Stockland · ASX:SGP
Stockland — Investor Day (November 2011)
73 slides from Stockland's investor day presentation, Nov 23, 2011
Slide 1: Stockland Investor Day Update (ASX/Media Release)
133 Castlereagh Street T 02 9035 2552 Sydney NSW 2000 F 02 8988 2552 www.stockland.com.au 23 November 2011 ASX/Media Release For personal use only STOCKLAND INVESTOR DAY UPDATE Stockland today announced it had recorded continued positive sales momentum in its residential communities in October and N
Slide 2: Caloundra South masterplanned development
The centre piece of the investor update was Stockland’s Caloundra South masterplanned development on the Sunshine Coast, which will eventually become home to around 50,000 people and have an end project value of $5 billion. For personal use only The early release stage, Bells Reach, will provide imm
Slide 3: Group update
For personal use only Group update Matthew Quinn, Managing Director www.stockland.com
Slide 4: Agenda
Agenda For personal use only Presentation and Webcast • Group Update - Matthew Quinn, Managing Director • Residential Communities strategy, performance and market update - Mark Hunter, CEO Residential • Queensland market update - Kingsley Andrew, GM Queensland Residential • Q & A - Matthew Quinn, Ma
Slide 5: Our Vision, Strategy and Competitive Advantages
Our Vision, Strategy and Competitive Advantages For personal use only Our Vision • To be a trusted partner with government to deliver vibrant and sustainable communities, retail centres and social hubs • To deliver our customers ‘a better way to live’ • To be Australia’s preeminent greenfield commun
Slide 6: Our Retail centres are outperforming the market
Our Retail centres are outperforming the market For personal use only Value and convenience offering continues to be more resilient • MAT performance to 30 September 2011 stronger than market; October sales continued this trend • Centres in regional markets such as Gladstone, Nowra and Traralgon are
Slide 7: Business update
Business update For personal use only Residential market conditions • Too early to determine benefits from 25 bps interest rate cut • Positive Residential sales momentum has continued through October and November: - First Home Buyers are the most active segment - will benefit most from interest rate
Slide 8: Residential Communities – Investor Briefing
For personal use only Residential Communities – Investor Briefing Mark Hunter, CEO Residential 23 November 2011 www.stockland.com
Slide 9: Agenda
Agenda For personal use only 1. Our Residential Communities strategy 2. Bringing our strategy to life 3. Financial performance 4. Market Update -1-
Slide 10: Stockland is the leading Residential Community developer in Australia
Stockland is the leading Residential Community developer in Australia For personal use only • We consistently deliver strong returns Delivering record EBIT in FY11 In FY11 sold five times as many lots in our active corridors as the next competitor High RONFE (return on net funds employed) • We
Slide 11: Our strategy remains to deliver affordable, high-quality residential communities
Our strategy remains to deliver affordable, high-quality residential communities for middle Australia For personal use only Our aim • To be Australia’s leading greenfield community developer • To be a trusted partner with government to deliver vibrant and sustainable residential communities • To del
Slide 12: Strong population and declining household size creates underlying demand
Strong population and declining household size creates underlying annual demand for 160,000 dwellings1 For personal use only Population Household Size growth (p.a.) (People per dwelling) 500,000 5 Net international migration 450,000 Natural Increase 400,000 Average Household Size 4 (RHS) 350,000 Str
Slide 13: Vacant land sales are the largest part of the market
Vacant land sales are the largest part of the market For personal use only Average annual underlying demand1 Australian established dwelling stock1 8.4m ~ 160,000 Our Focus 0.9 Apartments 0.9 ~50,000 Semi-detached Separate House ~25,000 ~ 85,000 79% of 6.6 dwellings are separate houses Total Demand
Slide 14: Detached homes in greenfield areas will remain at least 50% of supply
Detached homes in greenfield areas will remain at least 50% of total supply For personal use only State Governments acknowledge that greenfield is key to meet future urban housing needs1 South East Queensland - 2031 plan 50% Infill Perth target - 2031 plan 50% Greenfield 47% Infill 53% Greenfield Sy
Slide 15: Vacant land is lower risk and less capital intensive
Vacant land is lower risk and less capital intensive than building houses and apartments For personal use only Vacant land sales House building Apartments • Largest market segment • Greater exposure to supply • Large upfront and ongoing chain risk capital requirement • Can acquire in large parcels w
Slide 16: Significant potential for growth by expanding into new corridors
We have significant potential for growth by expanding into new corridors For personal use only Annual underlying demand for vacant land sales ~85,000 1 ~8,000 1 Our 26 priority ~34,000 corridors FY11 effective demand lower than 1 ~43,000 ~43,000 Not yet entered underlying due to ~4,000 3 corridors l
Slide 17: Our competitive advantages enable us to capture market share
Our competitive advantages enable us to capture market share - in FY11 we achieved 29% share in active corridors For personal use only 1. Identify and • Targeted corridor strategy acquire land • Acquisition of quality land on capital efficient terms • Strong balance sheet and proven track record pro
Slide 18: Customer Insight: informs our business decisions
Customer Insight: informs our business decisions For personal use only The Customer Journey Understand • Customer behaviours customer • Reasons for key decisions Dream Research Purchase Build Move in journey • Emerging trends First Home Buyer Leads: Perception of Value • Determine what customers can
Slide 19: Customer Insight: who our customers are and what they value
Customer Insight: we know who our customers are, what they can afford and what they value1 For personal use only First Home Buyer Upgrader Investor Retirees • Young couple, singles • Families • Private individuals • Retired couple or looking to buy a safe, widow(er) 70+, looking Description • Lookin
Slide 20: Product Development: more than just House and Land
Product Development: more than just House and Land For personal use only • Determine product demand and Leverage Market & supply in key corridors Customer research • Define the needs of all customer segments • Create different neighbourhoods within projects that appeal to different Village positioni
Slide 21: Product Development: innovative products from strong partnerships
Product Development: innovative products from strong partnerships For personal use only Affordable for first home buyers Affordable for families Target price range: $290,000 - $350,000 Target price range: $350,000- $475,000 • 3 bedroom, 2 bathrooms, 1 garage • 4 bedroom, 2 bathrooms, 2 garage • Typi
Slide 22: Community Development: we create a better way to live
Community Development: we create a better way to live For personal use only • A sense of community belonging • Access to education Understand our • Access to shops customer needs • Safety • Opportunity to exercise and be healthy • Dedicated Community Development managers assigned to projects Resourc
Slide 23: Our scale enables us to invest in key capabilities
Our scale enables us to invest in key capabilities For personal use only Identify Purpose / Plan and Obtain Detailed Design Construct & Complete & Opportunity Opportunity Approval & Tender Deliver Manage Our Focus Buy in the Extract the Obtain Cost Speed to Leave a best location maximum approvals ef
Slide 24: Agenda
Agenda For personal use only 1. Our Residential Communities strategy 2. Bringing our strategy to life 3. Financial performance 4. Market Update - 16 -
Slide 25: North Shore Townsville - brings our 3-Rs together
North Shore Townsville - brings our 3-Rs together For personal use only Project snapshot • Acquired in 2003 for $6m • 5,200 lot master planned community • Over 800 lots sold to date Existing and future community • Multiple residential ‘villages’ • Stockland retail centre with Woolworths and 13 speci
Slide 26: Early delivery of community infrastructure in North Shore has driven strong sales
Early delivery of community infrastructure in North Shore has driven strong sales For personal use only North Shore Settlements (#) 247 15% 214 215 108 17 FY07 FY08 FY09 FY10 FY11 FY12 (Net Deposits Approval Works Public launch Commenced Feb. ‘11 - Opened to 31October) obtained commence shopping cen
Slide 27: Lensworth was Australia's largest ever residential land transaction
Lensworth was Australia’s largest ever residential land transaction For personal use only Lensworth Portfolio • Portfolio acquired in December 2004 • Cost $846m • Portfolio comprised: – 29,600 lots – 17 projects including Caloundra, North Lakes and Highlands – Presence in 3 States (NSW, Vic, Qld) –
Slide 28: The Lensworth portfolio has delivered excellent returns
The Lensworth portfolio has delivered excellent returns For personal use only Lensworth Yield Uplift Portfolio performance ~7,000 ~ 9,000 • Lots settled ~9,000 • Net revenue $2.1bn ~ 30,000 ~ 28,000 • EBIT margin 27%1 • Operating profit margin2 23%1 • Cash flow positive Sep 2011 Yield increased by 7
Slide 29: Lensworth taught us several lessons
Lensworth taught us several lessons which we have used to refine our strategy For personal use only 1. We create significant value when we buy large projects e.g. North Lakes, Highlands 2. We have applied these lessons to recent acquisitions e.g. Vale, Lockerbie, Leppington North Lakes (Qld) 3. Take
Slide 30: Caloundra: Australia's largest project
Caloundra: Australia’s largest project will deliver significant cross business synergies For personal use only Caloundra – Northern Portion (2,360 Ha) • ~50,000 residents across ~20,000 lots • ~170,000 sqm retail and commercial • Number of retirement villages Funds employed for Northern portion Land
Slide 31: Agenda
Agenda For personal use only 1. Our Residential Communities strategy 2. Bringing our strategy to life 3. Financial performance 4. Market Update - 23 -
Slide 32: Speed to market delivers strong returns on funds employed
Speed to market delivers strong returns on funds employed For personal use only Net Funds Return on FY11 Average Employed1 Net Funds Employed Delivering current earnings 38 Active projects $1.1b 23% Strategic Focus Sales, approvals, acquisitions 16% Enhance near 16 New projects term earnings $0.8b C
Slide 33: Agenda
Agenda For personal use only 1. Our Residential Communities strategy 2. Bringing our strategy to life 3. Financial performance 4. Market Update - 25 -
Slide 34: National housing sentiment points to improving activity
National housing sentiment points to improving activity1 For personal use only 100% “Time to buy a dwelling” sentiment (advanced 3 months) 80% 60% Housing Finance (values – ex-refi) 40% Year on Year change (%) 20% Sentiment leads housing finance commitments by ~3 months 0% Sentiment data is pre-
Slide 35: Affordability has improved
Affordability has improved For personal use only • Affordability improving due to: Affordability in most States trending down1 45% Mortgage Repayments as a % of Household Income Weak established house prices 40% Falling interest rate environment 35% 35% “affordable” benchmark Rising incomes 30
Slide 36: Our lead volumes are starting to improve
Our lead volumes are starting to improve For personal use only • Latest quarter leads up on prior quarter Stockland customer leads1 • Growth in latest quarter mainly in WA and Qld 8,000 Total lead volumes 6,000 • Reflective of improving customer sentiment and anticipation of interest rate cuts 4,000
Slide 37: NSW: Acute undersupply continues to grow
NSW: Acute undersupply continues to grow For personal use only • Current ~130,000 housing supply deficit still growing Undersupply driving up shortage1 due to significant fragmentation of land ownership • Rental market remains very tight (1.3%) and rents are growing • First home buyers returning to
Slide 38: Vic: Returning to historic levels of activity
Vic: Returning to historic levels of activity • Dwelling completions down 25% from peak but still Dwelling completions returning to For personal use only above long term average long term average levels1 12,000 • Underlying demand underpinned by robust net 10,000 international migration 8,000 6,000
Slide 39: WA: improving affordability flowing through to housing finance
WA: improving affordability flowing through to housing finance For personal use only Houses on market starting to come down2 • Established market listings beginning downward trend as sellers meet the market 40,000 • Housing finance trending up 30,000 20,000 • Household income continues to rise on th
Slide 40: Qld: coming off the bottom of the cycle
Qld: coming off the bottom of the cycle For personal use only Owner-occupied loans trending up1 • Housing finance trending up 11,000 • New homes sales up 16% in last two months 10,000 9,000 • Recent Builder Boost driving enquiry for affordable 8,000 new homes 7,000 6,000 Jan-10 Apr-10 Jul-10 Oct-10
Slide 41: Recap of key points
Recap of key points For personal use only 1. We are the leading and largest residential communities developer in Australia. This scale gives us advantages and access to capabilities 2. We have a unique and geographically diverse portfolio comprising 73 projects, over 90,000 lots, positioning us well
Slide 42: Queensland Market Update
For personal use only Queensland Market Update Kingsley Andrew, General Manager – Residential, Queensland www.stockland.com
Slide 43: Key issues
Key issues For personal use only • Queensland market fundamentals: underpinned by resources • Market conditions: showing signs of improvement • Stockland communities: well placed for growth -1-
Slide 44: Strong outlook led by investment growth and increased employment
Strong outlook led by investment growth and increased employment For personal use only Qld GSP vs. National GDP1 6% • Strong Gross State Product forecast with 5% more than $40bn of resource projects to 4% commence in FY12 and FY131 3% 2% • Employment growth underpinned by diverse 1% resource sectors
Slide 45: Diversity of new resource projects to underpin recovery
Diversity of new resource projects to underpin recovery For personal use only • New projects increase geographical footprint of resources in Queensland • Committed resource investment to generate 45,000 direct full time jobs1 Townsville Mackay • South East Queensland to be beneficiary of white and b
Slide 46: Population growth returning to historical levels
Population growth returning to historical levels For personal use only Queensland population growth and forecast (annual)1 140,000 Forecast growth 120,000 Natural increase Net international migration 100,000 Net interstate migration Steady growth 80,000 60,000 40,000 20,000 0 2001 2002 2003 2004 200
Slide 47: Key issues
Key issues For personal use only • Queensland market fundamentals: underpinned by resources • Market conditions: showing signs of improvement • Stockland communities: well placed for growth -5-
Slide 48: Time to buy and consumer sentiment recovering
Time to buy and consumer sentiment recovering For personal use only Owner occupied housing finance vs. Time to buy sentiment1 120% “Time to buy a dwelling” sentiment (advanced 3 months) • Strong correlation between housing finance 100% and time to buy sentiment: Housing Finance Year on Year change (
Slide 49: Established market remains soft and oversupplied
Established market remains soft and oversupplied For personal use only Brisbane established houses on market1 35,000 • Levels of established houses on market 30,000 have remained above average for more 25,000 than12 months 20,000 15,000 • Prices have been in decline in most 10,000 Queensland markets
Slide 50: Key issues
Key issues For personal use only • Queensland market fundamentals: underpinned by resources • Market conditions: showing signs of improvement • Stockland communities: well placed for growth -8-
Slide 51: First Home Buyers leading the market
First Home Buyers leading the market For personal use only Leads by segment1 40% • Strong demand from First Home Buyers 35% who are unconstrained by established 30% 25% market 20% 15% • Deposits have bounced off mid year lows: 10% 5% Recovery driven by targeted customer and 0% First Home Buyer Inv
Slide 52: Affordable lots are widely accepted and selling strongly
Affordable lots are widely accepted and selling strongly For personal use only Reduction in Queensland lot sizes1 • Demand strongest for product under Portfolio (15%) FY10 FY12 $200,000 (<450 sqm) and we continue to 60% adjust product mix to meet this demand: 50% (9%) 40% Lots over 571sqm fallen
Slide 53: Stockland delivering most affordable product on the market
Stockland delivering most affordable product on the market For personal use only Brisbane North corridor - comparable 3 bed product Median Stockland Entry Closest Major House Price Price Competitor • Stockland home and land packages well $380,000 $296,000 $323,000 below the comparable median price A
Slide 54: Recap of key points
Recap of key points For personal use only • Sound fundamentals backed by a diverse resource economy • Residential market showing signs of improvement • Stockland communities are located in corridors to benefit from the resource sector • Innovative and affordable product is outperforming the market a
Slide 55: Investor Tour November 2011
INVESTOR TOUR NOVEMBER 2011
Slide 56: Content
CONTENT For personal use only • Caloundra South overview – Ben Allen, General Manager Sustainable Communities • Planning and Approvals status update – Marc Wilkinson, QLD Planning and Approvals Manager • Masterplanning and delivery – Ben Simpson, Project Director - Caloundra South
Slide 57: Project Overview
PROJECT OVERVIEW For personal use only • Location - ideally placed at the gateway to the Sunshine Coast and close to Brisbane • Scale - 2,360 hectares, home to 50,000 people • Value - $5bn end value • Ownership - master developer and single ownership • Diversity - opportunity to leverage 3-R synergi
Slide 58: Leveraging our capability
LEVERAGING OUR CAPABILITY Bells Reach & For personal use only Neighbourhood Major Activity Centre Centre District Centre District Centre Neighbourhood Centres Industry & Business Zones District Centre Neighbourhood Centres 165ha OF INDUSTRIAL LAND MULTIPLE RETIREMENT LIVING VILLAGES BRUCE HIGHWAY/SU
Slide 59: Sunshine Coast growing rapidly
SUNSHINE COAST GROWING RAPIDLY For personal use only • Population growth strong projected population growth (2.1% p.a.) Population expected to grow to 500,000 by 20312 • Trade area growth strong trade area growth (71%) ~132,000 growing to ~226,000 people by 20311 • Public infrastructure investment K
Slide 60: Fundamentally undersupplied
FUNDAMENTALLY UNDERSUPPLIED For personal use only Positioned to service undersupply, generate employment and deliver affordable product 1. Office of Economic and Statistical Research (Qld) 2. Urbis
Slide 61: Planning and Approvals
PLANNING AND APPROVALS MARC WILKINSON, QLD PLANNING AND APPROVALS MANAGER For personal use only
Slide 62: Approval capability
APPROVAL CAPABILITY • National Approval and Design Team − National and State capability to ensure pipeline For personal use only − Seen as valued partner to public authorities • Caloundra South − Expertise in community building and government engagement has wider benefits across portfolio − Leverage
Slide 63: Approval timeframes
APPROVAL TIMEFRAMES For personal use only 1 1. EPBC – Environmental Protection and Biodiversity Conservation Act 1999
Slide 64: Approved development scheme
APPROVED DEVELOPMENT SCHEME For personal use only • Approved October 2011 • Secures development entitlements Commercial Property − 117,000m² Retail − 65,000m² Commercial − 650,000m² Industrial/service industry and showrooms Residential − 20,000 dwellings Retirement − Multiple villages
Slide 65: Approval process
APPROVAL PROCESS For personal use only Bells Reach (Early Release Area) Development Scheme Secure Development Rights Master Plan Approval Detailed Approval EPBC Federal Approval
Slide 66: Infrastructure
INFRASTRUCTURE For personal use only • Infrastructure charge benchmarks − Comparative charges of $25,000/lot1 − State-wide infrastructure cap $28,000/lot • Key infrastructure − Kawana arterial road extension − Rail connection to city line 2031 − Bruce Highway Interchange – to be funded by Federal Go
Slide 67: Community consultation
COMMUNITY CONSULTATION For personal use only • Extensive consultation − Continual stakeholder engagement • Communication process − Key concerns being addressed − Environmental benefits package developed − Public transport strategy to address community needs − Open space Master Plan to cater for envi
Slide 68: Development certainty
DEVELOPMENT CERTAINTY For personal use only • Current status − Development Scheme approved − Master Plan in preparation − EPBC response in preparation • Land uses − Preferred locations for main land uses • Infrastructure − Location of major infrastructure identified • Future planning process − ULDA
Slide 69: Masterplanning and Delivery
MASTERPLANNING AND DELIVERY BEN SIMPSON, PROJECT DIRECTOR – CALOUNDRA SOUTH For personal use only
Slide 70: Master plan outcomes
MASTER PLAN OUTCOMES For personal use only • Master Plan purpose – define next layer of planning, facilitate progressive and orderly development • Certainty - further define development entitlements, allow for flexibility • Vision - provides Stockland’s detailed development vision • Implementation -
Slide 71: Development staging
DEVELOPMENT STAGING For personal use only • First stage commenced Bells Reach provides immediate supply and FY12 settlements • Long term pipeline secured 25 – 35 year project • First residential settlements at Caloundra South ~300 lots sales per year from FY14, growing to ~900+ per year with multipl
Slide 72: A unique customer opportunity
A UNIQUE CUSTOMER OPPORTUNITY For personal use only Caloundra South Customer Insights
Slide 73: Key take outs
KEY TAKE OUTS For personal use only • Strong market dynamics • Certainty and flexibility in approval process • A vibrant and sustainable community