Region Group · ASX:RGN
Region — SCA Property Group — H1 FY2015 Earnings Presentation
35 slides from Region's earnings presentation, Feb 9, 2015
Slide 1: First Half FY15 Results Presentation
For personal use only SCA PROPERTY GROUP First Half FY15 Results Presentation 9 February 2015 Clemton Park NSW (Artists Impression)
Slide 2: Agenda
AGENDA For personal use only 1 Overview of First Half FY15 Results 2 Financial Performance 3 Operational Performance 4 Key Priorities and Outlook 5 Questions 6 Appendices 2
Slide 3: Overview of First Half FY15 Results
For personal use only 1 OVERVIEW OF FIRST HALF FY15 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: First Half FY15 Highlights
FIRST HALF FY15 HIGHLIGHTS For personal use only Financial Capital Active Portfolio Performance Management Management $98.2m, up by 128.4% 35.8% 98.6% 5.4% (98.8% excl Margaret River) (4.5% excl Margaret River) Statutory net profit after tax 1 Gearing 3, within 30 – 40% target range Portfolio occupa
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY For personal use only • 5.4% specialty vacancy as at 31 December 2014 (4.5% excluding Margaret River) Specialty Leasing • Continued focus on remixing to optimise rent/sqm Project • Woolworths rental guarantee now substantially ended Above Market Sales • Abov
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 2014 For personal use only • Statutory net profit after tax of $98.2m, up by 128.4% on the same period last year $m 1H15 1H14 % Change Anchor rental income 52.0 47.6 9.2% • Net operating income up by 8.7%, driven by: Specialty rental incom
Slide 8: Distributable Earnings, FFO, AFFO
DISTRIBUTABLE EARNINGS, FFO, AFFO For the Six Months Ended 31 December 2014 For personal use only $m 1H15 1H14 % Change • Funds From Operations of $37.8m is up by 12.5% on the same Net profit after tax (statutory) 98.2 43.0 128.4% period last year Reverse: Straight lining & amortisation of (3.1) (4.
Slide 9: Strong Underlying Earnings Growth
STRONG UNDERLYING EARNINGS GROWTH FFO growth to continue in 2H FY15 and beyond For personal use only • Funds From Operations (“FFO”) is becoming the FFO growth (A$m) standard measure of underlying cash earnings for A- 12.5% above prior corresponding period REITs. From 1 July 2015 we will stop report
Slide 10: Balance Sheet
BALANCE SHEET As at 31 December 2014 For personal use only • Value of investment properties increased by $158.9m 31 Dec 30 June % Change $m 2014 2014 since 30 June 2014, predominately due to acquisitions and positive revaluations (see slide 28). Investment Cash 9.0 0.9 900% property valuations up by
Slide 11: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 31 December 2014 For personal use only 31 Dec 30 June • Gearing of 35.8%(1) is within target range of 30% to 40% $m 2014 2014 • We have fixed interest rate hedges in place for 70.4% of our Facility limit (2) 679.8 600.0 drawn debt as at 31 December 2014 Drawn debt (
Slide 12: Operational Performance
For personal use only 3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW For personal use only Assets Number of Number of GLA Occupancy Value Weighted average As at 31-Dec-2014 centres specialties (sqm) (% GLA) (A$m) WALE (yrs) cap rate (%) Freestanding 15 3 61,922 100.0% 219.4 15.9 7.74 Neighbourhood 55 580 286,695 98.8% 1,098.6 12.3 7.59 Sub-regional
Slide 14: Active Portfolio Management
ACTIVE PORTFOLIO MANAGEMENT Strengthening our portfolio through acquisitions and divestments For personal use only The Markets (Brisbane) Greystanes (Sydney) • Acquisition completed in October 2014 • Acquisition completed in October 2014 for $32.0m (7.20% implied cap rate) for $38.2m (1) (8.00% impl
Slide 15: Neighbourhood Centres in Australia
NEIGHBOURHOOD CENTRES IN AUSTRALIA Fragmented ownership provides acquisition opportunities For personal use only Coles and Woolworths – Anchored Shopping Centres • Most Coles and Woolworths stores are in Indicative neighbourhood centres Freestanding c. 20% • There are over 850 Coles and Woolworths a
Slide 16: Supermarket Sales Growth
SUPERMARKET SALES GROWTH SCP’s Supermarket sales continue to grow For personal use only Australia (12 month MAT sales growth % ) 12.0% • Continued sales growth from SCP’s 9.5% supermarket tenants in both Australia and New 10.0% 9.6% 8.9% 8.4% Zealand, but moderating to more normalised 8.0% levels as
Slide 17: Turnover Rent
TURNOVER RENT For personal use only Current Sales as % of Turnover Threshold (1) • As a result of strong sales growth, our turnover rent is 2 Supermarkets increasing, with 10 anchors in turnover rent at 31 <50% 8 Supermarkets >100% December 2014 (8 supermarkets, 1 Dan Murphy’s, and 1 Kmart) 16 Super
Slide 18: Portfolio Occupancy
PORTFOLIO OCCUPANCY Portfolio occupancy is 98.6% For personal use only • Portfolio Occupancy is at 98.6% by GLA (98.8% excluding Margaret River) Specialty Vacancy (% of Specialty GLA) • Specialty vacancy is 5.4% by GLA (4.5% excluding 19.2% Margaret River) 4.5% excluding 14.0% Margaret River • In 1H
Slide 19: Specialty Leasing – By Centre
SPECIALTY LEASING – BY CENTRE Four centres account for almost half of our specialty vacancy For personal use only Specialty Vacancy Across the Portfolio (% of Specialty GLA) • Solid leasing progress has been made across 19.2% the portfolio • Entered into a conditional contract to sell Kwinana, 5.3%
Slide 20: Specialty Key Metrics
SPECIALTY KEY METRICS For personal use only • Specialty sales continue to grow strongly, driven mainly by Australian specialty tenants open for > 24 months non-discretionary spend. The growth rate has moderated as our portfolio matures and as we acquire more mature June Sept Dec centres 2014 2014 20
Slide 21: Key Priorities and Outlook
For personal use only 4 KEY PRIORITIES AND OUTLOOK Anthony Mellowes Chief Executive Officer
Slide 22: Core Strategy
CORE STRATEGY Defensive, resilient cashflows to support secure distributions For personal use only Focus on convenience- Weighted to non-discretionary Long leases to quality anchor based retail centres retail segments tenants Appropriate capital Growth structure opportunities 22
Slide 23: Potential Earnings Growth Trends
POTENTIAL EARNINGS GROWTH TRENDS Solid earnings growth expected over time For personal use only Indicative Contribution to FFO Description and Assumptions Growth Rate (% pa) (from FY17 onwards) • Anchor rental income represents about 60% of overall gross property income Anchor Rental • Once turnover
Slide 24: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK For personal use only Optimise our existing • There are 37 specialty stores for which we have agreed deals, but which are yet to commence centres trading or paying rent. We aim to open all of these stores prior to 30 June 2015 • We are also focused on remixing our tenancie
Slide 25: Questions
For personal use only 5 QUESTIONS
Slide 26: Appendices
For personal use only 6 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) (1) • 61% of gross rent generated by Woolworths and 56.7 % Wesfarmers Group (on a fully leased basis), with an Anchor WALE of 16.6 years • Opportunity to realise positive rent reversions
Slide 28: Investment Properties Value
INVESTMENT PROPERTIES VALUE For personal use only 46.8 8.0 5.7 1,799.7 98.4 1,640.8 A$m 30-Jun-14 Acquisitions Fair Value Straight lining & capex FX 31-Dec-14 • Acquisitions are made up of: Prospect Vale ($26.8m), Claremont ($27.9m), The Markets ($32.0m) and final payment of $16.4m on Greystanes les
Slide 29: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING For personal use only Debt Facilities as at 31 Dec 2014 Facility Limit Drawn Debt Undrawn Maturity $m (A$m) (A$m) (A$m) Bank Facilities Bank bilateral 75.0 75.0 0.0 20 Nov 2017 Bank bilateral (1) 150.0 150.0 0.0 11 Dec 2017 Bank bilateral 25.0 25.0 0.0 20 Nov
Slide 30: Transactions During the Period
TRANSACTIONS DURING THE PERIOD Six months to 31 Dec 2014 For personal use only Acquisition/ Specialty Total purchase Implied Anchor Total GLA % GLA Centre type Completion GLA price Acquisition GLA (sqm) (sqm) committed date (sqm) ($m) Cap rate Acquired Properties Claremont, TAS Neighbourhood Oct 201
Slide 31: Portfolio List
PORTFOLIO LIST For personal use only Valuation Completion Total GLA Occupancy Number of WALE Valuation Property State Property Type Dec-14 Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Australia Lilydale VIC Sub-Regional Jul-13 22,066 98% 55 14.5 7.25% 84.8 Pakenham VIC Sub-Regiona
Slide 32: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only Valuation Completion Total GLA Occupancy Number of WALE Valuation Property State Property Type Dec-14 Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) Australia Ayr QLD Neighbourhood Jan-00 5,513 99% 9 9.6 7.50% 19.9 Brookwater Village
Slide 33: Portfolio List (Continued)
PORTFOLIO LIST (CONTINUED) For personal use only Valuation Completion Total GLA Occupancy Number of WALE Valuation Property State Property Type Dec-14 Date (sqm) (% by GLA) Specialties (Years by GLA) Cap Rate (A$m) New Zealand Kelvin Grove NZ Neighbourhood Jun-12 3,611 100% 5 16.5 7.75% 11.0 Newtown
Slide 34: Management Team
MANAGEMENT TEAM For personal use only Anthony Mellowes, Chief Executive Officer • Mr Mellowes is an experienced property executive. Prior to joining SCA Property Group, Mr Mellowes was employed by Woolworths since 2002 and held a number of senior property related roles including Head of Asset Manage
Slide 35: SCA Property Group
SCA Property Group For personal use only 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