Stockland · ASX:SGP
Stockland — Non-Deal Roadshow (November 2005)
35 slides from Stockland's roadshow presentation, November 2005
Slide 1: Investor Presentation November / December 2005
INVESTOR PRESENTATION November / December 2005 Merrill Lynch Australasian Investor Conference 2004
Slide 2: Presentation Outline
Presentation Outline • Stockland’s Position in the LPT Sector • Stockland’s Business Model • Financial Performance • Operating Divisions – Profit Drivers • Future Outlook and Group Strategy 2 Merrill Lynch Australasian Investor Conference 2004
Slide 3: Australian REIT Sector
Australian REIT Sector • Australia has one of the world’s most highly securitised real estate markets • REITs have been a core holding of Australian investors for decades • Now attracting more overseas interest as real estate markets are globalised Investment Grade % Real Estate REITs as % of Real E
Slide 4: Stockland's Position in Australian LPT Sector
Stockland’s Position in Australian LPT Sector • Stockland’s current position – 2nd largest Australian LPT – Most diversified Australian LPT – Market capitalisation over A$8.0bn# – 10% of the LPT 200 Index# – High liquidity (85%* moving annual) 4 # 14 November 2005 *Source: UBS October 2005 Annualise
Slide 5: Business Diversification
Business Diversification Hotels EBIT A$5m EBIT A$220m EBIT A$197m Shopping Centres Residential Development EBIT A$161m EBIT A$59m Office Buildings Industrial Property 5 EBIT as at FY05
Slide 6: Stockland's Business Model
Stockland’s Business Model EBIT Assets FY05 30 June 2005 Strategic Strategic Actual Actual Weighting Weighting Property Development 31% 27% Hotel Management 1% <1% Subtotal 32% 20-40% 27% 20-30% Shopping Centres 34% 40% Commercial 25% 22% Industrial & Office 9% 11% Parks 6 Subtotal 68% 60-80% 73% 70
Slide 7: Stockland's Business Model
Stockland’s Business Model • Strategic rationale for diversification: Reduces volatility in returns Optimises risk/return Enhances returns through cross divisional capability • Assets are managed “internally” Greater alignment of interests than “external” management model Focus on maximising income
Slide 8: Financial Performance
Financial Performance Net Profit After Tax Growth in Earnings per security 14% A$m 600 12% 517* 500 456* 10% 400 8% 285* 300 250 6% 198 200 4% 100 2% 0 0% FY01 FY02 FY03 FY04 FY05 FY00 FY01 FY02 FY03 FY04 FY05 SGP Growth REIT Sector average Source: Merrill Lynch * Net profit after income tax and bef
Slide 9: Total Shareholder Returns (TSR)
Total Shareholder Returns (TSR) Strong dividend yield and dividend growth has driven TSR outperformance vs LPT Index & ASX 200 240 210 Cumulative 180 Total Return 150 (Share Price Movement + Dividends) 120 Oct 2000 = 100 90 60 SGP REIT 200 ASX 200 30 Nov-00 Mar-01 Jul-01 Nov-01 Mar-02 Jul-02 Nov-02
Slide 10: Capital Management
Capital Management • Strategy to maintain relatively low gearing • Enables Stockland to capitalise efficiently on opportunities • Additional debt capacity currently >A$550m within existing covenants Gearing (Debt / Assets) 45% Stockland vs LPT Index 40% LPT Index 35% 30% 25% 20% 15% Stockland 10% 5%
Slide 11: Capital Management
Capital Management • A- S&P credit rating • Low weighted average cost of debt 6.1%* • Long dated debt maturity profile: 8.5 years* 500 As ian MTN 400 US Senior Term Notes Dom es tic Medium Term Notes 300 (A$m) 200 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 12: AIFRS
AIFRS • No effect on – Business operations – Cash flows – Debt covenants – Distributions • Potential income statement volatility, due to – Revaluation of investment property – Goodwill adjustments – Mark to market of financial instruments that do not qualify for hedge accounting – UIG53 profit recog
Slide 13: Stockland Shopping Centres
Stockland Shopping Centres PORTFOLIO SUMMARY* Number of Properties 40 Total Asset Value A$3.0bn Number of Tenants 2,700 Total sales per annum A$4.0bn Total customer visits 128m % of group EBIT FY05 1334% * 30 June 2005
Slide 14: Shopping Centres Highlights – FY05
Shopping Centres Highlights – FY05 Divisional operating profit A$214.2m / +7.5% Comparable net income growth 4.6%* Revaluations in FY05 A$242.3m Portfolio has delivered a total return of 16.4%pa over the past 4 years 3,000 25% 20.6% Total Return % 2,500 Asset Value A$m 16.3% 20% 14.1% 15.4% 2,000 15
Slide 15: Shopping Centres – Profit Drivers
Shopping Centres – Profit Drivers • High barriers to entry (land use, retailer demand) • All 40 Stockland centres anchored by Coles Myer and/or Woolworths • Focus on non discretionary value/convenience centres • A$700m+ capex budget for expansion of existing centres – 5 year programme – accretive to
Slide 16: Commercial and Industrial
Commercial and Industrial PORTFOLIO SUMMARY* Number of Properties 53 Total Asset Value A$2.6bn Number of Tenants >500 Top 10 Tenants 24% % of Net Income Largest Building <9% Exposure % of group EBIT FY05 34% 16 * 30 June 2005
Slide 17: Commercial & Industrial Highlights – FY05
Commercial & Industrial Highlights – FY05 Division operating profit A$220.1m Comparable net income growth 3.5%* High portfolio occupancy 99% Revaluation increase at 30 June A$37.1m 84,000m² Optus prelease at Macquarie Park * Excludes impact of acquisitions, disposals and development 17
Slide 18: Commercial & Industrial – Profit Drivers
Commercial & Industrial – Profit Drivers • Major tenants include Government, ANZ, Westpac, IBM, Commonwealth Bank, Sony, Optus • 70% of buildings in Sydney, Australia’s strongest market • >A$550m of organic development pipeline • Strong focus on de risking leasing profiles. Lease Expiry Profiles – d
Slide 19: Development Division
Development Division PORTFOLIO SUMMARY* Number of Properties 82 Book Value A$2.2bn (Historic Cost) Total End Value A$14.5bn Number of Lots 65,000 % of group EBIT FY05 31% EBIT Split % Apartments 6% % Communities 1994% * 30 June 2005
Slide 20: Development Division Highlights
Development Division Highlights • Operating profit up 25.3% to $197 million • Residential Communities margin 35% (excluding Lensworth) • Successful acquisition and integration of Lensworth • A further 9 acquisitions that will yield 3,600 lots (excluding Lensworth) • Launched 7 new projects to market
Slide 21: Development Division Net Profit & Inventory
Development Division Net Profit & Inventory A$m A$bn 250 4 Net Profit $ Million $197m 200 Inventory 25% 3 $157m 150 67% 2 49% $94m 100 $63m $48m 31% 1 50 0 0 FY01 FY02 FY03 FY04 FY05 21
Slide 22: Development Division – Consistent Strategy
Development Division Consistent Strategy 30 June 2002 30 June 2005 Apartments Apartments 16% 11% Residential Residential Communities Communities 84% 89% Gross Assets A$516 m Gross Assets A$2,184 m • Retained focus on Residential Community Development • Enhanced core skills and expertise • Not expose
Slide 23: Residential Development – Profit Drivers
Residential Development – Profit Drivers • Market leader in development of master planned communities • Development land is a scarce commodity • Over 65,000 future dwelling sites under control – end value A$14.5bn • Stockland already control 100% of stock to achieve our next 3 year internal revenue
Slide 24: Australian Residential Market Analysis
Development Division Australian Residential Market Analysis Building Approvals New Home Sales Patterns Original Series, Private Sector, Australia Market Peak Selected States 12,500 250 Index NSW Index VIC Index QLD Index WA 10,000 200 Index: Feb-00 = 100 No. of Dwellings 7,500 150 5,000 100 2,500 50
Slide 25: Queensland Residential Market Outlook
Development Division Queensland Residential Market Outlook Building Approvals Employment Growth EQUIVALENT UPTURN 1994 CYCLE Original Series, Private Sector, QLD (Base May-91) QLD vs Australia, Annualised 3600 8.0% 7.0% QLD Australia 3000 6.0% Number of Dwellings Annualised Growth 2400 5.0% 4.0% 180
Slide 26: NSW Residential Market Outlook
Development Division NSW Residential Market Outlook Building Approvals Population Growth Original Series, Private Sector, NSW NSW vs Australia, Annualised Change 3,500 1.6% 3,000 1.4% 2,500 1.2% Annualised Growth No. of Dwellings 1.0% 2,000 0.8% 1,500 0.6% 1,000 0.4% 500 NSW Australia Houses 10 Year
Slide 27: VIC Residential Market Outlook
Development Division VIC Residential Market Outlook Purchaser Sentiment Building Approvals Time to Buy a Dwelling Index, Quarterly, Victoria Original Series, Private Sector, VIC Base 100 = balance between positive & negative responses 80 4,000 3,500 60 3,000 40 No. of Dwellings 2,500 20 2,000 0 1,50
Slide 28: WA Residential Market Outlook
Development Division WA Residential Market Outlook Building Approvals Employment Growth Original Series, Private Sector, WA WA vs Australia, Annualised 8.0% 2,400 7.0% 2,000 6.0% WA Australia 5.0% Annualised Growth No. of Dwellings 1,600 4.0% 1,200 3.0% 2.0% 800 1.0% 0.0% 400 Houses 10 Year Average
Slide 29: Future Outlook & Group Strategy
Future Outlook & Group Strategy • FY06 – Strong momentum carried forward from FY05 – Distribution policy – no disadvantage from AIFRS transition • Goal of market leadership in each of our businesses • Focus on growing new business capabilities and platforms • UPF circa FUM $400m • Current EBIT mix t
Slide 30: Annexures
Annexures 2 30
Slide 31: Shopping Centres – Development Pipeline
Shopping Centres – Development Pipeline Development Anticipated Project Status Cost ($'m) Yield Stage 1 opened Feb'05, Stage 2 opened Apr'05, final completion by Bay Village 44.1 > 11.0% Oct'05 Glendale 19.6 11.7% Completion Dec’05 Burleigh Mktplace 32.3 8.5% Stage 1 opened Mar'05, with final comple
Slide 32: Industrial & Office Parks – Development Pipeline
Industrial & Office Parks – Development Pipeline Forecast Total Project Target Building Property Commencement Cost (A$m) Yield Area (m²) Centre Court (NSW) Under construction 282 7.4% 84,000 Yennora (East/West Land) 60% Under construction 35 8.6% 33,000 Greystanes (NSW) Commenced 39 8.3% 36,000 Sydn
Slide 33: Commercial – Market Commentary
Commercial – Market Commentary Commercial Market Commentary Net SGP SGP Market Absorption m² Supply Under Portfolio Vacancy Vacancy (12 mths to Construction m² Jun-05 Jun-05 Sep ’05* Sep-05) Sep-05 Sydney CBD 42% 5.7% 11.2% Ð 114,832 158,061 North Sydney 14% 7.7% 10.7% Ð 13,253 49,771 Suburban Sydne
Slide 34: Development Division – Geographic Diversity
Development Division – Geographic Diversity National Queensland WA 4,750 Gold Coast 5,710 VIC & SA Caloundra 13,000 Downs 12,000 QLD 35,550 Brisbane 7,640 Sunshine Coast 4,755 NSW & ACT 11,700 North QLD 5,445 Total Units / Lots 65,000 34
Slide 35: Disclaimer
Disclaimer Corporation/ Responsible Entity Stockland Corporation Limited ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741 16th Floor 157 Liverpool Street SYDNEY NSW 2000 Disclaimer of Liability: While every effort is made to provide accurate and complete information, Stockland does