Slide 1: 1H17 Results Presentation
1H17 Results Presentation For personal use only RESULTS BUILT ON SUSTAINABLE COMMUNITIES 31 December 2016 Cardinal Freeman The Residences, Sydney
Slide 2: Agenda
Agenda For personal use only Topic Speaker Page Group Update Mark Steinert, Managing Director and CEO 03 Group Finance 06 Commercial Property John Schroder, Group Executive and CEO, Commercial Property 12 Residential Andrew Whitson, Group Executive and CEO, Residential 19 Retirement Living Stephen B
Slide 3: Strategy delivering sustainable, strong results
Strategy delivering sustainable, strong results For personal use only 1H17 1H16 Change Community creation focus delivers growth across whole business Statutory Profit $702m $696m 0.7% Growth in FFO per security of 6.2% reflecting consistent Funds from Operations (FFO)2 $369m $342m 7.8% implement
Slide 4: 1H17 Achievements: Grow Asset Returns and Customer Base
1H17 Achievements For personal use only Grow Asset Returns and Customer Base Commercial Property Residential Communities Retirement Living OVER Strong $ 228 m 5800 Record level Cash ROA 6.4 % 3.7 leasing of pre-sales improved to % in L&BP Wetherill Park contracts on hand development Improved Growth
Slide 5: 1H17 Achievements: Operational Excellence and Capital Strength
1H17 Achievements For personal use only Operational Excellence and Capital Strength Third consecutive year Global Sector HR Salesforce and Regional Success launched in Sector Leader- Factors Residential Retail/Office launched Maintained S&P credit #1 two years in a row, market leader for ten years r
Slide 6: Group Finance
Group Finance For personal use only Newhaven Robot Park, Perth
Slide 7: Growth in FFO across all business units
Growth in FFO across all business units For personal use only Funds from Operations Comp. $m 1H17 1H16 Change % Delivering high quality results Growth % Retail 207 197 5.2% 3.5% Residential Communities well positioned for Logistics & Business Parks 72 66 8.7% 2.9% the full year, earnings growth
Slide 8: FFO to Statutory Profit Reconciliation
FFO to Statutory Profit Reconciliation For personal use only 47% of commercial properties by $m 1H17 1H16 Change % value were independently revalued in Funds From Operations (FFO) 369 342 7.8% 1H17 Adjust for: Amortisation of lease incentives and lease fees (35) (33) Favourable movement in mark
Slide 9: Strong operating cash flows
Strong operating cash flows For personal use only Cash Flow Summary $ millions 900 (70)2 800 180 2 700 (246) 92 600 500 Includes Residential cash flows as follows: 1H17 1H16 (231) 400 385 Sales 708 650 (36) 300 Current year stage costs (194) (141) 200 Future stage infrastructure costs (252) (212) SG
Slide 10: Maintaining a strong balance sheet
Maintaining a strong balance sheet For personal use only A-/Stable metrics maintained for over 10 years Key debt metrics 1H17 1H16 Expect FY17 average cost of debt ~ 5.5%, based on an S&P rating A-/Stable A-/Stable average fixed hedge ratio of 90% for the period Drawn debt1 $3.7b $3.4b Cash on d
Slide 11: Good visibility of future cost of debt
Good visibility of future cost of debt For personal use only Forward hedge rates1 positively impact Group WACD Billions($) 4.5 4.5% 4.4% 4.0 4.3% 3.5 3.0 4.1% 2.5 4.0% 2.0 Hedged Debt 3.9% 3.8% 1.5 1.0 3.6% 3.7% Hedge Rate 1H17 3.7% 0.5 Fixed Debt 0.0 3.5% FY17 FY18 FY19 FY20 FY21 1. Excludes fees a
Slide 12: Commercial Property
Commercial Property For personal use only John Schroder Stockland Shellharbour, NSW
Slide 13: Commercial Property: Solid recurrent earnings
Commercial Property: Solid recurrent earnings For personal use only Sustainable profit growth Asset FFO WALE Occupancy2 Weighted ROA Comparable FFO growth of 3.7% with solid results values (comparable (years) (stable average ($m) change) assets) cap rate across all sectors Retail sales stable Reta
Slide 14: Retail: Accretive development pipeline
Retail: Accretive development pipeline For personal use only Retail development activity progressing well Total Stabilised Incremental Completed spend ($m) yield1 IRR2 • $279m completed: • Wetherill Park, Sydney, showing strong results Wetherill Park (Sydney) 228 7.3% 15.8% • $442m under constructio
Slide 15: Stockland Wetherill Park: A leading lifestyle, food, fashion and leisure centre
Stockland Wetherill Park: A leading lifestyle, food, fashion and leisure centre For personal use only • Three extensions since 1983 completion • Customer demand for a redevelopment based on fresh food, cafes, restaurants, mini-majors, theatre, lifestyle, health and services • 5 Star Green Star Desig
Slide 16: Retail: Continuing to achieve positive leasing spreads
Retail: Continuing to achieve positive leasing spreads For personal use only Key operating metrics 1H17 1H16 Strong leasing momentum continues Occupancy2 99.5% 99.5% Maintained high occupancy and positive leasing spreads Specialty retail leasing activity3 WALE increased to 6.8 years1 Tenant rete
Slide 17: Logistics & Business Parks: improved occupancy
Logistics & Business Parks: improved occupancy For personal use only • Over 310,000 sqm of leasing activity, 23% of the portfolio Logistics & Business Parks 1H17 1H16 • Boral Sydney HQ, 5,000 sqm new lease at Triniti, Sydney Leasing activity executed 160,000 sqm 182,000 sqm • Erskine Park, Sydney, 1
Slide 18: Office: Optimising returns
Office: Optimising returns For personal use only 76% of portfolio in high performing Sydney office market where our Office 1H17 1H16 assets are fully occupied Leasing activity executed 2,900 sqm 6,800 sqm Investigating development opportunities in Sydney portfolio Leasing activity under HOA1 2,1
Slide 19: Residential
Residential For personal use only Andrew Whitson Minta Farm, Melbourne
Slide 20: Residential: Strongly positioned for growth
Residential: Strongly positioned for growth For personal use only Continuing growth in ROA, driven by implementation of our Residential 1H17 1H16 Change strategy and positive market conditions Lots settled 2,853 2,771 3.0% Record level of presales provides high visibility of earnings Revenue Ret
Slide 21: Residential: Operating profit margin targeted to remain above 15%
Residential: Operating profit margin targeted to remain above 15% for the short to medium term For personal use only On track for operating profit margin of 15-16% for FY17 Residential Core Workout1 Total Project mix lower in 1H17 due to fewer settlements in NSW Lots settled 2,686 167 2,853 Reve
Slide 22: Residential: Growing assets and customers
Residential: Growing assets and customers For personal use only Core Capital projects employed 1 Maintaining over 90% of funds employed in projects actively selling Delivering current 31 Active Projects $1.7b Strong customer demand for our new launch projects earnings ~57,900 Lots 2 Newport, B
Slide 23: Residential: Market overview
Residential: Market overview For personal use only 1H17 Stockland summary 12 month market outlook 1H17 settlement Comments on Vacant land Vacant land State volumes State Comments on market outlook our settlements in 1H17 sales volumes prices (% change over 1H16) Volumes reached a decade high in 2016
Slide 24: Retirement Living
Retirement Living For personal use only Stephen Bull Cardinal Freeman The Residences, Sydney 24
Slide 25: Retirement Living: Customer focus delivering results
Retirement Living: Customer focus delivering results For personal use only Total Portfolio 1H17 1H16 Change EBIT $28m $20m 36.0% Continued improvement in operating profit and ROA Operating Profit $26m $18m 43.8% Improved margins by ~200bp Occupancy 94.6% 93.9% Cash ROA 6.4% 5.2% Increa
Slide 26: Retirement Living: Building on success
Retirement Living: Building on success For personal use only Broadening customer reach Developing Seniors apartments, Cardinal Freeman, Sydney, Oceanside, Qld Progressing repositioning of middle ring villages including Oak Grange, Melbourne Non DMF Seniors Living, Aspire at Elara, Sydney Provi
Slide 27: Outlook
Outlook For personal use only Mark Steinert Willowdale Regional Park, Sydney
Slide 28: FY17 outlook
FY17 outlook For personal use only Our Purpose: We believe there is a better way to live Guidance for FY17 FFO per security growth tightened to 6-7%, assuming no material change in market conditions. Underpinned by: Settlements above 6,000 residential lots, with a settlement and profit skew to 2
Slide 29: Important Notice
For personal use only Important Notice While every effort is made to provide accurate and complete information, Stockland does not warrant or represent that the information in this presentation is free from errors or omissions or is suitable for your intended use. This presentation contains forward-