Region Group · ASX:RGN
Region — SCA Property Group — H1 FY16 Earnings Presentation
37 slides from Region's earnings presentation, Feb 8, 2016
Slide 1: First Half FY16 Results Presentation
For personal use only SCA PROPERTY GROUP First Half FY16 Results Presentation 8 February 2016 Wonthaggi Plaza, Victoria
Slide 2: Agenda
AGENDA For personal use only 1 Overview of First Half FY16 Results 2 Financial Performance 3 Operational Performance 4 Growth Initiatives 5 Key Priorities and Outlook 6 Questions 7 Appendices 2
Slide 3: Overview of First Half FY16 Results
For personal use only 1 OVERVIEW OF FIRST HALF FY16 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: First Half FY16 Highlights
FIRST HALF FY16 HIGHLIGHTS For personal use only Financial Capital Active Portfolio Performance Management Management $48.8m, up by 29.1% 34.2% 98.7% 4.5% Funds from operations1 Gearing3, within 30 – 40% target range Portfolio occupancy6 Specialty vacancy6 $45.8m, up by 23.5% $1.85, up by 4.5% 7.28%
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY For personal use only • Specialty tenants are performing strongly – Sales growth of over 5% p.a. continuing Optimising the – 9.8% average rental increase across 31 renewals completed during the six month period Core Business – Occupancy cost down to 8.9% • A
Slide 6: Financial Performance
For personal use only 2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer
Slide 7: Statutory Profit & Loss
STATUTORY PROFIT & LOSS For the Six Months Ended 31 December 2015 For personal use only • Net property income growing strongly, up by 10.9% $m 1H16 1H15 % Change – Anchor rental income growth primarily due to acquisitions, offset by Anchor rental income 56.3 52.0 8.3% divestment of SURF 1 properties
Slide 8: Distributable Earnings, FFO, AFFO
DISTRIBUTABLE EARNINGS, FFO, AFFO For the Six Months Ended 31 December 2015 For personal use only • Funds From Operations of $48.8m is up by 29.1% on the same $m 1H16 1H15 % Change period last year Net profit after tax (statutory) 90.8 98.2 (7.5%) – Amortisation of incentives has increased to $1.3m,
Slide 9: Balance Sheet
BALANCE SHEET As at 31 December 2015 For personal use only • Value of investment properties increased by $180.7 million since 31 Dec 30 June % Change 30 June 2015, predominately due to acquisitions ($115.2 million, $m 2015 2015 plus transaction costs of $8.5 million) and positive revaluations (see C
Slide 10: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 31 December 2015 For personal use only • Gearing of 34.2%1 is within target range of 30% to 40% 31 Dec 30 June $m 2015 2015 • During the half year we entered into $150 million of new fixed Facility limit2 829.8 804.8 interest rate swaps, while NZ$44 million of old f
Slide 11: Operational Performance
For personal use only 3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 12: Portfolio Overview
PORTFOLIO OVERVIEW For personal use only Assets Number of Number of GLA Occupancy Value Weighted average As at 31 December 2015 centres specialties (sqm) (% GLA) (A$m) WALE (yrs) cap rate (%) Freestanding 10 - 44,958 100.0% 182.0 17.2 6.80 Neighbourhood 64 740 350,591 98.5% 1,398.0 11.1 7.26 Sub-reg
Slide 13: Portfolio Occupancy
PORTFOLIO OCCUPANCY Portfolio occupancy is 98.7% For personal use only • Total portfolio occupancy is at 98.7% of GLA Portfolio Occupancy (% of GLA) – Specialty vacancy is within the normalised target range of 100.0 98.6% 98.8% 98.7% 3% - 5% 98.0 • Acquisitions during the six months to 31 December 2
Slide 14: Sales Growth & Turnover Rent
SALES GROWTH & TURNOVER RENT For personal use only • Moderating Australian supermarket sales growth, due to: Comparable Store MAT sales growth by category (%) – Maturing of our original portfolio As at As at – Acquisitions of more mature centres 31 December 2015 30 June 2015 – Woolworths supermarket
Slide 15: Specialty Key Metrics
SPECIALTY KEY METRICS Positive rent reversions are expected to continue For personal use only • Specialty sales continue to grow strongly, assisted by Australian specialty tenant key metrics supermarket volume growth 1H16 FY15 • Average specialty occupancy cost is now 8.9% and rent per square metre
Slide 16: Growth Initiatives
For personal use only 4 GROWTH INITIATIVES Anthony Mellowes Chief Executive Officer
Slide 17: Active Portfolio Management
ACTIVE PORTFOLIO MANAGEMENT Four new acquisitions in the six months to 31 December 2015 For personal use only Griffin Plaza (Griffith, NSW) Northgate Shopping Centre • Acquisition completed in Sept 2015 for (Tamworth, NSW) • Acquisition completed in Dec 2015 for $23.0m (7.45% implied cap rate) $14.8
Slide 18: Neighbourhood Centres in Australia
NEIGHBOURHOOD CENTRES IN AUSTRALIA Fragmented ownership provides acquisition opportunities For personal use only Neighbourhood centre landscape in Australia Ownership of neighbourhood centres in Australia (Number of centres) • There are over 850 Coles and Woolworths anchored Indicative neighbourhood
Slide 19: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE We have identified over $100m of development opportunities at 18 of our For personal use only centres over the next 5 years1 Estimated Capital Investment (A$m) Development Type Centre (s) FY16 FY17 FY18 FY19 FY20 Refurbishment Lismore 2.8 - - - - Stage 3 (third anchor
Slide 20: Funds Management Business
FUNDS MANAGEMENT BUSINESS Potential to deliver additional earnings growth in the future For personal use only • First fund “SURF 1” successfully completed – Five SCP non-core assets acquired for $60.9m, a 12% premium to book value – Fund commenced on 1 October 2015 – SCP retains a 24.4% equity inter
Slide 21: Key Priorities and Outlook
For personal use only 5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes Chief Executive Officer Mark Fleming Chief Financial Officer
Slide 22: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure distributions For personal use only Weighted to Focus on convenience- Long leases to non-discretionary based retail centres quality anchor tenants retail segments Appropriate Growth capital structure opportunities 22
Slide 23: Potential Earnings Growth Trends
POTENTIAL EARNINGS GROWTH TRENDS Continued solid earnings growth expected over time For personal use only Indicative Contribution to FFO Growth Rate (% pa) Description and Assumptions (from FY18 onwards) Anchor • Anchor rental income represents about 60% of overall gross property income 1% + Rental
Slide 24: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY16 For personal use only • Increase specialty rent per sqm by optimising tenancy mix and achieving rental uplifts on renewals • Improve centre standards by reinvesting expense savings and reviewing property management arrangements Optim
Slide 25: Questions
For personal use only 6 QUESTIONS
Slide 26: Appendices
For personal use only 7 APPENDICES
Slide 27: Long Term Leases to Woolworths and Wesfarmers Group
LONG TERM LEASES TO WOOLWORTHS AND WESFARMERS GROUP For personal use only Overall Lease Expiry (% of gross rent) • 59% of gross rent generated by Woolworths (50%) and Wesfarmers Group (9%) (on a fully leased basis), with an Anchor 53.4% WALE of 15.0 years • Opportunity to realise positive rent rever
Slide 28: Investment Properties Value
INVESTMENT PROPERTIES VALUE For personal use only A$m 2,200 • Acquisitions of $115.2m being Griffin 2,100 38.0 11.0 2,076.1 Plaza ($23.0m), Marian Town Centre 4.7 ($32.0m), Northgate ($14.8m), Wonthaggi 127.0 ($45.4m). $8.5m of stamp duty and other transaction costs. The balance of $3.3m 2,000 relat
Slide 29: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING For personal use only Facility Limit Drawn Debt Undrawn Maturity $m (A$m) (A$m) (A$m) Bank Facilities Bank bilateral 190.0 149.5 40.5 Nov – Dec 2018 Bank bilateral 25.0 20.0 5.0 Feb 2019 Bank bilateral1 230.0 172.0 58.0 Dec 2019 Debt Facilities 445.0 341.5 103
Slide 30: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Six months to 31 December 2015 For personal use only Total Anchor Specialty Total Implied Acquisition % GLA purchase Centre type GLA GLA GLA Acquisition date committed price (sqm) (sqm) (sqm) Cap rate ($m) Acquired Properties Griffin Plaza, NSW Neighbourhood Sep 2015 3
Slide 31: Divestments During the Period
DIVESTMENTS DURING THE PERIOD Six months to 31 December 2015 For personal use only Anchor Specialty Total Total sale Divestment % GLA Divestment Centre type GLA GLA GLA price date committed Cap rate (sqm) (sqm) (sqm) ($m) Divested Properties Woolworths Griffith North, NSW Freestanding Oct 2015 2,560
Slide 32: Anchor Tenants
ANCHOR TENANTS Increasing exposure to Wesfarmers Limited For personal use only 31 Dec 30 June 30 June 30 June 31 Dec • All of our centres are anchored by either 2012 2013 2014 2015 2015 Woolworths Limited or Wesfarmers Limited retailers Woolworths Limited Woolworths 40 50 51 53 52 • We are gradually
Slide 33: Portfolio List
For personal use only PORTFOLIO LIST 33
Slide 34: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only 34
Slide 35: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only 35
Slide 36: Management Team
MANAGEMENT TEAM For personal use only Anthony Mellowes, Chief Executive Officer Campbell Aitken, Chief Investment Officer • Mr Mellowes is an experienced property executive. Prior to joining SCA • Mr Aitken has over 10 years experience working in the Property Funds Property Group as an Executive Dir
Slide 37: SCA Property Group
For personal use only SCA Property Group Level 5, 50 Pitt Street Sydney NSW 2000 Tel: (02) 8243 4900 Fax: (02) 8243 4999 www.scaproperty.com.au Disclaimer This presentation has been prepared by Shopping Centres Australasia Property Group RE Limited (ABN 47 158 809 851) (SCPRE) as responsible entity