Slide 1: FY20 interim results
FY20 interim results 19 February 2020 Vicinity Centres | FY20 interim results | 19 February 2020 Queen Victoria Building, NSW
Slide 2: Welcome / Agenda
Welcome Agenda 3 FY20 interim results overview and FY20 guidance update 7 Financial results 11 Portfolio performance Grant Kelley Nicholas Schiffer Peter Huddle CEO AND MANAGING DIRECTOR CHIEF FINANCIAL OFFICER CHIEF OPERATING OFFICER 17 Development 23 Strategic growth initiatives 26 Summary 28 Appe
Slide 3: FY20 interim results overview and FY20 guidance update
FY20 interim results overview and FY20 guidance update Grant Kelley CEO AND MANAGING DIRECTOR Vicinity Centres | FY20 interim results | 19 February 2020 QueensPlaza, QLD
Slide 4: FY20 interim results summary
FY20 interim results summary Solid performance and delivery in subdued economic conditions Statutory net profit of $242.8m Funds from operations (FFO) of 8.95 cents per security reflecting 1.5% comparable growth1 Portfolio enhancement continues Acquisition of 50% interest in Uni Hill Factory Outlets
Slide 5: External market update
External market update Despite some improvements in the housing market, retail spending growth and consumer sentiment remain weak A number of positive retail indicators in Australian economy Consumer sentiment well below historical trend5 Record low cash rate of 0.75%1 110 Rebound in house prices (+
Slide 6: FY20 guidance update
FY20 guidance update FY20 FFO per security guidance1 revised to 17.2 to 17.4 cents, impacted by novel coronavirus Novel coronavirus materially impacting global travel, Portfolio foot traffic growth trade and near-term economic growth expectations Annual change (%) Material decline in foot traffic at
Slide 7: Financial results
Financial results Nicholas Schiffer CHIEF FINANCIAL OFFICER Vicinity Centres | FY20 interim results | 19 February 2020 Emporium Melbourne, VIC
Slide 8: Financial results summary
Financial results summary Statutory net profit of $242.8m, comparable FFO per security growth of 1.5%1,2 Net profit after tax2 Funds from operations2 FFO per security Distribution per security $242.8 million $337.0 million 8.95 cents 7.70 cents Primarily funds from operations (FFO) Down 3.6%, princi
Slide 9: Valuations
Valuations Portfolio valuations impacted by Western Australian and pre-development centres; Flagships continue to grow Weighted average capitalisation Net tangible assets per security Total portfolio Flagship portfolio rate (NTA) 0.5% decline 1 2.8% gain 1 5.26% $2.90 Flagship portfolio gain of 2.8%
Slide 10: Capital management
Capital management Debt profile enhanced with duration significantly extended, average cost reduced and funding sources diversified New or renegotiated debt Liquidity Gearing Average cost of debt Average debt duration $2.5 billion $1.6 billion 27.3% 4.2% 5.4 years Increased diversity with inaugural
Slide 11: Portfolio performance
Portfolio performance Peter Huddle CHIEF OPERATING OFFICER Vicinity Centres | FY20 interim results | 19 February 2020 Chadstone, VIC
Slide 12: Portfolio metrics affirm strategy
Portfolio metrics affirm strategy Performance underpinned by Flagship portfolio, with Core assets providing opportunities for growth Chadstone, VIC DFO Perth, WA QueensPlaza, QLD Portfolio MAT growth1: 3.2% Portfolio comparable NPI growth2: 2.5% Portfolio leasing spread3: -4.0% Total MAT growth1 (%)
Slide 13: Operational highlights
Operational highlights Solid portfolio metrics with leasing spreads reflecting remixing activity Solid leasing activity Key portfolio metrics 99.5% occupancy Dec-19 Jun-19 Change Maintaining strong deal activity while materially reducing the number of short-term deals down to 109 (from 178 in prior
Slide 14: Transforming centres through introducing key retailers and ambience upgrades
Transforming centres through introducing key retailers and ambience upgrades Improving customer experience driving stronger centre performance Investing in small projects to enhance customer experience and drive broader centre performance Introducing key on-trend retailers Revitalising entryways, fo
Slide 15: Refreshing our customer offer
Refreshing our customer offer Exciting new retailer openings and service offerings introduced Bang & Olufsen Morphe Cotton On Mega Universal Store F Chadstone, VIC Chadstone, VIC Bayside, VIC Bayside, VIC L A C G O S Winning Appliances Fortress Esports (Artist’s impression) R JD Sports Sheike Chadst
Slide 16: Sales performance improving
Sales performance improving Strong specialty growth across key retail categories continues Leisure1,2 Retail services1,2 Food catering1,2 Apparel and footwear1,2 Luxury1,2 +6.8% +5.1% +5.0% +4.3% +30.2% Sporting goods +15.3% Hairdressing and beauty +5.9% Cafes and restaurants +8.5% Fashion accessori
Slide 17: Development
Development Carolyn Viney CHIEF DEVELOPMENT OFFICER Vicinity Centres | FY20 interim results | 19 February 2020 Hotel Chadstone, VIC
Slide 18: Focused development pipeline provides growth opportunities
Focused development pipeline provides growth opportunities Driving income and long-term asset values Significant pipeline of $3.2b (Vicinity share: $1.8b) Targeting spend of ~$300m p.a. Targeting stabilised development yields of 6% to 8%+ and IRR of ~10%+ Investment focused in strongest markets Inve
Slide 19: Pipeline of value creating opportunities
Pipeline of value creating opportunities Major projects in planning with a pipeline value of $3.2b (100%) FY20 FY21 Beyond Chadstone, VIC Hotel Completed Emporium Melbourne, VIC Under construction Fortress Esports Co-working Fortress Esports and co-working DA submitted/approved Ellenbrook Central, W
Slide 20: Chatswood Chase Sydney
Chatswood Chase Sydney, NSW Transformational development to reinforce centre’s position as the premium retail destination on Sydney’s North Shore Project cost $1.1 billion (Vicinity’s share: $560 million) Development to commence Mid-2020 Target development yield1 >5.5% Project to enhance premium, li
Slide 21: Chadstone
Chadstone, VIC Retail enhancements and mixed-use addition reinforcing centre as Australia’s leading retail, dining and leisure destination Project cost ~$700 million (Vicinity’s share: ~$350 million) Development in stages commencing 2021 Target development yield1 >6.0% Development applications lodge
Slide 22: Prioritised development opportunities
Prioritised development opportunities Projects focused on revitalising retail and introducing new concepts, while also maximising the value of our land through mixed-use additions DAs lodged or approvals gained in 2019 – $2.0b (100%) DA lodgements or approvals sought for 2020 – $1.6b (100%) Chadston
Slide 23: Strategic growth initiatives
Strategic growth initiatives Justin Mills CHIEF STRATEGY OFFICER Vicinity Centres | FY20 interim results | 19 February 2020 Chatswood Chase Sydney, NSW
Slide 24: Leveraging physical and digital assets
Leveraging physical and digital assets Maximising existing and driving new ancillary income streams for growth +5.7%1 1H FY20 ancillary income growth (comparable) Strong growth in Vicinity Media up 8.0%, managed parking up 4.7% and new solar generation, partly offset by casual mall leasing down 4.7%
Slide 25: Leadership in sustainability
Leadership in sustainability Delivering sustainable long-term value for our securityholders and communities Strong 2019 sustainability survey results Recognised in CDP’s1 Climate A-list Ranked 3rd global listed retail company by GRESB2 Net Zero Australia’s Ranked 6th most sustainable real estate com
Slide 26: Summary
Summary Grant Kelley CEO AND MANAGING DIRECTOR Vicinity Centres | FY20 interim results | 19 February 2020 The Strand Arcade, NSW
Slide 27: Summary
Summary Strategy positions Vicinity well to drive future growth Subdued economic conditions presenting short-term challenges Balance sheet strengthened with broader funding markets Specialty and mini majors sales growth continues to improve Development pipeline progressing with a number of projects
Slide 28: Appendices
29 Strategy 39 Assets under management 31 Capital recycling 40 Financial results Appendices 32 Retail trends 45 Asset summaries 33 Black Friday and Christmas trading 53 Key dates 34 Direct portfolio 54 Contact details and disclaimer Vicinity Centres | FY20 interim results | 19 February 2020 The Stra
Slide 29: A strategy focused on sustainable growth
A strategy focused on sustainable growth Well positioned to create value from improving retail environment Our business model Our investment proposition Horizon 1 #1 retail destination Current value driver Ongoing Strengthening Premium locations portfolio the portfolio review Leading Outlet Centre p
Slide 30: Delivering on strategy
Delivering on strategy Focused on sustainable growth and value creation #1 retail • Chadstone is Australia’s leading retail asset • Significant retail and mixed-use expansion destination opportunities Premium • Located in Australia’s three largest CBDs and key metropolitan locations locations Leadin
Slide 31: Executing on strategy of market-leading destination portfolio
Executing on strategy of market-leading destination portfolio Productive capital recycling from 2015 to 2019 driving value for securityholders Repositioned Reinvested Strengthened portfolio capital key metrics Specialty MAT/sqm Proceeds Reinvestment +36% (36) 3.3 Average asset value Number of assets
Slide 32: Emerging retail trends
Emerging retail trends Physical stores are proving to be critical to success in omni-channel environment Online sales growth remains strong, but has slowed Quantium research suggests that a larger physical store footprint Australian online sales penetration has levelled off results in higher online
Slide 33: Black Friday and Christmas sales period
Black Friday and Christmas sales period Christmas trade period changing, with shopping events gaining popularity and underpinned by luxury spend Black Friday record traffic, with growth of 14.6% November and December foot traffic and sales growth, 2019 vs 2018 Boxing Day remains the number one shopp
Slide 34: Direct portfolio: key statistics by centre type
Direct portfolio Key statistics by centre type Total Portfolio Chadstone Premium CBD DFO1 Core Number of retail assets 59 1 7 6 45 Gross lettable area (000’s)(sqm) 2,384 233 223 211 1,717 Total value2 ($m) 15,724 3,375 2,505 1,828 8,016 Portfolio weighting by value (%) 100 21 16 12 51 Capitalisation
Slide 35: Direct portfolio: sales by store type and specialty category
Direct portfolio Sales by store type and specialty category Actual Comparable1 growth Dec-19 Jun-19 Proportion Proportion of Comparable MAT of total MM and MM and MAT portfolio (%) growth (%)1 MAT SS4 SS4 SS4 SS4 Dec-19 Dec-19 Jun-19 ($m) By sales By rent (%) (%) Apparel 19 4.3 2.9 3.4 2.7 Specialty
Slide 36: Direct portfolio: non-comparable centres for sales reporting
Direct portfolio Non-comparable centres for sales reporting Non-comparable status Centre Dec-19 Jun-19 DFO Perth, WA Post-development Post-development Mandurah Forum, WA Post-development Post-development QueensPlaza, QLD Under development Under development Roselands, NSW Post development Under devel
Slide 37: Direct portfolio: key portfolio tenants
Direct portfolio Key portfolio tenants Top 10 tenants by income Top 10 tenant groups by income Number % of Number % of Rank Retailer Retailer type of stores income Rank Retailer of leases income Brands Big W, BWS, Dan Murphy’s, Woolworths, 1 Supermarket 37 3.3 1 65 4.6 Woolworths Liquor, Woolworths
Slide 38: Direct portfolio: lease expiry profile
Direct portfolio Lease expiry profile Lease expiry profile (by income) 35% 30 30% Majors 25% All other retailers 20% 14 15 15% 12 11 10% 8 6 5% 0 0 1 1 1 0% Holdover FY20 FY21 FY22 FY23 FY24+ Weighted average lease expiry (years) Dec-19 Jun-19 by Area 4.7 4.8 by Income 3.7 3.8 QueensPlaza, QLD Vicin
Slide 39: Assets under management
Assets under management ~7,400 tenants across 63 assets under management1 Direct portfolio1 Managed Third party/ Total Wholly-owned Co-owned Total co-owned AUM1 Number of retail assets 32 27 59 4/27 63 Gross lettable area (000’s)(sqm) 937 1,447 2,384 134 2,517 Number of tenants 2,892 4,104 6,996 409
Slide 40: Income statement
Financial results Income statement Dec-19 Dec-18 Change Change For the six months to ($m) ($m) ($m) (%) Net property income (NPI) 438.9 450.0 (11.1) (2.5) Property and development mgt fees 29.9 32.8 (2.9) (8.8) Fund mgt fees 1.8 2.5 (0.7) (28.0) Total income 470.6 485.3 (14.7) (3.0) Net corporate ov
Slide 41: FFO reconciliation to statutory net profit after tax
Financial results FFO reconciliation to statutory net profit after tax Dec-19 Dec-18 For the six months to ($m) ($m) Statutory net profit after tax 242.8 235.3 Property revaluation decrement for directly owned properties 52.8 71.6 Non-distributable loss relating to equity accounted investments 16.5
Slide 42: Balance sheet
Financial results Balance sheet Dec-19 Jun-19 Change As at ($m) ($m) ($m) Cash and cash equivalents 53.7 34.9 18.8 Investment properties1 15,303.2 15,351.8 (48.6) Equity accounted investments 668.8 670.1 (1.3) Intangible assets 591.2 591.2 - Other assets 392.3 345.6 46.7 Total assets 17,009.2 16,993
Slide 43: Valuation summary
Financial results Valuation summary Valuation Weighted average capitalisation rate Number of 31-Dec-19 Net valuation movement1 New Previous Movement1 Centre type centres ($m) ($m) (%) (%) (%) (bps) Super Regional 1 3,375 100 3.0 3.75 3.75 - CBD Retail 7 2,505 25 1.0 4.63 4.65 (2) Outlet (DFO) 6 1,82
Slide 44: Capital management
Financial results Capital management Key debt statistics Hedging profile4,6 As at: Dec-19 Jun-19 4,000 5.0% Total debt facilities1 $6.0b $5.8b 3,500 4.5% Drawn debt2 $4.4b $4.4b 3,000 Gearing 3 27.3% 27.1% 4.0% 2,500 Notional A$m Hedge rate Weighted average cost of debt 4.2% 4.5% 2,000 3.5% Weighted
Slide 45: Asset summaries: centre statistics
Asset summaries Centre statistics Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) New South Wales Chatswood Chase Sydney2 Major Regional 51 63,501 100.0 n.a. n.a. n.a. n.a. Banks
Slide 46: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Queensland QueensPlaza2 City Centre 100 39,378 100.0 n.a. n.a. n.a. n.a. The Myer Ce
Slide 47: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Victoria Chadstone Super Regional 50 233,243 99.7 2,301.5 13,320 21,130 16.1 Bayside
Slide 48: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) Moving annual Specialty Ownership Occupancy turnover Centre Specialty occupancy Centre type interest GLA rate (MAT) MAT MAT costs1 (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%) Western Australia Galleria2 Major Regional 50 81,435 100.0 n.a. n.a. n.a. n.a. Mandu
Slide 49: Asset summaries: valuations
Asset summaries Valuations Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-191 31-Dec-19 30-Jun-19 Movement 31-Dec-19 (%) ($m) ($m) (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regional 51 (13.9) 560.9 4.75
Slide 50: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-191 31-Dec-19 30-Jun-19 Movement 31-Dec-19 (%) ($m) ($m) (%) (%) (%) Queensland QueensPlaza City Centre 100 (1.1) 795.0 4.75 4.75 -
Slide 51: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) Capitalisation rate Net Value Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-191 31-Dec-19 30-Jun-19 Movement 31-Dec-19 (%) ($m) ($m) (%) (%) (%) Victoria Chadstone Super Regional 50 99.8 3,375.0 3.75 3.75 -
Slide 52: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement1,2 31-Dec-191 31-Dec-19 30-Jun-19 Movement 31-Dec-19 (%) ($m) ($m) (%) (%) (%) Western Australia Galleria Major Regional 50 (57.2) 292.5 5.75
Slide 53: Key dates
Key dates Investor calendar Key dates December 2019 distribution payment 2 March 2020 Ex-distribution date for June 2020 distribution 29 June 2020 Record date for June 2020 distribution 30 June 2020 2020 annual results 19 August 2020 June 2020 distribution payment and 2020 Annual Tax Statements desp
Slide 54: Contact details and disclaimer
Contact details and disclaimer For further information please contact: Penny Berger Troy Dahms Head of Investor Relations Senior Investor Relations Manager T +61 2 8229 7760 T +61 2 8229 7763 E penny.berger@vicinity.com.au E troy.dahms@vicinity.com.au Authorisation Mr Grant Kelley, CEO and Managing
Slide 55: Thank you
Thank you Vicinity Centres | FY20 interim results | 19 February 2020 Queen Victoria Building, NSW