 16: Growth Initiatives
4 GROWTH INITIATIVES Anthony Mellowes Chief Executive Officer
Slide 17: Portfolio Management
PORTFOLIO MANAGEMENT Four acquisitions in the twelve months to 30 June 2018 Acquisitions Sugarworld Shopping Centre Belmont Bowling Club Site (Cairns, QLD) (Belmont, NSW) • Acquisition completed in Oct 2017 for $24.8m (7.01% • Acquisition completed in Dec 2017 for $4.8m implied cap rate) (n/a implie
Slide 18: Neighbourhood Centres
NEIGHBOURHOOD CENTRES Fragmented ownership provides acquisition opportunities Neighbourhood Centre Landscape Ownership of Neighbourhood Centres (Number of centres) • There are over 900 Coles and Woolworths anchored Indicative neighbourhood centres in Australia Syndicates, Funds, Other SCP • SCP is t
Slide 19: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE We have identified over $125m of development opportunities at 24 of our centres over the next 5 years1 Estimated Capital Investment (A$m) Development Type Centre(s) FY18 FY19 FY20 FY21 FY22 FY23 New centre developments Bushland, Shell Cove2 22.4 9.7 - - - - Kwinana, E
Slide 20: Funds Management Business
FUNDS MANAGEMENT BUSINESS Potential to deliver additional earnings growth in the future • First fund “SURF 1” performing well – Investment property valuation increased from $60.9m in October 2015 to $71.0m as at 30 June 2018 with NTA per unit increasing from $0.95 to $1.23 – Distribution yield on in
Slide 21: Key Priorities and Outlook
5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes Chief Executive Officer Mark Fleming Chief Financial Officer
Slide 22: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure 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 opportunities 22
Slide 23: Potential Earnings Growth Trends
POTENTIAL EARNINGS GROWTH TRENDS Continued solid earnings growth expected over time Indicative Contribution to FFO Growth Rate (% pa) Description and Assumptions (medium to longer term) Anchor • Anchor rental income represents about 53% of overall gross property income 0 - 1% Rental • Once turnover
Slide 24: FFO per Unit – Key Movements
FFO PER UNIT – KEY MOVEMENTS FY17 to FY19 guidance (cpu) Minimal increase in Increased tax FY17 Comparable NOI corporate costs, Higher weighted FY18 Comparable NOI payable on funds Replacing old bank grew at 2.8% in FY18 reduced tax on average debt to grow at 2.5% in FY19 management facilities with
Slide 25: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY19 • Increase specialty rent per sqm by optimising tenancy mix and achieving rental uplifts Optimising the on renewals Core Business • Focus on managing expenses both at centres and corporate while maintaining appropriate standards • Co
Slide 26: Questions
SGA Property Group 6 QUESTIONS
Slide 27: Appendices
SGA Property Group 7 APPENDICES
Slide 28: Sustainability
SUSTAINABILITY We continue to focus on long-term sustainable performance Our Sustainability Objectives SCP has established a sustainability strategy (environment, social and governance) that aims to reduce risks, improve operations and enhance stakeholder relationships for the Strengthen the relatio
Slide 29: Long Term Leases to Woolworths and Wesfarmers Group
LONG TERM LEASES TO WOOLWORTHS AND WESFARMERS GROUP • 53% of gross rent is generated by anchor tenants Overall Lease Expiry (% of gross rent) (Woolworths 39% and Wesfarmers Group 14% on a 41.5% fully leased basis), with an Anchor WALE of 12.0 years • Opportunity to realise positive rent reversions f
Slide 30: Anchor Tenants
ANCHOR TENANTS 30 June 2014 30 June 2015 30 June 2016 30 June 2017 30 June 2018 • All of our centres are currently Woolworths Limited anchored by either Woolworths Woolworths 51 53 53 54 54 Limited or Wesfarmers Limited Big W 9 9 8 7 7 retailers Dan Murphy's 5 5 3 2 2 Masters 1 1 1 0 0 • We are grad
Slide 31: Investment Properties Value
INVESTMENT PROPERTIES VALUE • Acquisitions of $38.3m being Sugarworld Shopping Centre ($24.8m), Shell Cove Town Centre land acquisition ($1.5m), Belmont Bowling Club ($4.8m) and Coorparoo Child Care ($7.2m), and $2.5m of stamp duty and other transaction costs • Developments comprises Shell Cove ($13
Slide 32: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Facility Limit Drawn Debt Financing capacity Maturity / Notes $m (A$m) (A$m) (A$m) Bank Facilities Bank bilateral 230.0 132.0 98.0 Dec 2019 (refer below & note 1) Bank bilateral 125.0 85.0 40.0 Nov - Dec 2022 355.0 217.0 138.0 Medium Term Notes Medium Term Not
Slide 33: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Twelve months to 30 June 2018 Centre Type Acquisition Anchor Specialty Total % GLA Total Purchase Implied Date GLA GLA GLA Committed Price Acquisition (sqm) (sqm) (sqm) ($m) Cap Rate (Fully-Let) Acquired Properties Sugarworld Shopping Centre, QLD Neighbourhood Oct 2017
Slide 34: Pending Divestments
PENDING DIVESTMENTS At 30 June 2018 SURF 3 assets classified as ‘Assets Held for Sale’ Centre Type Divestment Anchor Specialty Total % GLA Total Sale Divestment Date GLA GLA GLA Committed Price Cap Rate (sqm) (sqm) (sqm) ($m) Assets held for sale (divested July 2018) (“SURF 3”) Moama Marketplace, NS
Slide 35: Portfolio List (I)
PORTFOLIO LIST (I) Occupancy Number of WALE Valuation Valuation Jun-18 Property State Property Type Anchor Tenant(s) Completion Date Total GLA (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Australia Lilydale VIC Sub-Regional WOW; Big W, Aldi Jul-13 22,066 100% 60 11.5 6.00% 114.0 Pakenh
Slide 36: Portfolio List (II)
PORTFOLIO LIST (II) Occupancy Number of WALE Valuation Valuation Jun-18 Property State Property Type Anchor Tenant(s) Completion Date Total GLA (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Annandale Central QLD Neighbourhood Coles Oct-07 6,685 93% 22 6.9 7.25% 30.2 Ayr QLD Neighbourhoo
Slide 37: Portfolio List (III)
PORTFOLIO LIST (III) Completion Total GLA Occupancy Number of WALE Valuation Valuation Jun-18 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Properties Under Management – “SURF 1” Burwood DM NSW Freestanding Dan Murphy's Nov-09 1,400 100
Slide 38: Management Team
MANAGEMENT TEAM Anthony Mellowes, Chief Executive Officer Mark Fleming, Chief Financial Officer • Mr Mellowes is an experienced property executive. Prior to joining SCA • Mr Fleming worked for 8 years at Woolworths Limited from 2003 to 2011, Property Group as an Executive Director, Mr Mellowes was e
Slide 39: SCA Property Group
SCA Property Group Level 5, 50 Pitt Street Sydney NSW 2000 Tel: (02) 8243 4900 Fax: (02) 8243 4999 www.scaproperty.com.au Disclaimer This presentation has been prepared by Shopping Centres Australasia Property Group RE Limited (ABN 47 158 809 851) (SCPRE) as responsible entity of Shopping Centres Au