Stockland · ASX:SGP
Stockland — H1 FY2004 Earnings Presentation
68 slides from Stockland's earnings presentation, Feb 4, 2004
Slide 1: Stockland
© Stockland
Slide 2: Highlights
Highlights Board & Management December 2003 Results Asset Diversification Divisional Performance — Shopping Centre Division — Commercial & Industrial Division — Development Division — Saville Hotel Group Capital Management Future Direction & Strategy
Slide 3: EPS/U and DPS/U growth above forecasts in ADP Bidder's Statement
EPS/U and DPS/U growth above forecasts in ADP Bidder’s Statement Strong financial performance from all operating divisions ADP properties fully integrated and performing ahead of expectation All 100% owned ADP assets managed “in house” and shopping centres rebranded Increased size following ADP take
Slide 4: Focus on adding value through internalised management structure
Focus on adding value for shareholders through Stockland’s internalised management structure Further strengthening of management team in line with the growth of the business Smooth transition of CFO role Appointment of Graham Bradley as a Non Executive Director
Slide 5: December 2003 Results
© Stockland
Slide 6: Revenue and Net Profit After Tax
REVENUE NET PROFIT AFTER TAX $668.6 $219.8* Half Year Ended 31 December * Excluding individually significant items 2003
Slide 7: EPS/U DPS/U
EPS/U DPS/U ¢ ¢ 20 18.8* 20 19 19 18.0 18 18 17 16.3 47 16 16 15.6 15 45 14 44 13 13 12 12 "4 11 10 40 1999 2000 2001:+«=«-2002-—S«2003 1999 2000 += 2001.-«S«- 2002 -~= 2003 Half Year Ended 31 December * Excluding individually significant items
Slide 8: Dec Half Year
Dec 03 Half Year sm Security Reported profit after tax 219.8 18.8¢ Capital profits (0.2) Unrealised gain on “mark to market” of interest rate hedges 7.3 Write off of premium on acquisition of ADP (99.2) Reported statutory net profit 127.7 Net transfers from Reserves 91.9 Amount available for distrib
Slide 9: Asset Diversification
ASSET DIVERSIFICATION aa , © Stockland
Slide 10: Asset diversification Dec vs Jun
31 Dec 03 30 Jun 03 14% \40% 30% 33% BB industrial & Office Parks [1 Hotels Development Division pi $6.2bn a Shopping Centres HE commercial $5.6bn
Slide 11: Shopping Centre Division
LOOM © Stockland
Slide 12: Highlights
HIGHLIGHTS « Divisional Operating Profit of $98.6 million « Comparable net rental income growth of 4.5% (excluding ADP assets) « Management team has successfully integrated ADP portfolio " High occupancy levels with vacancy rate currently <0.5% GLA « Arrears only 0.1% of annual billings « Rebranding
Slide 13: Rebranding
REBRANDING
Slide 14: Market Commentary
MARKET COMMENTARY = Overail retail environment remains healthy =» Exchange rate movement has improved retailer margins in many categories = Potential interest rate movements remain a threat to consumer confidence = Past twelve months: — Fresh food, takeaway food, household goods and discount departm
Slide 15: Acquisitions/Disposals
ACQUISITIONS/ DISPOSALS = Strategy remains focused on acquiring sub-regional, district and specialty centres with development/ remix potential = Since July 2003 Stockland has settled: — Shin Yen Portfolio ($119m) — Forster Shopping Centre ($41m) — Bridge Plaza ($13m) = Sale of Rockhampton City Centr
Slide 16: Stockland Australian Presence
STOCKLAND AUSTRALIAN PRESENCE NEW ZEALAND PROPERTIES “@ sou ausiqAUA antares Pqueews.ann sien yeti Prk, ‘Bathoast, Slerrase Forster ‘Gieee Hie Jeuroand owe ‘Shhesbowe ‘Batwonans Bay Current No. of Centres 38 Asset Value $2.5b6n GLA 877, 535m? No. of Tenancies 2,700 MAT $4.0bn* Customer Traffic 127m
Slide 17: Development
DEVELOPMENT Under Construction/ Approved for Commencement: Est. Capital Est Project Expenditure Yield Status Piccadilly 9 8.0% _ Complete 70% compiete, opening mid 2004. Specialty Batemans Bay 58 8.4% | store leasing is well advanced with 60% of specialty stores committed Signed agreement for Lease
Slide 18: Leasing and Management
LEASING AND MANAGEMENT » 255 specialty shop renewals/ new leases completed in half year period = Average renewal rental increase of 13% (110 Renewals) « 7 Stockland shopping centres now ranked in Top 10 centres nationally for specialty MAT turnover/ m2 (centres 15,000m2 to 40,000m2) Stockland Centre
Slide 19: MAT Growth by Category
MAT GROWTH BY CATEGORY Actual Actual % % Comparable $bn Growth Growth Supermarkets 1.4 4.1 2.1 DDS 0.7 7.6 44 Specialties 1.1 11.8 7.7 Other 0.3 23.0 (1.6) Total $3.5bn 8.7% 4.2% Note: Figures inclusive of GST Excludes New Zealand portfolio Karrinyup weighted at 25%
Slide 20: Lease Expiry Profile
LEASE EXPIRY PROFILE = Weighted average lease expiry of 7 years = Specialty expiries in FY04 to FY07 provide opportunities for income growth FY04 Th FYO5 11% FY06 8% FY07 FY08 Me 67% By NLA as at 31 December
Slide 21: Future Direction
FUTURE DIRECTION « Continue to drive efficiencies from our expanded portfolio « Focus on driving rental growth from high specialty sales ($8,000/m2) and low specialty occupancy costs (10%) " Delivery of development pipeline « Depth and experience of management team will ensure growth targets are ach
Slide 22: Commercial & Industrial Division
oT © Stockland
Slide 23: C&I Highlights
C&l HIGHLIGHTS « Division Operating Profit of $104.9 million " Comparable net rental income growth (excluding ADP assets): ~ Commercial 3.6% — Industrial -1.7% (impacted by Yennora development) « ADP integration complete with inhouse property management in place « Average monthly arrears 0.6% of ann
Slide 24: Market Commentary
MARKET COMMENTARY % of Market* SGP 2003 Net* Supply Under* SGP Vacancy Vacane Absorption Construction Portfolio Dec 03 y m? m? Sydney CBD 49% 10.3% A 23% -92,351 288,122 North Sydney 16% 118% 5.9% -18,781 9,500 Suburban Sydney 10% 11.5% A 01% -22,021 10,200 Melbourne 10% 10.5% A 0.0% ¢% = -11,297 32
Slide 25: Commercial Highlights
COMMERCIAL HIGHLIGHTS « Proactive leasing strategy with 40,000m? leased/ renewed in half year period « Portfolio vacancy reduced from 3.6% in Jun 2003 to 2.0% as at Dec 2003 with strong tenant retention « Launched Stockland Customer Service platform
Slide 26: Commercial Highlights (con't)
COMMERCIAL HIGHLIGHTS (con't) " Proactive repositioning of portfolio to improve quality and manage expiry risk Net Movement to Disposals Sale Price Book Value $m $m % 504 Pacific Hwy / 95 Nicholson St, 35.4 24 7% St Leonards 2-10 Wentworth St, Parramatta 29.2 1.9 7% 33 Herbert St, St Leonards 24.2 1
Slide 27: Lease Expiry Profile
LEASE EXPIRY PROFILE vent FY04 om 4% | FY05 FYO8+ | 19% 35% /FY06 15% FYO7 25% Average lease expiry 3.2 years Vacancies 000m? Northpoint, Nth Sydney 3.3 Underwood House site, Sydney 1.7 Exchange Plaza, Perth (50%) 1.0 135 King Street, Sydney (50%) 1.0 Others 2.4 Total vacancies 9.1 Total NLA 459.1 V
Slide 28: Industrial & Office Parks
INDUSTRIAL & OFFICE PARKS TY ell nh © Stockland
Slide 29: Industrial Market Commentary
INDUSTRIAL MARKET COMMENTARY % of SGP aesS | 2003 Supply SGP Portfolio Vacancy i P m2* rend Sydney 51% 1.6% a 395,000 v Melbourne 10% 10.2% aR 477,600 AR Brisbane 7% 3.0% a 283,300 # Adelaide 6% 0.0% o 73,000 4 North Ryde 26% 13.2% n 36,900 V Office Parks * Source: Jones Lang LaSalle
Slide 30: Industrial & Office Park Highlights
INDUSTRIAL & OFFICE PARK HIGHLIGHTS « Proactive leasing strategy with 80,000m? leased/ renewed during haif year period « Industrial and Office Park vacancy improved from 6.0% in Jun 2003 to 3.1% in Dec 2003 « Disposal of 28 Rodborough Rd, Frenchs Forest at book value $13 million « Acquisition of Syd
Slide 31: Industrial & Office Park Highlights (cont.)
INDUSTRIAL & OFFICE PARK HIGHLIGHTS (cont.) = Yennora Building 7 redevelopment: — 74,000m? including roof raising, new slab, lowered docks — 11 month programme completed in Jul 2003 — 100% leased to Linfox, Toll, LG and ACI — Actual return on cost 9.5% (forecast 9.0%) — Revaluation increment of $8.3
Slide 32: Lease Expiry Profile
LEASE EXPIRY PROFILE Vacant 3% FY04 ] 12% FY08+ 35% FY05 24% FY07 FY06 17% 9% Average lease expiry 3.1 years Vacancies 000m? Brooklyn (VIC) 17.3 Centrecourt (NSW) 3.9 Hendra (QLD) 3.0 Khartoum Rd, North Ryde (NSW) 24 Others 2.4 Total vacancies 29.0 Total NLA 948.0 Vacancy rate 3.1% (Excludes propert
Slide 33: C&I Future Direction
C&l FUTURE DIRECTION « Focus on de-risking the lease expiry profile for FY05 « Continue to dispose of non core assets and reinvest in higher quality properties « Drive outgoings savings from the Stockland Customer Service platform « Unlock development potential from Industrial and Office Park Portfo
Slide 34: Development Division
_DEVELOPMENT DIVISION © Stockland
Slide 35: Highlights
HIGHLIGHTS Division Operating Profit of $84.1 million Residential Estates margins increased from 24% to 30% Successful acquisitions strategy comprising 11 new projects Launched 4 new projects to market
Slide 36: Profit and Asset Growth
PROFIT AND ASSET GROWTH 90 - - 1,200 80 - 70 L 4,000 E : = 604 -g00 wy i = 504 ro 2 / 600 ¥ 6 40 + < a 30 4 -400 8 2 24 6 L 200 10 4 0 0 2000 2001 2002 2003 31 December Half Year
Slide 37: Key Performance Indicators
KEY PERFORMANCE INDICATORS Residential Apartments Retail Estates Projects Dec 2003 Half Year Performance Units / Lots sold 1,609 205 0 Revenue $249m $90m* $0m Operating Profit $74.0m $9.5m* $0.6m Net Margin 30% 10% N/A Key Statistics Gross Assets $725m $187m $95m Projects 63 11 11 Units / Lots contr
Slide 38: Continued Improvement in Residential Estates Performance
CONTINUED IMPROVEMENT IN RESIDENTIAL ESTATES PERFORMANCE Increased profit performance has been driven by a combination of volume and margin growth ™ Focus on creating high quality owner occupier product ™ Proactive price escalation strategies ™ Launch of new projects
Slide 39: Residential Estates
RESIDENTIAL ESTATES Dec 2003 Half Year Jun 2003 Year No. Av. Price No. Av. Price Lots Sold $000 Lots Sold $000 NSW 224 $281 613 $201 vic 318 $110 628 $90 QLD 689 $158 1,049 $106 WA 378 $103 784 $85 Total 1,609 $153 3,074 $116
Slide 40: Residential Estates: Margin and Volume Growth
RESIDENTIAL ESTATES MARGIN AND VOLUME GROWTH 2,000 1,800 1,600 be 1,400 1,200 1,000 800 600 400 Lot Sales 1999 2000 2001 2002 ; Half Year Ended 31 December wojen Lots Sold <li Margin 2003 35 30 25 20 15 10 Net Margin on Revenue %
Slide 41: Solid Performance from Apartments
SOLID PERFORMANCE FROM APARTMENTS ABODE » 95% construction complete (est. completion March 2004) » 71% sold = Construction costs as per budget = Project profitability in accordance with feasibility SOUTHBANK » 88 residential apartments released to market » Achieved 52 unconditional sales and 17 depo
Slide 42: Residential Market Overview
RESIDENTIAL MARKET OVERVIEW « Market has slowed over past three months principally due to interest rate rises " Limited price escalation expected over the next 6-12 months « Fundamentals are still quite strong for the owner occupier market (low inflation — low unemployment) " Pockets of oversupply,
Slide 43: Residential Building Approvals
No. of approvals, Monthly RESIDENTIAL BUILDING APPROVALS $14,000 FHOG Reduced 20,000 $14,000 FHOG Introduced nal 17,500 Introduction of GST Apartments/ Townhouses 0 2 + td o i Cy o o aan a “ 2 ° @ ® S 79 a S 3S 8 2 > > > > > > 3 3 z z rq 3 S 9 o Cj 3 3 3} 3 3 3 2 2 2 2 z 2 z z z z 3 Source: ABS
Slide 44: Managing Through the Cycles
MANAGING THROUGH THE CYCLES r 3,000 r 2,500 r 2,000 + 1,500 r 1,000 r 500 T T T T T T T T T T T T + 0 Building Approvals (no.) 200,000 5 180,000 + 160,000 140,000 - 120,000 - 100,000 80,000 - 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Financial Year Ending M@& Total Private App
Slide 45: Business Strategy
BUSINESS STRATEGY « Continued focus on core activity of Residential Estates " Opportunities for growth from our Apartment and Retail Projects businesses « Strong level of contracts on hand
Slide 46: Contracts on Hand as at December 2003
CONTRACTS ON HAND AS AT 31 DECEMBER 2003 Business Unit Units/ Lots Contract Value Residential Estates 849 $141.5m Apartments 221 $67.3m Retail Projects 4 $40.0m TOTAL 1 074 $248.8m
Slide 47: Business Strategy
BUSINESS STRATEGY ISHHONS h to acqu ic approac « Strateg
Slide 48: Restocking Over Past Months
RESTOCKING OVER PAST 6 MONTHS Location State Lots Acquire d Off Market | puree ms Residential Estates | Upper Coomera Queensland 1095 v i v ugustine Heights Queensland 420 v Xx Heathwood Queensland 585 v v ettlers Hills Western Australia 220 v x _ New South Wales 926 v v New South Wales 330 y¥ yv 3,
Slide 49: Outlook
OUTLOOK « Expect to maintain the margins in our Residential Estates business « 12 new projects to be launched to the market over the next 6 months « Increased profits will start to flow from Apartments and Retail Projects over the next 18 months as the businesses start to mature
Slide 50: Hotel Management
HOTEL MANAGEMENT SAVILLE © HOTEL GROUP Stockland
Slide 51: Performance Overview
PERFORMANCE OVERVIEW 2003 Half Year § 2002 Half Year Occupancy 76% 75% Average Room Rate $148 $140 Net Operating Profit $3.6m $2.0m « Funds invested in hotel management business, approximately $20 million as at December 2003
Slide 52: Highlights
HIGHLIGHTS " Record result for Saville « All corporate hotels have achieved high occupancy and rate over the past 6 months « Despite increased room supply in Melbourne, our hotels have performed well against our competitor set « Continued focus on all suite format by major corporate users " Saville’
Slide 53: Market Conditions
MARKET CONDITIONS « International visitor arrivals expected to grow in 2004 " Qantas’ monopoly diminished due to expansion of low cost domestic carriers «" Oversupply of product in Melbourne & Adelaide will continue to put pressure on average room rates & occupancy « Inbound tourism will benefit wit
Slide 54: New Developments
NEW DEVELOPMENTS « Development of Saville Southbank commences February 2004 — completion mid 2005
Slide 55: Technology/Marketing Initiatives
TECHNOLOGY/ MARKETING INITIATIVES « Technology — centralised database & access to client information nationally will give us a competitive advantage « Continued focus on maximising yield through online marketing strategies to maintain & increase market share
Slide 56: Capital Management
AL MANAGEMENT Stockland
Slide 57: Market leader with $1.3bn of bond issues in Australia and USA in 2003
* Market leader with $1.3bn of bond issues in Australia and USA in 2003 = Winner of the Insto Magazine “Bond Issuer of the Year” Award, 2003 = A-/ Positive Outlook credit rating from Standard & Poor’s = Preferred gearing range 20% to 30% funded debt to total tangible assets (26% as at 31 December 20
Slide 58: Debt Maturity Profile as at December 2003
DEBT MATURITY PROFILE AS AT 31 DECEMBER 2003 400 - 350 300 5 269 250 340 250 250 196 £ J & 200 175 J 150 | 100 | 7 61 50 | 32 28 . 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year Ending June 0 Bank Bill Facility @ Domestic Medium Term Notes & US Senior Term Notes
Slide 59: Future Direction & Strategy
© Stockland
Slide 60: Short Term Strategy
SHORT TERM STRATEGY » Ensure optimal performance from all businesses to achieve FY04 forecasts = Focus on capital management in rising interest rate environment = Specific short term strategic objectives for each operating division: ~ COMMERCIAL - de-risk lease expiry profile and focus on tenant ret
Slide 61: Future Direction
FUTURE DIRECTION « Leverage off our strong platform to broaden our business across new sectors, for example: — Unlisted product — Retirement/ lifestyle Achieving synergies with existing businesses and a higher ROE « Confirm our position as “employer of choice” and attract the best talent into the bu
Slide 62: Appendix
© Stockland
Slide 63: Portfolio Summary
PORTFOLIO SUMMARY Centre Totai MAT ($) Comp Growth Specialities MAT Occupancy Cost (A) ($) (%) Bay Village 138.0 -0.9 46.9 8.2 Bathurst 111.2 45 22.6 9.3 Baulkham Hills 96.0 3.7 34.1 10.7 Benowa Gardens 33.6 1.8 16.4 9.0 Bull Creek 91.0 7A 23.9 10.7 Burleigh Heads 129.3 44 40.9 7.5 Cairns 180.0 24 5
Slide 64: Portfolio Summary
PORTFOLIO SUMMARY Centre Total MAT Comp Growth Specialities MAT Occupancy Cost ($) (%) (8) (%) Imperial Arcade 40.8 7.2 24.9 16.3 Jesmond 125.1 4.0 43.2 10.5 Merrylands 164.4 0.1 58.7 10.2 Nowra 113.7 8.7 40.2 8.6 Parabanks 140.1 47 42.2 9.7 Piccadilly 11.4 1.9 11.4 16.9 Rockhampton 182.8 4.9 75.7 9
Slide 65: Hotel portfolio
FY03 Av. Hotel Location Star No. FY03 FY03 Av. Room Operating Rating | Rooms ; Occupancy | Room Rate Yield Agreement 2 Bond St Sydney NSW 4% 169 83% $205 $170 Leased Chatswood NSW 4 165 79% $174 $127 Leased Canberra ACT 4 175 71% $120 $85 Leased Russell St Melbourne vic 4% 221 76% $151 $115 Leased E
Slide 66: Revaluation
Revaluation Previous Book Current Cap Rat i tf Value Valuation ap ate neremen % Decrement $m $m $m INDEPENDENT REVALUATIONS Shopping Centres Sunland, Caloundra (ADP) 467 492 8.25 25 Wendouree, Ballarat (ADP) 42.5 51.0 8.25 8.5 Bullcreek, WA (ADP) 53.1 57.0 825 3.9 Parabanks, Salisbury SA (ADP) 56.0
Slide 67: Revaluation
Revaluation Previous Book Current i Value Valuation i Increment! i } : Decrement $m i $m : $m PROPERTIES EXCHANGED BUT NOT SETTLED Shopping Centres City Centre Plaza, Rockhampton QLD | 33.5 H 375 : 40 Office Parks 28 Rodborough Rd, Frenchs Forest NSW 13.4 13.0 (0.1) 29-35 Gibbes St, Chatswood NSW. 3
Slide 68: Corporation/Responsible Entity
Corporation/ Responsible Entity Stockiand Corporation Limited ACN 600 181 733 Stockland Trust Management Limited ACN 001 900 744 16% Floor 157 Liverpool Street SYDNEY NSW 2000 Disclaimer of Liability: While every effort is made to provide accurate and complete information, Stockland does not warrant