Region Group · ASX:RGN
Region — FY2022 Earnings Presentation
41 slides from Region's earnings presentation, Aug 15, 2022
Slide 1: FY22 Results Presentation
Is FY22 RESULTS PRESENTATION 15 August 2022 slide Moggill Village, QLD
Slide 2: Agenda
AGENDA 1. OVERVIEW OF FY22 RESULTS 2. FINANCIAL PERFORMANCE 3. OPERATIONAL PERFORMANCE 4. GROWTH OPPORTUNITIES 5. KEY PRIORITIES AND OUTLOOK 6. QUESTIONS 7. APPENDICES slide
Slide 3: Overview of FY22 Results
1 OVERVIEW OF FY22 RESULTS Anthony Mellowes Chief Executive Officer slide slide 3
Slide 4: FY22 Highlights
FY22 HIGHLIGHTS FINANCIAL CAPITAL ACTIVE PORTFOLIO PERFORMANCE MANAGEMENT MANAGEMENT Net Profit After Tax Gearing Portfolio occupancy Specialty vacancy $487.1m, up by 5.2%1 28.3%, down by 3.0%1 98.1% 5.0% FFO per unit NTA per unit Portfolio weighted average cap rate 17.40 cpu, up by 17.9%1 $2.81, up
Slide 5: Key Achievements
KEY ACHIEVEMENTS Convenience based centres performance is strengthening • Convenience-based centres performance is strengthening – Comparable NOI growth of 3.3% – Tenant sales 10.0% above pre-COVID levels OPTIMISING THE – Leasing spreads of 2.0% for the year, including 3.3% in the second half CORE B
Slide 6: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer slide slide 6
Slide 7: Impact of COVID-19
IMPACT OF COVID-19 Pandemic impacts are largely behind us Sales growth trends Quarter-on-quarter retail sales growth (%) 1 20% • Sales momentum improving 15% ‒ Sales growth accelerated in the fourth quarter of FY22 to 4.5% ‒ Total sales are 10.0% above pre-COVID levels (MAT as at 30 June 10% 2022 vs
Slide 8: Income Statement
INCOME STATEMENT 30 June 30 June $m 2022 2021 % Change For the year ended 30 June 2022 Anchor rental income 149.0 134.2 11.0% Specialty rental income 160.2 125.8 27.3% • Net property income increase on the prior year is due to comparable NOI growth of 3.3% and acquisitions (less divestments) Recover
Slide 9: Funds From Operations
FUNDS FROM OPERATIONS $m 30 June 2022 30 June 2021 % Change Net profit after tax (statutory) 487.1 462.9 5.2% For the year ended 30 June 2022 Adjustment for non cash items • Funds From Operations (“FFO”) of $192.7m is up by $33.7m or 21.2% Reverse: Straight lining & amortisation 13.6 12.6 7.9% prima
Slide 10: Balance Sheet
BALANCE SHEET At 30 June 2022 30 June 30 June • Value of investment properties increase from $4,000.0m to $4,460.9m due to: – Acquisitions of $347.5m (excluding transaction costs); plus $m 2022 2021 % Change – Valuation increase of $421.0m being like-for-like fair value increase of Cash 8.7 11.6 (25
Slide 11: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT At 30 June 2022 30 June 2022 30 June 2021 Facility limit ($’m) 1,757.1 1,582.1 Drawn debt (net of cash) ($’m) 1,293.4 1,280.5 • Gearing of 28.3% at 30 June 2022 is below the target range of 30% to 40%. Our preference is for gearing to remain below 35% at this point in the
Slide 12: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer slide slide 12
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW Weighting towards food, health and retail services (non-discretionary) At 30 June 2022 Number of Number of GLA Site Area Occupancy Value WALE Weighted average centres specialties (sqm) (sqm) (% GLA) ($m) (yrs)6 cap rate (%) Neighbourhood 77 1,426 501,342 1,718,730 98.1% 3,158.5 6.
Slide 14: Portfolio Occupancy
PORTFOLIO OCCUPANCY Resilient speciality occupancy Portfolio Occupancy (% of GLA) 98.4% • Continued strategic focus on remixing toward non-discretionary categories 98.2% 98.2% 98.1% and reducing long term vacancies where deals are accretive • Total portfolio occupancy of 98.1% and specialty vacancy
Slide 15: Sales Growth and Turnover Rent
SALES GROWTH AND TURNOVER RENT Turnover rent increasing due to strong supermarket sales Comparable Store MAT Sales Growth by Category (%) • Total MAT growth for FY22 (compared to FY21) was 1.3% ‒ Panic buying from FY21 has not been repeated ‒ Lockdowns in NSW and VIC during 1H FY22 As at As at Compa
Slide 16: Specialty Key Metrics
SPECIALTY KEY METRICS Improving leasing outcomes Specialty Tenant Metrics • Sales productivity and occupancy costs remain stable across the portfolio – Sales productivity of $9,865 sqm (decrease from $9,954 at 30 June 2021 Total Portfolio 30 June 2022 30 June 2021 due to acquisitions/disposals) – Av
Slide 17: FY22 Sustainability Highlights
SUSTAINABILITY STRATEGY We are targeting our efforts in six key areas where we can have maximum impact1 Energy & Carbon $11.0m investment installing solar panels at all WA centres (6.22MW generation) FY22 Sustainability Highlights $5.4m investment towards eliminating ozone depleting R22 gases $1.1m
Slide 18: Growth Opportunities
4 GROWTH OPPORTUNITIES Anthony Mellowes and Mark Fleming Chief Executive Officer and Chief Financial Officer slide slide 18
Slide 19: Funds Management
FUNDS MANAGEMENT New JV with GIC commenced and successful conclusion of SURF SCA Metro Fund (JV with GIC) • Fund successfully commenced in April 2022 with settlement of the seven seed portfolio assets for $284.5m – The Fund has also acquired a neighbourhood shopping centre in metropolitan Sydney (Be
Slide 20: Acquisitions
ACQUISITIONS Seven convenience centre acquisitions completed during the year Raymond Terrace (Raymond Terrace, NSW) Moama Marketplace (Moama, NSW) • Acquired Jul 21 for $87.5m (5.9% implied fully let • Acquired Nov 21 for $23.4m (4.9% implied fully yield) let yield) • % of income from Anchors: 34% •
Slide 21: Convenience Based Centres
CONVENIENCE BASED CENTRES Fragmented ownership provides continuing acquisition opportunities Indicative Ownership of Convenience Based Centres Convenience Based Centre Landscape (number of centres) • There are approximately 1,200 Coles and Woolworths anchored ISPT VCX neighbourhood and sub regional
Slide 22: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE Over $300m of development opportunities identified at more than 30 of our centres over the next 5 years1 Estimated Capital Investment (A$m) FY22 DEVELOPMENT TYPE CENTRE(S) Actual FY23 FY24 FY25 FY26 FY27 Greenbank, Warner, North Orange, Belmont, Whitsundays, Centre ex
Slide 23: Key Priorities and Outlook
5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes and Mark Fleming Chief Executive Officer and Chief Financial Officer slide slide 23
Slide 24: 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 25: Longer Term AFFO Growth Target
LONGER TERM AFFO GROWTH TARGET Indicative target growth rate for AFFO in the medium-longer term is 2% to 4%+ pa Indicative Contribution to AFFO Growth Rate (% pa) Description and Assumptions – medium to longer term – • Anchors represent 47% of rental income. 39% of anchors in turnover rent and expec
Slide 26: FY22 & FY23 AFFO per Unit
FY22 & FY23 AFFO PER UNIT (CPU) – KEY MOVEMENTS FY23 AFFOPU growth forecast is lower than long-term target, with comparable NOI growth offset by increasing interest rates Weighted average debt Weighted average debt Excluding the outstanding increased from Increase in outstanding forecast to impact o
Slide 27: Interest Expense / AFFOPU Sensitivity
INTEREST EXPENSE / AFFOPU SENSITIVITY Our FY23 interest expense forecast is based on the market curve for 3-month BBSW Hedge expiry profile 1,200 79% 1.8% • FY23 forecast weighted average hedged debt percentage is 79% 1.6% – Increased from 69.6% at 30 June 2022 to 81% at 15 August 2022 1,000 1.4% –
Slide 28: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Generate strong and sustainable comparable NOI growth, and continue to pursue growth initiatives in a disciplined way • Our focus is to generate strong and sustainable comparable NOI growth by: – Serving our local communities for their everyday needs – Partnering with our
Slide 29: Questions
6 QUESTIONS slide slide 29
Slide 30: Appendices
7 APPENDICES slide slide 30
Slide 31: Our Vision, Purpose and Strategy
OUR OUR VISION PURPOSE To be the fastest growing and most Together, we build thriving communities trusted retail owner in Australia. through local convenience. OUR STRATEGY Defensive, resilient cashflows to support hex secure and growing long-term distributions to unitholders, DY O g C OUR THRIVING
Slide 32: Our Performance - Key Metrics
OUR PERFORMANCE – KEY METRICS Since listing, SCA has delivered AFFOPU growth CAGR of 2.5% per annum NTA per unit ($) Funds from Operations (FFO) (A$m) 2.81 2.52 192.7 2.20 2.30 2.27 2.22 159.0 1.92 141.8 140.8 1.77 1.64 108.4 114.3 100.1 80.1 69.8 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY14 FY
Slide 33: Total Shareholder Return
TOTAL SHAREHOLDER RETURN SCA has consistently outperformed the S&P/ASX 200 A-REIT index Total Shareholder Returns (%) Pre-COVID Post-COVID1 Total TSR Relative TSR Relative TSR Relative (Nov-12 to Feb-20) (Feb-20 to Aug-22) SCA 230% - SCA 3% - SCA 240% - ASX Retail REITs2 102% +127% ASX Retail REITs2
Slide 34: Track Record of Acquisitions
TRACK RECORD OF ACQUISITIONS On average we have acquired 6 properties for $250m each financial year Completed Acquisitions ($m)1 677.9 2 452.4 347.5 274.9 $250m average annual acquisitions 233.1 135.8 117.8 145.3 78.4 26.3 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 7 Properties 6 Properties 8
Slide 35: Online Retail Implications
ONLINE RETAIL IMPLICATIONS Convenience based centres are becoming last mile logistics hubs • Our centres are located within local communities, well suited for last mile logistics hubs • We believe the store-based fulfilment model will remain the predominant model for online grocery fulfilment in Aus
Slide 36: Anchor Tenants
ANCHOR TENANTS 47% of gross rent generated by anchor tenants 30 June 30 June 30 June 30 June 30 June 2018 2019 2020 2021 2022 • All centres are anchored by either Woolworths Limited, Woolworths Limited Coles Group Limited or Wesfarmers Limited retailers Woolworths 54 58 58 64 62 Big W 7 9 9 11 10 To
Slide 37: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Facility Limit Drawn Debt Financing capacity Maturity / Notes (A$m) (A$m) (A$m) Bank and Syndicated Facilities Bank bilateral and syndicated facilities 50.0 50.0 - FY24: $50m Jun 2024 Bank bilateral 50.0 50.0 - FY25: $50m Dec 2024 Bank bilateral 150.0 - 150.0
Slide 38: Acquisitions During the Year
ACQUISITIONS DURING THE YEAR 30 June 2022 Total Purchase Implied Acquisition Anchor GLA Specialty GLA Total GLA Occupancy Centre Type Price Fully Let Date (sqm) (sqm) (sqm) (% GLA) ($m) Yield Acquired Properties Raymond Terrace Sub Regional Jul 2021 10,892 3,938 14,830 98% 87.5 5.9% Drayton Central
Slide 39: Portfolio List (I)
PORTFOLIO LIST (I) Completion Total GLA Occupancy Number of WALE Valuation Valuation Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate Jun 2022 ($m) Lavington Square NSW Sub-Regional WOW; Big W 2005 20,219 94.7% 58 3.0 6.00% 78.7 Marketown East N
Slide 40: Portfolio List (II)
PORTFOLIO LIST (II) Completion Total GLA Occupancy Number of WALE Valuation Valuation Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate Jun 2022 ($m) Carrara QLD Neighbourhood WOW 2011 3,715 98.1% 6 5.6 4.75% 23.0 Chancellor Park Marketplace QLD
Slide 41: Contact Details and Disclaimer
CONTACT DETAILS AND DISCLAIMER For further information please contact: Anthony Mellowes Mark Fleming Greg Inkson Chief Executive Officer Chief Financial Officer Head of Corporate Finance T: +61 2 8243 4900 T: +61 2 8243 4900 T: +61 2 8243 4900 E: anthony.mellowes@scaproperty.com.au E: mark.fleming@s