Stockland · ASX:SGP
Stockland — H1 2007 Earnings Presentation
42 slides from Stockland's earnings presentation, Feb 7, 2007
Slide 1: 1H07 Results Presentation
1H07 Results Presentation 7 February 2007 1 Agenda • Strategy • Finance and Capital Management • Divisional Performance • New Business Initiatives • Outlook Allisee, QLD 2 1
Slide 2: Vision and Key Benchmarks for World Class
Vision “To create a world class diversified property group” 3 Key Benchmarks For “World Class” • Financial performance • People and leadership • Customer satisfaction • Corporate responsibility and sustainability • Product development and innovation • Brand equity Durack Centre, Perth WA 4 2
Slide 3: The Stockland Team and Culture; Strategy
The Stockland Team and Culture • Dynamic, performance based culture • Competitive advantage as employer of choice • Tight knit and focussed Executive Team • High employee engagement (ISR 84%) Financial 40 Global High Performance Change in Tracked for Operating Change in Performing Companies 36 Month
Slide 4: Financial Highlights and Capital Management
Financial Highlights and Capital Management Hugh Thorburn • Financial Highlights • Capital Management 7 Macquarie Place, Sydney NSW 7 1H07 Results in Summary Net Profit* 7.2% $293.1m Earnings per Security* 3.9% 21.5 cents Distributions per Security 4.9% 21.5 cents NTA per Security 9.3% $4.96 * Net p
Slide 5: Capital Management; Consistent Delivery of Strategy
Capital Management 1H07 FY06 S&P Rating A-/Stable A-/Stable Weighted Average Debt Maturity 7.1 years 7.4 years Debt Fixed / Hedged 71% 61% Weighted Average Cost of Debt* 6.2% 6.1% Gearing (debt/total tangible assets) 26.7% 24.7% * Including all costs, fees and margins 9 Consistent Delivery of Strate
Slide 6: Retail Division - 1H07 Financial Highlights
Retail John Schroder • Financial Highlights • Market Indicators • Portfolio Performance • Growth Strategy • Outlook Stockland Bay Village, Bateau Bay NSW 11 Retail Division - 1H07 Financial Highlights Divisional operating profit $126.0m / + 6.6% Comparable net income growth 5.1%* Revaluations in 1H0
Slide 7: Retail Sales Performance and Leasing Performance
Retail Sales Performance and Market Indicators • Retail trade has proven resilient despite some headwind from rising interest rates • Stockland Centres’ MAT* sales are now at $4.5 billion with comparable growth of 3.1% • Comparable specialty shop growth is above inflation at 4.2% * See Annexures Sli
Slide 8: Retail Rental Growth and Development Pipeline
High Productivity Drives Retail Rental Growth 3 centres recently ranked in the Top 10 for total specialty, sub regional turnover* $/m2 Specialty sales* 9,000 Spec MAT Ranking Centre $8,140 $ per m2 8,000 1 Stockland Green Hills 10,705 $7,233 7,000 5 Stockland Merrylands 10,090 10 Stockland Townsvill
Slide 9: Retail Management Team and Outlook
Retail Management Team - Strengthened • New General Managers appointed – Stuart Langeveldt - General Manager, Marketing (internal transfer and promotion) – Stewart White - General Manager, Development, Design and Construction – Simon Bird - General Manager, Finance • Additional New Business role ide
Slide 10: Commercial and Industrial - 1H07 Financial Highlights
Commercial and Industrial Steven Mann • Financial Highlights • Commercial • Industrial • Development Pipeline • Outlook Optus HQ, North Ryde NSW 19 Commercial and Industrial - 1H07 Financial Highlights Divisional operating profit $113.3m / + 10.9% Comparable net income growth 4.2% Revaluations in 1H
Slide 11: Commercial - Market Indicators and Acquisitions
Commercial - Market Indicators • Sustainable growth in “resource” states • Vacancy is at record lows in Brisbane / Perth • Short-term supply side constraints in Brisbane / Perth • Supply to pick up again from 2009 6% Base Office Demand Demand Office Supply 2005-06 2005-06 2007-08 300 2007-08 2009-10
Slide 12: Industrial Market Commentary and Development Pipeline
Industrial - Market Commentary/Acquisitions • Strong supply levels continue to be mostly pre-commitment based • Industrial sector output is forecast to rebound, particularly for transport and storage • 7 acquisitions for $270m / 7.3% yield* • Increased portfolio exposure to Melbourne, now 20% * By v
Slide 13: Commercial and Industrial Outlook; Development Division
Commercial and Industrial Outlook • Deliver rental reversions for office acquisitions in QLD / WA • Acquisitions in growth markets and UPF partnership opportunities • Continue the momentum of the development pipeline • Target world class sustainability measures Piccadilly, Sydney NSW 25 Development
Slide 14: Development Division - 1H07 Highlights and Net Profit Growth
Development Division - 1H07 Highlights • Operating profit up 2.4% to $113 million • Achieved strong presales in the Apartment projects released • Successfully repositioned several Residential Communities projects • Achieved a number of key development approvals • Continued to make progress on Retire
Slide 15: Development Division Results Summary
Development Division - Results Summary 1H07 1H06 Residential Apartments Total 1H07 Communities Performance Units / Lots Sold No. 1,898 1 1,899 2,096 Revenue $m $440m $0m $440m $370m Operating Profit $m $116m ($3m) $113m $110m Net Margin % 26% N/A 26% 30% Asset/Pipeline Gross Assets $m $1,985m $508m
Slide 16: Apartments - Key Achievements
Apartments - Key Achievements • Successful pre-sales on projects launched to market • The Hyde • Prince Henry • Achieved approvals for Tooronga project (circa $500m) • Continued market leadership in design and sustainability initiatives Tooronga, Glen Iris VIC 31 Apartments - Key Achievements • Stro
Slide 17: Retirement Living and Residential Market Overview
Retirement Living - Key Achievements • Progressing in line with our market entry strategy • Focus on unlocking sites within our Residential Communities Portfolio • Seek acquisitions only when they represented value • No desire to enter the aged care market – preference was to form strategic alliance
Slide 18: Residential Market Overview; Development Division Outlook
Residential Market Overview MARKET PERFORMANCE Last 6-12 Months Next 6-12 Months Has been abnormally soft - particularly in the outer suburbs Land sales fallen to record lows Improving demand – NSW late CY2007 Planning complexity and costs have stalled projects Production relative to population is o
Slide 19: Development Division Summary; Unlisted Property Funds
Development Division - Summary • Delivered another record profit performance • Well positioned to achieve our full year forecast - strong level of contracts on hand entering into 2H07 • Continue to build our market share as our development pipeline is released 37 Unlisted Property Funds Highlights •
Slide 20: Strategy; Competitive Advantage From Diversity
Strategy • Market leadership in each of our businesses • Active Capital Management to provide to lowest cost funding solutions for business growth • Collaborate across the businesses to create value adding solutions • Further diversify our businesses both by sector and geography to broaden our incom
Slide 21: Strategy; Stockland Accelerates UK Expansion with Halladale
Strategy • Market leadership in each of our businesses • Active Capital Management to provide to lowest cost funding solutions for business growth • Collaborate across the businesses to create value adding solutions • Further diversify our businesses both by sector and geography to broaden our incom
Slide 22: Agenda; Stockland's UK Strategy
Agenda • Stockland’s UK Strategy • Acquisition Rationale • Overview of Halladale Business • Stockland Halladale Platform • Transaction Summary • Future Growth Strategy Aldermary House, London, EC4 43 Stockland’s UK Strategy • Leverage Stockland development and asset management skills • Gap in market
Slide 23: Acquisition Rationale; Halladale Business Model
Acquisition Rationale Why Halladale? • Great strategic fit • Management and development platform across retail and office • Co investment model underpinned by selective use of balance sheet • Established brand and infrastructure • Track record of delivering results • Team oriented culture • The righ
Slide 24: Halladale Portfolio
Halladale Portfolio Total Assets Under Management £ million % allocation Asset management 457.4 50% Development 109.1 12% Co-investment fund management (1) 344.0 38% TOTAL 910.5 100% Asset Management Development Co-investment fund management CReAM 64% Co-Investment 86% Nelson 9% Co-Investment 64% Di
Slide 25: Halladale Funds Management Platform; Combined Platform
Halladale Funds Management Platform • High quality Institutional Joint Venture Capital partners • Bank of Scotland • Citigroup Property Investors • The Carlyle Group • Tyburn Lane Private Equity • Anglo Irish Bank • Co-investment fund management • CReAM • Nelson • Rynda funds management platform • E
Slide 26: Stockland Halladale Management; Transaction Summary
Stockland Halladale Management David Lockhart Executive Chairman Ken Lindsay Lisa Scenna Joint Managing Director Joint Managing Director Senior Management Team 70 Employees 51 Transaction Summary • All cash recommended offer of 225p per Halladale share • Values Halladale at £171m (A$427m) on a fully
Slide 27: Financial Impact; Future Growth Strategy
Financial Impact • Group earnings impact(1): • FY07: No impact on 5% EPS guidance • FY08: Neutral impact (due to fair value accounting adjustments) • FY09: Accretive • Funding by debt from existing facilities • Stockland pro forma gearing (D/TTA) as at 31 December 2006 increases from 26.7% to 30.7%
Slide 28: Outlook; Annexures
Outlook • On track for 5% EPS growth in FY07 • Strong and respected platform and market positioning • Key strategic initiatives to drive future value • Clear strategy to drive TSR outperformance Stockland Wetherill Park, Sydney NSW 55 Annexures Prince Henry, Sydney NSW 56 28
Slide 29: Summary of Results 1H07; Total P&L Effect of Interest
Summary of Results – 1H07 $m Cents per security Operating Profit 293.1 21.5 Net gain from fair value adjustment of investment properties 479.1 Net unrealised loss on financial instruments (0.5) Net loss on sale of investment properties 7.2 Security holders’ finance costs - Reported Statutory Net Pro
Slide 30: Debt Maturity Profile; Retail Portfolio Sales
Capital Management - Debt Maturity Profile 800 700 600 500 ($m) 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2036 As at 31 Dec 2006 Commercial Paper Bank Debt Domestic Medium Term Notes US Senior Term Notes Euro Medium Term Notes 59 Retail Portfolio Sa
Slide 31: Retail Sales - Portfolio Summary
Retail Sales - Portfolio Summary Total MAT Comp Growth Specialties MAT Occupancy Cost Centre ($m) (%) ($/m²) (%) Stockland Bay Village 167.0 N/A 7,142 14.8 Stockland Bathurst 117.9 (0.5) 8,395 11.5 Stockland Baulkham Hills 75.8 N/A N/A N/A Stockland Bull Creek 101.9 7.2 7,397 13.7 Stockland Burleigh
Slide 32: Retail NZ Portfolio Summary; Development Pipeline
Retail Sales - NZ Portfolio Summary Total MAT % Comp. Specialities % Occupancy ($m) Growth ($/m2) Cost Lynnmall Shopping Centre (NZ) 218.2 4.3 (NZ) 7,223 13.7 Botany Town Centre (NZ) 302.8 3.6 (NZ) 7,940 13.0 Manukau Supa Centre N/A N/A N/A N/A TOTAL (NZ) 521.0 Inclusive of GST 63 Retail Division -
Slide 33: Retail Division - Revaluations; Commercial Market Commentary
Retail Division - Revaluations Current Valuation Previous Book Increment % Movement Current Cap Rate Property ($m) Value ($m) ($m) % Stockland Shellharbour 252.0 228.9 23.1 10.1% 6.00 Stockland Taralgon 71.2 61.1 10.1 16.5% 6.75 Stockland Bathurst 83.0 77.2 5.8 7.5% 6.25 Stockland Merrylands 151.0 1
Slide 34: Industrial Market Commentary; Commercial and Industrial Revaluations
Industrial and Office Parks – Market Commentary SGP Under Pre-Commitment Land Values Rental Growth Portfolio Construction m² Sydney 45% 782,000 53% Ï Moderate Melbourne 20% 594,000 80% Ï Good Brisbane 14% 444,000 60% Ï Strong Adelaide 5% 165,000 100% Ï Moderate Macquarie Park 16% 131,000 78% Ï Stron
Slide 35: Commercial and Industrial - Revaluations
Commercial and Industrial - Revaluations Commercial (cont.) Current Previous Book Current Cap Increment % Movement Property Valuation Value Rate ($m) ($m) Waterfront Place $237.5 $178.1 $59.4 33.3% 6.13% 150 Charlotte Street $57.0 $47.0 $10.0 21.4% 7.50% Trace and Todd $21.3 $17.3 $4.0 23.1% 8.50% C
Slide 36: Commercial and Industrial Lease Expiry Profiles
Commercial Lease Expiry Profile June 2006 December 2006 Lease expiry profile Lease expiry profile Vacant Vacant FY07 1% FY07 4% 3% 16% FY08 12% FY11+ 39% FY08 FY11+ 12% 47% FY09 15% FY09 14% FY10 FY10 19% 18% WALT: 4.2 years WALT: 4.2 years 71 Industrial and Office Parks Lease Expiry Profile June 20
Slide 37: Commercial and Industrial Acquisitions and Development Pipeline
Commercial and Industrial - 1H07 Acquisitions Purchase Price Market Cap Initial Yield WALE ($m) Rate Commercial Durack* WA 49 7.3% 7.6% 2.5 27-29 High Street* QLD 5 7.4% 7.3% 2.0 300 Ann Street* QLD 40 5.8% 7.0% 2.5 45 St Georges Terrace WA 57 6.6% 6.8% 5.4 Garden Square Office Park QLD 57 7.0% 7.5%
Slide 38: Development Division - Consistent Strategy and Geographic Diversity
Development Division - Consistent Strategy Gross Assets $516m Gross Assets $2,493m 30 June 2002 31 December 2006 Apartments Apartments 20% 11% Residential Residential Communities Communities 80% 89% 75 Development Division - Geographic Diversity National Queensland WA 13% Gold Coast Sunshine* 17% 22
Slide 39: Development Product Diversity; Residential Lots Sold
Development Division – Product Diversity Rural Retirem ent Living 4% Fam ily 4% 18% Courtyard 15% Large 4% C&I & Retail 6% Conventional 19% Tow nhouses 17% Sm all Lots Apartm ents 10% 3% As at 31 December 2006 77 Residential Communities - Lots Sold 1H07 2H06 1H06 No. Lots Avg Price No. Lots Avg Pric
Slide 40: Annexure: Case Studies - Baytree Centre and West Bromwich
Annexure: Case study Approach to development: Baytree Centre • Retail and commercial mixed use precinct • Co-investment partner: Bank of Scotland • Refurbishment of existing shopping centre and conversion of commercial tower into residential • Sold to core investor for £41.6 million 79 Annexure: Cas
Slide 41: Key Properties under Management; CReAM and Nelson Funds
Key Properties under Management Offices 1 Shaftesbury House, Glasgow 2 The Strand, London WC2 3 Becket House, Cheapside, London EC2 4 Moorgate, London EC2 5 Chubb Tower, Sunbury-on-Thames 6 Aldermary House, London EC4 7 Tudor Street, London EC4 14 8 Hammersmith, London W14 1 12 9 16 9 Fountain House
Slide 42: Halladale Business Overview; Overview of Key Funds
Halladale business overview Overview of Key Funds Fund AUM Comments £m CPI Retail Active 221 • Launched in 2004 Management • UK focused retail property fund Programme • Launched in partnership with Citigroup Property Investors (“CReAM”) • Halladale undertakes asset manager and property manager roles