Scentre Group · ASX:SCG
Scentre — H1 2017 Earnings Presentation
47 slides from Scentre's earnings presentation, Aug 24, 2017
Slide 1: Half Year Results – June 2017
HALF YEAR RESULTS – JUNE 2017 Westfield Chermside
Slide 2: Results Overview
RESULTS OVERVIEW PETER ALLEN CEO Westfield Chermside 2017 HALF YEAR RESULTS | 2
Slide 3: 2017 Full Year Forecast
2017 FULL YEAR FORECAST The Group continues 4.25% 2.75% to 3% FORECAST its strong operating FORECAST COMPARABLE performance and is on FFO GROWTH NOI GROWTH 5% underlying FFO growth track to deliver its forecast full year growth in Funds From Operations of approximately 4.25% 21.73c >$900M FORECAST D
Slide 4: Results Overview: First Half 2017 Results
RESULTS OVERVIEW FIRST HALF 2017 RESULTS Funds From Operations (FFO) $638 million, 3.5% growth FFO per security 12.01 cents, 3.5% growth Distribution per security 10.86 cents, 2% growth Comparable NOI 2.6% growth Developments Commenced $900 million Assets Under Management (AUM) $47.4 billion, 3.6% g
Slide 5: Strategic Priorities
STRATEGIC PRIORITIES Creating PROGRESS extraordinary places Delivering long-term sustainable growth by strategically investing in and proactively connecting and managing each individual shopping centre in the portfolio. Asset valuations up 4.0% enriching Improvement in weighted average capitalis
Slide 6: Strategic Priorities
STRATEGIC PRIORITIES Creating PROGRESS extraordinary places Growing the business by strategically investing in the redevelopment of our high connecting and quality shopping centre portfolio Completed the Chermside $355m redevelopment enriching Today announced the commencement of the $470m Coomer
Slide 7: Operating Performance June 2017
OPERATING PERFORMANCE 30 JUNE 2017 Total Sales (MAT) $22.9bn Portfolio Leased > 99.5% Specialty Store Sales Growth (psm) (MAT) 2.0% Average Specialty Store Rent (psm) $1,615 Average Specialty Store Sales (psm) $11,250 Lease Deals Completed Number 1,394 Occupancy Cost 17.6% Lease Deals Completed Area
Slide 8: Retail Sales
RETAIL SALES COMPARABLE SALES GROWTH %1 6 MONTHS TO 12 MONTHS TO 30 JUN 2017 30 JUN 2017 Majors (0.9%) (1.0%) Mini Majors (≥ 400 sqm) 2.9% 2.7% Specialties (< 400 sqm) 1.5% 2.0% Total Portfolio 1.1% 1.0% 1. Total stable portfolio 2017 HALF YEAR RESULTS | 8
Slide 9: Retail Sales: Comparable Specialty Sales Growth by Region
RETAIL SALES COMPARABLE SPECIALTY SALES GROWTH BY REGION1 6.0% 4.0% 6 months MAT 3.4% 3.0% 2.4% 2.5% 2.0% 2.0% 1.5% 1.5% 1.1% 0.9% 1.0% 0.3% 0.7% 0.2% 0.2% 0.0% (0.8%) (1.5%) (2.0%) NSW QLD VIC WA SA ACT NZ Total 1. Total stable portfolio 2017 HALF YEAR RESULTS | 9
Slide 10: Retail Sales: Comparable Sales Growth by Category
RETAIL SALES COMPARABLE SALES GROWTH BY CATEGORY1 6 MONTHS TO 12 MONTHS TO 30 JUN 2017 30 JUN 2017 Supermarkets 1.0% (0.2%) Department Stores (5.6%) (2.5%) Discount Department Stores (1.6%) (3.7%) Cinemas (2.1%) (1.7%) Fashion 1.0% 1.6% Footwear 1.8% 1.1% Jewellery 0.9% 3.0% Leisure (4.2%) (2.2%) Ge
Slide 11: Growing the Business: Active Developments
GROWING THE BUSINESS ACTIVE DEVELOPMENTS Key Highlights: TOTAL PROJECT SCG ANTICIPATED Commenced $900 million (SCG share: COST SHARE COMPLETION $’M $’M $625m) of developments in the first half of 2017 2016 COMMENCEMENTS Completed the $355 million (SCG share: Whitford City – Cinemas & Restaurants
Slide 12: Westfield Chermside New Galleria Mall
WESTFIELD CHERMSIDE NEW GALLERIA MALL 2017 HALF YEAR RESULTS | 12
Slide 13: Westfield Chermside Integrated Dining, Entertainment & Leisure
WESTFIELD CHERMSIDE INTEGRATED DINING, ENTERTAINMENT & LEISURE 2017 HALF YEAR RESULTS | 13
Slide 14: Westfield Chermside Expansive Dining Mix
WESTFIELD CHERMSIDE INTEGRATED DINING, ENTERTAINMENT & LEISURE EXPANSIVE DINING MIX - 25 NEW RESTAURANTS AND CAFES 2017 HALF YEAR RESULTS | 14
Slide 15: Westfield Chermside Outdoor Entertainment & Kids Play Area
WESTFIELD CHERMSIDE OUTDOOR ENTERTAINMENT & KIDS PLAY AREA 2017 HALF YEAR RESULTS | 15
Slide 16: Westfield Chermside Creating the 'Heartbeat'
WESTFIELD CHERMSIDE CREATING THE ‘HEARTBEAT’ THROUGH NEW EXPERIENCES 2017 HALF YEAR RESULTS | 16
Slide 17: Westfield Chermside: Growing Market Share
WESTFIELD CHERMSIDE GROWING MARKET SHARE CHERMSIDE $MAT million TOTAL RETAIL SALES 1,200 Based on its strong early trading performance, Westfield Chermside is forecast to generate more +$300m than $1.1 billion in total sales per annum: +35% growth 1,000 Approximately $300 million of additional sal
Slide 18: Westfield Chermside Highlights
WESTFIELD CHERMSIDE HIGHLIGHTS OVERVIEW RETURNS Incremental Project GLA 33,000sqm Project Cost $355m (SCG share: $355m) Completed Centre GLA 156,000sqm Valuation 30 Jun 2017 $2.345 billion Capitalisation Rate 5.0% Zara, H&M, Sephora, Uniqlo, new New Anchors entertainment, dining and leisure precinct
Slide 19: Growing the Business: >$3bn of Future Developments
GROWING THE BUSINESS > $3BN OF FUTURE DEVELOPMENTS Albany (NZ) Booragoon (WA)1 Stirling (Innaloo) (WA) Knox (VIC) Kotara (NSW) Westfield Westfield Stirling Newmarket Marion (SA) Newmarket (NZ) St Lukes (NZ) Sydney (NSW) Tea Tree Plaza (SA) Westfield Kotara Warringah Mall – stag
Slide 20: Retail: The Ever Changing Opportunity
RETAIL THE EVER CHANGING OPPORTUNITY Westfield Kotara 2017 HALF YEAR RESULTS | 20
Slide 21: The Ever Changing Retail Opportunity
THE EVER CHANGING RETAIL OPPORTUNITY EMBRACING CHANGE Consumer Retailer Trends Scentre Group is embracing changes in what customers Scentre Group is keeping a close eye on international want: trends: We are increasing opportunities for customers to discover Retailers more selective on physical s
Slide 22: Regional Shopping Centres Are Well Positioned
REGIONAL SHOPPING CENTRES ARE WELL POSITIONED TOTAL AUSTRALIAN RETAIL SALES $312BN* Scentre Group Regional shopping centres are Regional Shopping Centres1 well positioned to continue $20bn Regional growing market share from other Shopping Online 54% Centres retail platforms $37bn Shopping 12% $23bn
Slide 23: Scentre Group Has the Best Positioned Retail Property Portfolio
SCENTRE GROUP HAS THE BEST POSITIONED RETAIL PROPERTY PORTFOLIO MORE THAN 80% OF THE SCENTRE GROUP’S PORTFOLIO GENERATES SALES > $500M1 More than 33% of Scentre Group’s invested capital is in shopping centres that generate over $1 billion in sales. Shopping Centres with Sales > $1bn2 ~33% Shopping C
Slide 24: Scentre Group Has the Best Positioned Retail Property Portfolio
SCENTRE GROUP HAS THE BEST POSITIONED RETAIL PROPERTY PORTFOLIO Located in trade areas with strong demographics for growth: Located in urbanised transportation nodes with the highest population density growth. More than 65% of the population live within a 30 minute drive to a Westfield shoppin
Slide 25: Diverse Product Offering
0.0% 10.0% 16.0% 2.0% 14.0% 6.0% 4.0% 12.0% 18.0% 8.0% Supermarkets 16.5% 1. MAT 30 June 2017 Department Stores 9.6% Discount Department Stores 8.5% Cinemas 1.8% 4.8% 9.2% Fashion Womens Unisex, Mens, 14.0% Fashion & Other Fashion Footwear 3.0% Jewellery 3.3% Leisure 5.3% DIVERSE PRODUCT OFFERING Ge
Slide 26: Sales Grown by >$6.5bn Over 10 Years
SALES GROWN BY >$6.5 BN OVER 10 YEARS KEY GROWTH CATEGORIES Food Dining Health & Beauty Fashion, Footwear & Jewellery Technology & Appliances +89.3% +63.1% +54.5% +52.8% $1.8bn $1.4bn $4.7bn $4.7bn $2.2bn $3.0bn $1.0bn $0.8bn $3.0bn $1.5bn $2.2bn $1.8bn $1.5bn $1.4bn $1.0bn $0.8bn 2007 2017 2007 201
Slide 27: Sales Grown by >$1.2bn Over Last 2 Years
SALES GROWN BY >$1.2 BN OVER LAST 2 YEARS TOTAL SALES $’M 12,000 11,500 11,000 10,500 Over the last 2 years total sales for the Scentre 10,000 Group portfolio has grown by >$1.2 billion with: 9,500 9,000 Specialty sales up >$750 million or > 7% 8,500 Mini major sales up >$300 million or >11% 8,0
Slide 28: An Extensive Track Record
AN EXTENSIVE TRACK RECORD DELIVERING LONG-TERM SUSTAINABLE GROWTH Scentre Group total sales have grown by > $6.5 bn over 10 years Scentre Group has added > 480,000sqm of Over the last 10 years Scentre Group has retail space to the portfolio delivered growth in: Australian online sales have grown fro
Slide 29: Scentre Group Portfolio
SCENTRE GROUP PORTFOLIO AS AT 30 JUN 2017 TOTAL Australia Centres 39 34 centres $32.4 billion1 Gross Lettable Area (sqm) 3.6m Assets Under Management (AUM) $47.4bn SCG share of AUM $33.6bn JV Partner share of AUM $13.8bn Weighted Average Capitalisation Rate 5.25% Customer Visits per annum > 530m New
Slide 30: Finance Update
FINANCE UPDATE MARK BLOOM CFO Westfield Warringah Mall 2017 HALF YEAR RESULTS | 30
Slide 31: Financial Performance
FINANCIAL PERFORMANCE FUNDS FROM OPERATIONS 6 MONTHS TO 6 MONTHS TO 3.5% $M FIRST HALF 2017 30 JUN 2017 30 JUNE 2016 FFO GROWTH Net Operating Income 907.2 895.4 - Delivering 12.01 cents per security - Underlying FFO growth of 5% Management Income 22.6 23.2 Project Income 43.6 49.7 $638M Gross Income
Slide 32: Financial Position
FINANCIAL POSITION BALANCE SHEET - PROPORTIONATE $M 30 JUN 2017 31 DEC 2016 $20.3BN NET ASSETS Total Property Investments 33,574.8 32,288.8 Total Assets 34,964.4 34,100.2 Total Liabilities 13,747.0 13,333.3 $33.6BN PROPERTY INVESTMENTS Net Assets 21,217.4 20,766.9 Including first half revaluation up
Slide 33: Capital Structure
CAPITAL STRUCTURE DEBT METRICS 30 JUN 17 31 DEC 16 Total interest bearing liabilities $12.0bn $11.6bn Gearing (look through basis) Weighted average interest rate 33.9% 4.4% 33.3% 4.5% $3.6BN 33.9% Weighted average debt maturity 5.1 years 5.1 years LOAN GEARING Liquidity $2.9bn $2.8bn FACILITIES Inte
Slide 34: Capital Management
CAPITAL MANAGEMENT $2.9BN 5.1 YEARS DEBT MATURITIES FACILITIES & LIQUIDITY1 LIQUIDITY 30 JUNE 17 % $BN1 Weighted average debt No debt maturities Bonds maturity until July 2018 USD 24% 3.5 EUR 26% 3.8 MATURITY PROFILE1 GBP 10% 1.5 A$bn AUD 4% 0.6 3.0 Bonds Drawn Facilities Total 64% 9.4 Undrawn Facil
Slide 35: Distribution Payout Ratio
DISTRIBUTION PAYOUT RATIO CURRENT TARGET Distribution payout ratio has reduced from 93.8% in 2014 to 89.4% PAYOUT RATIO PAYOUT RATIO 89.4% 85% (forecast) for 2017 Additional Retained Earnings Additional Retained Earnings Payout ratio reducing further to 85%, with the additional retained ~$25m -
Slide 36: 2017 Forecast
2017 FORECAST 2017 FORECAST Funds From Operations Growth Distribution per security approximately 4.25% 21.73 cents (2% growth) 4.25% 2.75% to 3% FORECAST FFO GROWTH COMPARABLE Comparable NOI Growth 2.75% to 3% 5% underlying FFO Weighted Average Interest Rate approximately 4.5% growth NOI GROWTH Cher
Slide 37: Appendix
APPENDIX Westfield Warringah Mall 2017 HALF YEAR RESULTS | 37
Slide 38: Developments: Westfield Carousel
DEVELOPMENTS ACTIVE PROJECT WESTFIELD CAROUSEL OVERVIEW Project Cost $350m (SCG share: $350m) Commencement Q1 2017 Completion 2018 HIGHLIGHTS Incremental Project GLA 27,500sqm Completed Centre GLA 110,000sqm New Anchors David Jones, international mini-majors, new entertainment, dining and leisure pr
Slide 39: Developments: Westfield Coomera
DEVELOPMENTS ACTIVE PROJECT WESTFIELD COOMERA OVERVIEW Project Cost $470m (SCG share: $235m) Commencement Q2 2017 Completion 2018 HIGHLIGHTS Completed Centre GLA 59,000sqm New Anchors Event Cinemas, Kmart, Target, Coles, Woolworths, new leisure and dining precinct Specialty Retail approx. 140 new st
Slide 40: Developments: Westfield Plenty Valley
DEVELOPMENTS ACTIVE PROJECT WESTFIELD PLENTY VALLEY OVERVIEW Project Cost $80m (SCG share: $40m) Commencement Q1 2017 Completion 2018 HIGHLIGHTS Incremental Project GLA 10,300sqm Completed Centre GLA 63,500sqm New Anchors Village Cinema, new leisure and dining precinct Specialty Retail approx. 20 ne
Slide 41: Developments: Westfield Whitford City
DEVELOPMENTS ACTIVE PROJECT WESTFIELD WHITFORD CITY OVERVIEW Project Cost $80m (SCG share: $40m) Commencement Q3 2016 Completion September 2017 HIGHLIGHTS Incremental Project GLA 5,000sqm Completed Centre GLA 85,000sqm New Anchors Event Cinemas (including Gold Class) New dining and leisure precinct
Slide 42: Leasing & Retail Solutions
LEASING & RETAIL SOLUTIONS 30 JUNE 2017 SPECIALTY STORE RENT GROWTH Portfolio Leased > 99.5% Average Specialty Store Rent (psm) $1,615 The majority of specialty store rent growth is YTD 30 JUNE 2017 Lease Deals driven by contractual ~25% rental escalations. Lease Deals Completed Number 1,394 Contrac
Slide 43: Profit & FFO
PROFIT & FFO RECONCILIATION FROM PROFIT TO FFO $M PROFIT FFO FFO FINANCIAL 6 MONTHS TO ADJUSTMENTS1 6 MONTHS TO STATEMENT 30 JUN 2017 30 JUN 2017 NOTES A B C=A+B Net operating income 881.3 25.9 907.2 Note 3(iv) Management income 2 22.6 - 22.6 Note 3(i) Project income 3 43.6 - 43.6 Note 3(i) Gross in
Slide 44: Balance Sheet
BALANCE SHEET BALANCE SHEET - PROPORTIONATE1 $M CONSOLIDATED EQUITY ACCOUNTED 30 JUN 2017 A B C=A+B Cash 172.0 12.4 184.4 Property Investments - Shopping centres 30,308.7 2,549.8 32,858.5 - Development projects and construction in progress 629.7 86.6 716.3 Total Property Investments 30,938.4 2,636.4
Slide 45: Cashflow
CASHFLOW CASH FLOWS FROM OPERATING ACTIVITIES – LOOK THROUGH BASIS $M CONSOLIDATED EQUITY 30 JUN 2017 ACCOUNTED A B C=A+B Receipts in the course of operations (including GST) 1,372.9 118.3 1,491.2 Payments in the course of operations (including GST) (449.7) (30.0) (479.7) Dividends/distributions rec
Slide 46: Interest Rate Hedging Profile
INTEREST RATE HEDGING PROFILE $ FIXED RATE DEBT DERIVATIVES $ DEBT PAYABLE $ SWAP PAYABLE NZ$ SWAP PAYABLE NZ$ COLLAR PAYABLE 31 DECEMBER1 $M FIXED RATE $M FIXED RATE NZ$M FIXED RATE NZ$M STRIKE RATE 2017 (580.0) 3.25% (8,528.5) 2.88% (450.0) 3.30% (70.0) 3.39%/5.25% 2018 (580.0) 3.25% (8,115.0) 2.8
Slide 47: Important Notice
IMPORTANT NOTICE All amounts in Australian dollars unless otherwise specified. The financial information included in this document is based on the Scentre Group’s IFRS financial statements. Non IFRS financial information included in this document has not been audited or reviewed. This document conta