Stockland · ASX:SGP
Stockland — FY2019 Earnings Presentation
40 slides from Stockland's earnings presentation, Aug 21, 2019
Slide 1: FY19 Results
Group Financial Commercial Communities Summary update results Property and outlook WILLOWDALE, SYDNEY FY19 Results 21 August 2019 For personal use only
Slide 2: Agenda and presenters
Group update update Group Mark Steinert Managing Director & CEO For personal use only Financial results results Financial Tiernan O’Rourke CFO Property Commercial Commercial Property Louise Mason Group Executive & CEO, Commercial Property Communities Communities Andrew Whitson Group Executive & CEO,
Slide 3: Group update
Group Financial Commercial Communities Summary update results Property and outlook BRIGHTWATER, QLD Mark Steinert update Group For personal use only
Slide 4: Focus on sustainable returns
Focus on sustainable returns update Group FFO in line with forecast - reflects residential, workplace & logistics growth For personal use only results Financial Funds from operations1 (FFO) FFO per security1 Adjusted FFO (AFFO) per security1 Distribution per security (DPS) $897m 37.4 cents 32.5 cent
Slide 5: Executing on our strategic priorities
update Group For personal use only Executing on our strategic priorities results Financial Improving portfolio quality Driving sustainable and Increasing Workplace & Sustaining capital strength Property Commercial growing returns Logistics weighting • Completed4 a strategic capital • Transacted $505
Slide 6: Customer focus
update Group Residential communities resident satisfaction 93% For personal use only results Financial Retirement Living resident happiness Customer focus 8.6/10 • Launched “Stockland Listens” to better Above target of 8.25/10 Property Commercial understand our customer needs Retailer satisfaction •
Slide 7: Driving operational excellence
Driving operational excellence update Group For personal use only Capability Innovation Sustainability results Financial Resourcing realigned to our strategy Investing in building capabilities and skills Leading global sustainability credentials Employer of Choice for Gender Equality Launched Stockl
Slide 8: Financial results
Group Financial Commercial Communities Summary update results Property and outlook HENDRA INDUSTRIAL ESTATE, BRISBANE Tiernan O’Rourke Financial results For personal use only
Slide 9: Capital strength
Capital strength update Group At 30 June 2019 For personal use only results Financial Gearing Interest cover1 Investment grade credit ratings Weighted average cost of debt 26.7% 4.7:1 A-/Stable S&P 4.4% Property Commercial A3/Stable Moody’s Within target range 20-30% Communities Fixed / hedge ratio
Slide 10: Disciplined and active capital management
Disciplined and active capital update Group management For personal use only results Financial • Maintained strong balance sheet and capital management position with investment grade credit ratings of A-/Stable (S&P) and A3/Stable (Moody’s), despite portfolio devaluations Property Commercial • Reneg
Slide 11: Funds from operations
Funds from operations update Group Comparable For personal use only $m FY19 FY18 Change growth results Financial Retail Town Centres 432 428 1.1% (0.2)% Logistics 164 152 6.9% 3.9% Workplace1 48 54 (10.0)% 10.4% Trading profit - 1 - Property Commercial Commercial Property net overheads (21) (21) 1.4
Slide 12: Statutory profit to FFO and AFFO reconciliation
Statutory profit to FFO and AFFO reconciliation update Group $m FY19 FY18 Change For personal use only Statutory profit 311 1,025 (69.6)% Adjusted for: results Financial Amortisation of lease incentives and lease fees 87 76 Straight-line rent (3) (5) Net change in fair value of Commercial investment
Slide 13: Operating cash flows
Operating cash flows update Group For personal use only $m KEY AREAS OF CAPITAL EMPLOYED results Financial 1,600 • Operating cash flows declined due to land acquisitions and 1,400 residential development expenditure to support future settlements in FY20 and beyond 457 (439) • 96% of land payments re
Slide 14: Commercial Property
For personal use only Commercial Property Louise Mason STOCKLAND BIRTINYA, QLD
Slide 15: Solid operating performance
Solid operating performance update Group Commercial Property For personal use only results Financial FFO comparable Key metrics Asset value FFO change Occupancy WALE1 WACR2 2.1% Retail Town FFO comparable growth Centres $6,851m $432m (0.2)% 99.3% 6.0 yrs 5.9% Property Commercial within FY19 guidance
Slide 16: Delivering on our strategy
update Group For personal use only Delivering on our strategy results Financial Property Commercial Clear and focused plan to improve portfolio quality and returns Business leadership Reposition Retail Strengthen Retail Invest in Workplace and Logistics Communities • New leadership team in place • C
Slide 17: Valuation results mixed
Valuation results mixed update Group Commercial Property For personal use only results Financial Net valuation decline of $199m1 in FY19 with 98%2 of assets independently revalued last 12 months RETAIL $6,851m3 LOGISTICS $2,537m3 WORKPLACE $800m3 Property Commercial $(474)m valuation decline $202m v
Slide 18: Rebasing rents and tenant remixing to drive income growth
Rebasing rents and tenant remixing to drive income growth update Group Retail Town Centres For personal use only FY19 FY18 ACTIVE ASSET MANAGEMENT results Financial Occupancy2 99.3% 99.4% • Rebased rents to deliver sustainable occupancy Specialty retail leasing activity3 • Sustainable specialty occu
Slide 19: Ongoing improvement in specialty sales
Ongoing improvement in specialty sales update Group Retail Town Centres For personal use only Total portfolio Comparable centres4 results Financial ACTIVE ASSET MANAGEMENT MAT MAT 2H19 Category MAT3 • 2.5% growth in comparable specialty sales to $9,251 per square metre1, growth3 growth growth 6.3% a
Slide 20: Active remixing increasing resilience
Active remixing increasing resilience update Group Concentrating exposure across higher quality assets For personal use only IMPROVED RESILIENCE TO ONLINE SALES PROPORTION OF SPECIALTY RENT results Financial • Specialty area remix in the last 6 years: 45% 43% - Fashion reduced by 10% 40% - Food & Se
Slide 21: Active management improving sales
Active management improving sales update Group Retail Town Centres For personal use only results Financial Green Hills, NSW Wetherill Park, Sydney Merrylands, Sydney Property Commercial Communities ~10.2 million visitations 27% above benchmark +3.7% specialty sales growth and outlook Summary foot tr
Slide 22: Strong leasing and rental growth
Strong leasing and rental growth update Group Workplace For personal use only Key metrics FY19 FY18 results Financial • Strong comparable FFO growth of 10.4% Asset value $800m $774m • Rental growth on new leases of 18.2% Leases executed 30,400 sqm 20,500 sqm • 86% of portfolio in Sydney Leases under
Slide 23: Growing portfolio delivers strong returns
Growing portfolio delivers strong returns update Group Logistics For personal use only Key metrics FY19 FY18 results Financial • Strong comparable FFO growth of 3.9% Asset value $2,537m $2,228m • Leasing demand remains strong with 408,700 sqm leased during the year Leased area 408,700 sqm 324,400 sq
Slide 24: Redevelopment drives portfolio quality
Redevelopment drives portfolio quality update Group Logistics For personal use only Yennora, Sydney – completed KeyWest, Melbourne – active Yatala, Brisbane - active results Financial Property Commercial 13.9% IRR1 30,000 sqm 10 year WALE on completion of brownfield development greenfield developmen
Slide 25: Outlook
Outlook1 update Group Commercial Property For personal use only Retail environment remains challenging Green Hills, NSW results Financial • Rebasing of rents undertaken to create sustainable future growth • Improving sales from non-discretionary remixing and placemaking Property Commercial Workplace
Slide 26: Communities
For personal use only Communities Andrew Whitson 26 CALLEYA, PERTH
Slide 27: Profit growth demonstrates resilience in a challenging market
Profit growth demonstrates resilience in a challenging market update Group Residential For personal use only EXECUTION OF STRATEGY DRIVES FY19 GROWTH $362m results Financial Operating profit / FFO • Sydney and Melbourne price growth driving margin increase to 19.9% • 5,878 settlements in line with r
Slide 28: Improving market conditions post the Federal election
Improving market conditions post the Federal election update Group Residential For personal use only results Financial TOTAL ENQUIRY BY STATE 1,800 NSW post-election 1,800 QLD 1,600 1,600 post-election 1,400 1,400 • Increased enquiry in Sydney and Melbourne Property Commercial 1,200 1,200 following
Slide 29: Contracts on hand and improving sales underpin FY20 outlook
Contracts on hand and improving sales underpin FY20 outlook1 update Group Residential For personal use only results Financial IMPROVING LOT SALES • 846 net deposits in 4Q19, above 10,000 expectation of around 700 9,000 • 3,324 contracts on hand due to settle in Property Commercial 8,000 4,397 FY20 g
Slide 30: Competitive advantage drives market share
Competitive advantage drives update Group market share to 15%1 For personal use only Residential results Financial Brand Scale Property Commercial • For over 60 years, Stockland has been • Our market share is more than three times Australia’s leading creator of sustainable, that of our nearest compe
Slide 31: High quality landbank underpinning future earnings
` High quality landbank update Group underpinning future earnings For personal use only Residential results Financial Landbank INCREASING EXPOSURE TO NSW AND VIC2 Property Commercial • 76,0001 lot landbank with an average age of 10 years, skewed towards NSW + ACT VIC QLD WA rail serviced growth corr
Slide 32: Results underpinned by village disposals and development settlements
Results underpinned by village disposals update Group and development settlements For personal use only Retirement Living results Financial 5.7% 53% • Enhanced product offer driving increased development settlements • Established settlements lower for the year due to challenging residential market P
Slide 33: Retirement Living strategy
update Group For personal use only Retirement Living strategy results Financial Property Commercial Disciplined execution of Retirement Living strategy Improve quality Increase returns through Enhance customer Communities of our portfolio development pipeline and experience and satisfaction capabili
Slide 34: Future growth through development pipeline
Future growth through update Group development pipeline For personal use only Retirement Living results Financial Land lease Approximate First pipeline yield settlements Aura, QLD 250 FY22 • Over 3,500 total development units in the pipeline North Shore, QLD 200 FY22 Property Commercial • 12 complet
Slide 35: Strong position for the future
Strong position for the update Group future For personal use only Communities results Financial • Delivered growth in challenging market • Disciplined focus on executing strategy Property Commercial • Well positioned to leverage our brand, scale and landbank to take advantage of the current cycle Co
Slide 36: Summary and outlook
Group Financial Commercial Communities Summary update results Property and outlook NEWPORT, QLD and outlook Summary Mark Steinert 36 For personal use only
Slide 37: Group strategy
update Group Group strategy For personal use only results Financial Deliver sustainable and growing returns through community creation, leading Retail Town Centres and growing Workplace and Logistics Property Commercial Communities Commercial Property Communities Group and outlook Summary • Concentr
Slide 38: Portfolio allocation
Portfolio allocation update Group For personal use only CAPITAL ALLOCATION TARGET CAPITAL ACTIVE CAPITAL MANAGEMENT AT 30 JUNE 20191 ALLOCATION1 results Financial Strong investment grade ratings • A-/Stable (S&P) 32% Communities 20-30% • A3/Stable (Moody’s) Property Commercial Targets • Optimise WAC
Slide 39: FY20 outlook
update Group For personal use only FY20 outlook1 results Financial Disciplined focus on execution of strategy Property Commercial Commercial Property Residential Retirement Living Group Guidance $8m pa savings Forecast flat growth in Communities 1% comparable FFO >5,000 lot >850 established and grow
Slide 40: Important Notice
Stockland Corporation Limited For personal use only ACN 000 181 733 Stockland Trust Management Limited ACN 001 900 741; AFSL 241190 As responsible entity for Stockland Trust ARSN 092 897 348 LEVEL 25 133 Castlereagh Street SYDNEY NSW 2000 Important Notice While every effort is made to provide accura