Stockland · ASX:SGP
Stockland — H1 2022 Earnings Presentation
39 slides from Stockland's earnings presentation, Feb 23, 2022
Slide 1: 1H22 Results
1H22 Results 23 February 2022 M_Park, Macquarie, NSW
Slide 2: Acknowledgement of Traditional Custodians
We acknowledge the Traditional Custodians of the land on which we meet, work and live. We pay our respects to First Nation Elders past, present and emerging and the care they have given this country. Stockland is committed to supporting organisations and individual Aboriginal and Torres Strait Islan
Slide 3: Agenda
Agenda Group update Tarun Gupta Managing Director & CEO Financial results and Alison Harrop CFO capital management Commercial Louise Mason CEO, Commercial Property Property Communities Andrew Whitson CEO, Communities Summary and Tarun Gupta Managing Director & CEO Outlook 3 Coopers Paddock, NW
Slide 4: Artist impression, Affinity Place, North Sydney, NSW
4 Artist impression, Affinity Place, North Sydney, NSW 4
Slide 5: Group update
Group update Tarun Gupta 5 Artist impression, Whiteman Edge, WA
Slide 6: Executing our strategy
Executing our strategy FY22 Guidance Range Divestment of Retirement Tightened Living business broadly in To 35.1-35.6 cents line with book value Dynamically reshaping our business Land Lease Communities M_Park Capital Partnership with Capital Partnership with Halcyon Greens, QLD Mitsubishi Estate As
Slide 7: Key transactions
Key transactions Partnerships with high-quality, globally recognised institutional capital to drive future earnings growth Stockland Residential Rental Partnership1 with Mitsubishi Estate Asia • Accelerates returns from secured land bank, creating ongoing development margins and high quality recurri
Slide 8: Group strategic priorities
Group strategic priorities Executing our strategic priorities and generating sustainable long-term growth Reshape portfolio Accelerate pipeline Scale partnerships Sustainable growth • Extended Residential leadership • ~$37bn2 development pipeline across • High quality capital partnerships • Deliveri
Slide 9: Our performance – 1H22 result
Our performance – 1H22 result Tightened guidance range; material skew to 2H22 1H22 Highlights Tightened guidance range to 35.1-35.6 cents FFO1 FFO1 per security Material skew to 2H22 as previously disclosed $350m 14.7 cents Continued Masterplanned Communities sales and pricing momentum driving
Slide 10: One of Australia's ten strongest brands
One of Australia’s ten strongest brands1 Driven by excellence in our People, ESG and innovation Artist impression, Stockland Head Office, Piccadilly, Sydney, NSW Artist impression, Stockland Net Zero Home, Orion Braybrook, VIC Artist impression, Stockland Newport, NSW People are our most valuable as
Slide 11: Financial results and capital management
Financial results and capital management Alison Harrop 11QLD Artist impression, Halcyon Lakeside,
Slide 12: Capital position
Capital position Robust balance sheet with available liquidity, materially strengthened post transactions Gearing Investment grade Available liquidity Fixed Hedge Ratio 73%2 credit ratings (cash and undrawn facilities) 23.3% A-/A3 ~$1.3bn At the low end of target Stable outlook Materially strengthen
Slide 13: Solid operating cashflows
Solid operating cashflows 1H22 operating cashflow reflects material skew to 2H22 Operating Cashflow1 Operating Cashflow before Focused cashflow management land acquisitions1 Settled $172m of non-core divestments, primarily Town Centre $172m $440m disposals of ~$164m Setting up for future growth
Slide 14: Funds from operations
Funds from operations Solid FFO with 2H22 skew as per guidance • Skew to 2H22 driven by timing of Communities 1H22 1H21 Change Increased trading profits and comparable FFO growth $m settlements, contracted Retirement Living village of +3.7%4. New leases generated average positive disposal profits du
Slide 15: Commercial Property
Commercial Property Louise Mason Oakleigh Industrial Estate, VIC 15
Slide 16: Commercial Property
Commercial Property Solid operating metrics reflect quality and resilience of portfolio • Solid underlying FFO result and cash position, reflecting: • Positive comparable FFO growth (pre abatements and ECL) of 2.3% $10.5bn • Logistics trading profits from settlement of Gregory Hills, NSW and 5.1% av
Slide 17: Commercial Property – Key priorities
Commercial Property – Key priorities Leveraging our multi-sector capability to create and reshape portfolio Accelerate Reposition Focus Maximise Logistics & Workplace Town Centre portfolio Retail Essentials value of our asset base • Established M_Park Capital • Executed on ~$310m3 of non-core • Incr
Slide 18: Commercial Property valuations
Commercial Property Valuations underpinned by quality assets Stockland Nowra, Yennora Distribution Piccadilly, NSW NSW Centre, NSW Net valuation increase of $543m 1 5.5% increase on June 2021 book value With 88%2 of assets independently revalued at 31 December 2021 Town Centres Logistics Workplace 1
Slide 19: Town Centres
Town Centres Resilient sales from essentials-based mix Total MAT growth of 0.6%1, underpinned by resilient essentials-based Resilient sales, above pre-COVID-19 levels. Improvements aligned with easing portfolio trade restrictions Improvement in performance aligned to COVID-19 recovery cycles Com
Slide 20: Town Centres
Town Centres Well positioned portfolio Comparable FFO growth of +2.0%1, highlighting portfolio resilience despite trade restrictions 1H22 1H21 Occupancy4 99.1% 98.7% Despite the ongoing COVID-19 environment, tenant confidence is recovering: WALE5,6 5.4 yrs 5.5 yrs • 313 deals and ~52,000 sqm2
Slide 21: Logistics
Logistics Strong performance from high quality portfolio • Comparable FFO growth of 3.7%1, driven by 5.1% average rent growth on new leases 1H22 1H21 • 1H22 FFO2 includes trading projects achieving margins of ~28% as investment demand remains elevated for quality assets FFO $87m2 $55m • More than 3
Slide 22: Logistics
Logistics Accelerating the pipeline Masterplanning Progressed Planning Active Developments $1.3bn1 $1.1bn1 $0.8bn1 Future opportunities Kemps Creek 2, NSW Detailed planning ▪ Kemps Creek 1, NSW Underway ▪ Ingleburn, NSW – stage 3 Total ~$400m ~$3.2bn1 ▪ ▪ Kemps Creek 3, NSW ▪ Willawong Distribution
Slide 23: Workplace
Workplace Strong platform for future growth • Comparable FFO growth of 1.9%1 despite disrupted work patterns, with high rent collection rates of 98.9%2 and strong occupancy of 90.6%3,4 • 20,253 sqm leased5 as businesses make decisions on future workspace needs • WALE of 4.8 years across the Workplac
Slide 24: Workplace
Workplace Growing the new generation portfolio Artist impression, Affinity Place, North Sydney, NSW Artist impression, Piccadilly, Sydney, NSW Artist impression, M_Park, Macquarie Park, NSW Artist impression Piccadilly, NSW Creating next-gen Workplaces Scaling Capital Partnerships Exploring Opportun
Slide 25: Communities
Communities Andrew Whitson Newport, NSW 25
Slide 26: Communities – key priorities
Communities – key priorities Leveraging our position as Australia’s leading community creator Extend Grow Scale Optimise returns Residential leadership Land Lease Communities Apartments business via a capital solution • Strength of demand for Stockland • Halcyon acquisition performing • Well-placed
Slide 27: Residential
Residential On track to meet target FY22 FFO • 2,329 settlements1 over 1H22, in line with expectations • Material skew to 2H22 due to timing of settlements • Operating profit margin of 18.2% positively impacted by higher proportion of NSW settlements. FY22 operating profit margin guidance of over 18
Slide 28: Residential
Residential Demand remains strong • Strong net sales of 3,815 in 1H22, in line with elevated 1H21 volumes Net sales by quarter 2,036 1,974 1,947 during HomeBuilder stimulus 1,799 1,891 1,868 382 314 180 324 250 • Enquiries remain elevated, despite slower promotional activity to align 1,350 1,375 327
Slide 29: Residential
Residential Strong embedded margins • Landbank average age of ~9.5 years; well-located with skew to undersupplied Eastern seaboard markets • Embedded margins driven by strong price growth in these locations over the last 5 years, significantly above through-cycle acquisition pricing assumptions ~82,
Slide 30: Residential Outlook
Residential Outlook Positive 12 months with growth to moderate • Current residential fundamentals remain strong 12-month outlook State Price Volumes Market commentary • Supply unable to satisfy buyer demand, due to limited land • Strong demand to continue in the near-term availability and supply cha
Slide 31: Land Lease Communities
Land Lease Communities Rapid growth in the business, financial performance ahead of Halcyon acquisition expectations Building a market leading Land Lease Communities platform • Halcyon acquisition performing ahead of expectations • Net sales of 212 and price growth of ~12% • Leveraging Halcyon platf
Slide 32: Land Lease Communities
Land Lease Communities Scaling market footprint and leadership at pace • Total portfolio increased from 7,800 home sites to ~9,000 home sites • Total development sites increased to 7,400 home sites, including ~300 home sites from the recent acquisitions of St Germain, VIC and a further ~900 home sit
Slide 33: Land Lease Communities
Land Lease Communities Capital partnership with Mitsubishi Estate Asia (MEA) facilitating growth and improving returns • Stockland Residential Rental Partnership1 to focus on the development and Australia’s foremost Land Lease Communities Partnership ownership of Land Lease Communities: • Stockland
Slide 34: Retirement Living
Retirement Living Sales rebound in line with easing restrictions • 1H22 sales of 4151 reflected a significant rebound in 2Q22 in line with easing of restrictions, with November sales reflecting the highest monthly result on record $17m • Strength in conditions reflected in established settlements in
Slide 35: Retirement Living
Retirement Living Sale of Retirement Living business broadly in line with book value • Delivers on strategy to reduce capital allocation to the Retirement Living business Jun-21 carrying value to bridge to transaction sale price • Simplifies and focuses our Communities business as Australia’s leadin
Slide 36: Summary and Outlook
Summary and Outlook Tarun Gupta 36 Artists impression, Kalina, QLD
Slide 37: Good progress towards strategic targets
Good progress Sector capital allocation1 Target 1H22 towards strategic Workplace and Logistics Residential (for sale and ownership) 30-50% 20-35% 35% 19% targets Town Centres 20-30% 39% Alternate 0-5% 7% Capital allocation by activity1 Target 1H22 Recurring2 70-80% 81% Key points: Development2 20-30
Slide 38: Summary and outlook
Summary and outlook Outlook: Good visibility and well positioned for FY22 • Positive residential market conditions with continued elevated demand levels • Strong embedded margins driven by price growth across well-located landbank • Solid Retail performance from resilient core portfolio • Accelerati
Slide 39: Stockland Corporation Limited Important Notice
Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741; AFSL 241190 As responsible entity for Stockland Trust ARSN 092 897 348 LEVEL 25 133 Castlereagh Street SYDNEY NSW 2000 Important Notice This Presentation and its accompanying Annexures (“Presentation”)