Slide 1: FY16 annual results
For personal use only Emporium Melbourne, VIC FY16 annual results 17 August 2016
Slide 2: Overview
For personal use only Overview Angus McNaughton Emporium Melbourne, VIC
Slide 3: Agenda
For personal use only Agenda Angus McNaughton Richard Jamieson Michael O’Brien CEO and Managing Director Chief Financial Officer Chief Investment Officer and Acting EGM Development Overview Angus McNaughton Financial results Richard Jamieson Portfolio update Michael O’Brien Summary and Angus McNaugh
Slide 4: FY16 highlights
FY16 highlights A strong first 12 months as Vicinity Centres Strong results $960.9m 12.8% For personal use only Underlying earnings up 9.5%, underlying earnings per security (EPS) up 9.0% Net profit1 Total return1,2 Over 100% of targeted synergies locked-in, well ahead of program 9.5% 99.4% Strong b
Slide 5: Strategic focus
Strategic focus Creating value and sustainable growth by owning, managing and developing quality Australian retail assets For personal use only Group investment principles affirmed Key financial objectives (‘through cycle’ basis) Simple and transparent business model, with a single sector focus Inve
Slide 6: Total merger operational synergies exceeded
Total merger operational synergies exceeded Achieved ahead of program with integration well progressed and business to reinvest in capability For personal use only Exceeded total merger operational cost synergies target P&L synergy savings ($m)1 $50m of operational synergies locked-in, with $29m of
Slide 7: Portfolio enhancement strategy
Portfolio enhancement strategy Clear strategy established to improve portfolio quality For personal use only Acquisitions Acquired three assets for $358m1 Joint venture to develop a DFO at Perth Airport2 for ~$145m, Acquisitions Divestments with commencement expected mid-2017 Divestments Sold $218.1
Slide 8: Digital
Digital Focused on creating a seamlessly integrated digital and physical property platform For personal use only Digital vision To be Australia's most frequented and most loved retail destinations through seamlessly combined physical and digital consumer experiences Connecting all owned shopping cen
Slide 9: Retail environment
Retail environment Solid economic growth outlook, improving consumer sentiment, lower savings ratio and lower AUD support solid retail sales Domestic economic growth outlook remains solid Improving consumer sentiment should support retail sales growth For personal use only 25% 130 12% Australian nom
Slide 10: Financial results
For personal use only Financial results Richard Jamieson Chadstone, VIC
Slide 11: Financial results: strong underlying earnings growth
Financial results Strong underlying earnings growth For personal use only Jun-16 Jun-15 Change Statutory net profit of $960.9m For the 12 months to ($m) ($m)1 (%) Solid NPI growth Net property income (NPI) 953.6 936.9 1.8 Comparable4 NPI growth of 3.5% driven Partnerships and other income 66.1 66.0
Slide 12: Underlying earnings
Underlying earnings Developments, underlying portfolio income growth and merger synergies drive strong earnings growth FY16 Underlying earnings waterfall For personal use only $m +9.5% 52.0 22.7 29.5 7.0 13.4 757.5 691.8 FY15 Underlying Disposals Acquisitions Developments Underlying portfolio Merger
Slide 13: Balance sheet
Balance sheet Strong growth in net tangible assets (NTA) For personal use only Jun-16 Jun-15 Change Direct property increased by 3.9%1, driven by As at ($m) ($m) ($m) valuation gains, capital expenditure and acquisitions Cash 52.8 107.4 (54.6) of $1.7b (or 12.0%) offset by $1.1b (or 8.1%) of disposa
Slide 14: Valuations
Valuations Strong portfolio valuation gains of $708m1 or 5.0% over the year For personal use only Strong valuation growth across the portfolio Comparable NPI growth of 3.5% portfolio performing well Weighted average capitalisation rate down 35 bps to 5.95%, reflecting improved portfolio quality af
Slide 15: Capital management
Capital management Merger refinancing program complete resulting in lower costs and extended debt duration For personal use only Merger refinancing program completed As at Jun-16 Jun-15 $1.8b bridge facility repaid and cancelled in December 2015 Weighted average interest rate1 (%) 4.0 4.2 A$433m of
Slide 16: Capital management: debt capital management
Capital management An active period of debt capital management Debt maturity profile1 Debt sources1 Appropriate debt capacity For personal use only As at 30 June 2016 Total facilities of $5.1b 2,500 Drawn debt of $3.9b comprised of 44% bank debt and 56% debt capital markets 2,000 24% Available liqui
Slide 17: Portfolio update
For personal use only Portfolio update Michael O’Brien Emporium Melbourne, VIC
Slide 18: Portfolio summary
Portfolio summary Improving metrics reflect our portfolio enhancements For personal use only Portfolio quality enhanced over the period As at 30-Jun-16 30-Jun-15 Five development projects completed Number of retail assets1 81 88 Three assets acquired Gross lettable area (m)(sqm) 2.7 2.8 Ten non-core
Slide 19: Acquisitions
Acquisitions Acquired two strongly performing Perth assets and accessed two outstanding DFO opportunities The Shops at Ellenbrook, WA DFO Perth Airport, WA For personal use only • Acquired December 2015 for $220m1 • Joint venture to develop an Outlet Centre • Since acquisition, 13 lease transactions
Slide 20: Portfolio sales by store type
Portfolio sales by store type Significant improvement in total portfolio MAT growth For personal use only Actual MAT Jun-16 Specialty sales growth of 3.0% with two prime assets Comparable1 (Chadstone and Emporium Melbourne) not in comparable Proportion of MAT growth basket portfolio (%) • Chadstone
Slide 21: Portfolio specialty store performance
Portfolio specialty store performance Growth across all categories except homewares For personal use only Actual MAT Jun-16 Comparable1 MAT growth Apparel % of Despite warm start to Autumn, sales growth increased to 3.0% with men’s apparel (up 7.2%), fashion accessories (up 7.5%) MAT specialty Jun-1
Slide 22: Portfolio sales by state
Portfolio sales by state Victoria and Queensland strong with Western Australia and South Australia improving For personal use only Comparable1 specialty store MAT growth by state (%) Victoria 5.3 Strong population growth and labour market improvements 6 4.5 Three DFOs performing very strongly 4 3.0
Slide 23: Leasing
Leasing Positive leasing spread recorded for the period, together with an improvement in occupancy For personal use only Leasing spread1 (%) Productive period of leasing For the 12 months to Jun-16 Jun-15 Portfolio occupancy improved from 98.9% to 99.4% 1,397 lease transactions completed2 Leasing sp
Slide 24: Development highlights
Development highlights Extensive development opportunities a key driver of portfolio enhancement and growth Development pipeline of $3.7b1 For personal use only Five projects totalling2 $309m completed and trading strongly Leasing of Chadstone retail and office projects largely complete $350m Mandur
Slide 25: Expanded development pipeline totalling $3.7b
Expanded development pipeline totalling $3.7b1 Development pipeline provides significant opportunity for value creation $m Vicinity’s share Partner share Total For personal use only Chadstone Retail and Office 333 666 Gateway Plaza 85 Current Mandurah Forum 175 350 DFO South Wharf car park 46 61 2 O
Slide 26: Warriewood Square development completed
Warriewood Square (NSW) $87m development1 completed Centre revitalisation and expansion For personal use only Centre metrics Post Change Majors 4 +1 +7,907 sqm GLA Mini majors 2 +2 Specialties 112 +26 Car spaces 1,450 +394 June 2016 Project complete GLA (sqm) 30,043 +7,907 Opened on schedule Reposit
Slide 27: Chadstone development progressing well
Chadstone (VIC) development progressing well The evolution of Australia’s best shopping centre continues Key metrics For personal use only Cost (Retail and Office)1 $666m +19,800 sqm Q2 FY17 Initial yield >6% Key retail stage GLA complete Expected IRR >10% World-class entertainment and leisure preci
Slide 28: Chadstone development
Chadstone development Construction progress For personal use only Central atrium Office and bus interchange completed Vicinity Centres | FY16 annual results | 17 August 2016 28
Slide 29: Mandurah Forum development commenced
Mandurah Forum (WA) development commenced Major redevelopment with significantly improved product offer to capture growth opportunity For personal use only Key metrics Cost1 $350m +26,000 sqm Mid-2018 project Yield >6% GLA completion Expected IRR >10% Positioned to reinforce centre as dominant retai
Slide 30: DFO Perth Airport
DFO Perth Airport (WA) Joint venture to create a new DFO at prime location in Perth For personal use only Key metrics Cost1 ~$145m 24,000 sqm Mid-2017 target Initial yield >8% GLA commencement2 Expected IRR >13% Joint venture to develop the first DFO in Perth • Over 110 specialty stores • Over 1,600
Slide 31: The Glen development approvals well advanced
The Glen (VIC) development approvals well advanced Major redevelopment to capitalise on high income trade area and capture escape expenditure For personal use only Centre metrics Post Change Majors 5 +1 +18,900 sqm GLA Mini majors 16 +6 Specialties 240 +~70 2017 Car spaces 3,600 +500 target GLA (sqm
Slide 32: Roselands development planning continues
Roselands (NSW) development planning continues Proposed major redevelopment to re-establish iconic centre as the dominant retail destination in the trade area For personal use only Centre metrics Post Change Majors 7 +3 +34,500 sqm GLA Mini majors 20 +12 Specialties ~280 +~115 2017 Car spaces 3,600
Slide 33: Galleria planning advanced
Galleria (WA) planning advanced Significant proposed redevelopment to transform centre to become Super Regional For personal use only Centre metrics Post Change Majors 8 +1 +53,000 sqm GLA Mini majors 18 +11 Specialties ~350 ~180 FY18 Car spaces ~6,100 ~2,000 target GLA (sqm) ~126,000 ~53,000 commen
Slide 34: Sustainability roadmap established
Sustainability roadmap established Vision to become a leading global retail REIT For personal use only Integrated sustainability strategy Focused on creating shared value Centre significance in the community FY16 FY17 Climate resilient portfolio Foundations laid Strategy rollout Integrated strategy
Slide 35: Summary and FY17 guidance and focus
For personal use only Summary and FY17 guidance and focus Angus McNaughton Chadstone, VIC
Slide 36: FY16 summary
FY16 summary A strong first 12 months as Vicinity Centres For personal use only Strong result delivered, with high single-digit underlying earnings growth Merger synergies fully locked-in and further synergies identified Strengthened balance sheet with extended duration and diversity Improved portfo
Slide 37: FY17 guidance and focus
FY17 guidance and focus Well positioned to create long-term value and sustainable growth For personal use only Solid retail growth outlook forecast FY17 underlying EPS guidance FY17 underlying EPS guidance of 18.6 to 18.8 cents1 21.0 • Assumes $1.5b divestment program2,3 completes in 1H FY17 20.0 •
Slide 38: Appendices
For personal use only 39 Direct portfolio 48 Tenants 41 Assets under management 49 Asset summaries Appendices 42 Financial results 57 Organisational chart 46 Capital transactions 58 Key dates 47 Development pipeline 59 Contact details Halls Head, WA
Slide 39: Direct portfolio
Direct portfolio Well diversified by geographic and retail sub-sector exposure For personal use only Centre type composition Geographic exposure 15 5 2 City Centre 17 Regional 2 3 Regional Sub Regional 2 4 Sub Regional Outlet 7% Major Regional 1 5 Neighbourhood Neighbourhood 1 Regional 2 1 Outlet Ce
Slide 40: Direct portfolio: key statistics by centre type
Direct portfolio Key statistics by centre type For personal use only As at 30 June 2016 Total portfolio Regional1 Sub Regional Neighbourhood Outlet Centre Number of retail assets 81 23 35 18 5 Gross lettable area (m)(sqm) 2.7 1.5 0.8 0.2 0.2 Total value ($b) 14.6 9.5 3.4 0.7 1.1 Portfolio weighting
Slide 41: Assets under management
Assets under management Over 9,000 leases across 91 assets under management1 For personal use only Direct portfolio Managed Third party/ Total As at 30 June 2016 Wholly-owned1 Co-owned Total co-owned AUM Number of retail assets 53 28 81 10/28 91 Gross lettable area (000’s)(sqm) 1,206 1,450 2,656 234
Slide 42: Underlying earnings reconciliation to net profit after tax
Financial results Underlying earnings reconciliation to net profit after tax For personal use only 30-Jun-16 30-Jun-15 For the 12 months to ($m) ($m) Underlying earnings 757.5 691.8 Subtract Federation underlying earnings prior to the Merger - (240.8) Property revaluation increments for directly own
Slide 43: Distribution reconciliation to earnings measures
Financial results Distribution reconciliation to earnings measures For personal use only 30-Jun-16 30-Jun-15 Underlying earnings up 9.5% For the 12 months to ($m) ($m) FFO up 8.9% Underlying earnings 757.5 691.8 Distribution up 4.7% Less: Rent lost from undertaking developments (18.0) (12.5) Payout
Slide 44: Changes to net corporate overheads
Financial results Changes to net corporate overheads over FY16 and expected over FY17 For personal use only Changes to net corporate overheads from FY15 to FY17 $m 120 2.4 100 5.0 27.0 8.0 2.4 15.0 80 60 105.4 40 80.8 81.2 20 0 FY15 Corporate cost Overhead FY16 Corporate cost Reinvestment Impact of
Slide 45: Interest rate hedging profile
Financial results Interest rate hedging profile For personal use only Hedging profile1 Key hedging statistics 4,000 5.5% 30-Jun-16 30-Jun-15 3,500 5.0% 3,000 4.5% Weighted average hedge rate2 (%) 3.0 3.8 Proportion of debt hedged3 (%) 91 74 2,500 4.0% Notional A$m Hedge rate 2,000 3.5% 1,500 3.0% 1,
Slide 46: Capital transactions
Capital transactions An active period of portfolio enhancement Purchase For personal use only Disposals Settlement Sale price Passing yield Acquisitions Settlement price2 Cap rate Date ($m) (%) Date ($m) (%) Sold 1H FY16 The Shops at Ellenbrook Dec-15 220.0 5.75 Goulburn Plaza Aug-15 67.0 Livingston
Slide 47: Development pipeline
Development pipeline Vicinity’s share of costs to complete projects under construction is $296m For personal use only Total Vicinity’s share Identified development pipeline ($m) project Project Spent Cost to cost cost to date complete Chadstone Retail and Office 666 333 235 98 Mandurah Forum 350 175
Slide 48: Tenants
Tenants Key portfolio tenants For personal use only Top 10 tenants Top 10 tenant groups Number % of Number % of Rank Retailer Retailer type of stores income Rank Retailer of leases income Brands 1 Supermarket 52 4.4 1 132 10.1 Coles, Kmart, Liquorland, Target Big W, BWS, Dan Murphy’s, 2 Supermarket
Slide 49: Asset summaries: centre statistics
Asset summaries Centre statistics For personal use only Moving Specialty Ownership Occupancy annual Centre Specialty occupancy Centre type interest GLA rate turnover sales sales costs (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%)1 New South Wales Chatswood Chase Sydney Major Regional 100 63,713 100.0 573.0
Slide 50: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving Specialty Ownership Occupancy annual Centre Specialty occupancy Centre type interest GLA rate turnover sales sales costs (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%)1 Queensland QueensPlaza City Centre 100 39,062 99.3 311.0 8,750 2
Slide 51: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving Specialty Ownership Occupancy annual Centre Specialty occupancy Centre type interest GLA rate turnover sales sales costs (%) (sqm) (%) ($m) ($/sqm) ($/sqm) (%)1 Victoria Chadstone Shopping Centre Super Regional 50 162,645 100
Slide 52: Asset summaries: centre statistics (continued)
Asset summaries Centre statistics (continued) For personal use only Moving Specialty Ownership Occupancy annual Centre Specialty occupancy Centre type interest GLA rate turnover sales sales costs (%) (sqm) (%)1 ($m) ($/sqm)1 ($/sqm)1 (%)1,2 Victoria (continued) Bentons Square Neighbourhood 50 9,993
Slide 53: Asset summaries: valuations
Asset summaries Valuations For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement 30-Jun-16 30-Jun-16 31-Dec-15 Movement 30-Jun-16 (%) ($m)1,2 ($m)1 (%) (%) (%) New South Wales Chatswood Chase Sydney Major Regiona
Slide 54: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement 30-Jun-16 30-Jun-16 31-Dec-15 Movement 30-Jun-16 (%) ($m)1,2 ($m)1 (%) (%) (%) Queensland QueensPlaza City Centre 100 3
Slide 55: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement 30-Jun-16 30-Jun-16 31-Dec-15 Movement 30-Jun-16 (%) ($m)1,2 ($m)1 (%) (%) (%) Victoria Chadstone Shopping Centre Super
Slide 56: Asset summaries: valuations (continued)
Asset summaries Valuations (continued) For personal use only Net Value Capitalisation rate Discount rate Ownership revaluation As at As at As at As at Centre type interest movement 30-Jun-16 30-Jun-16 31-Dec-15 Movement 30-Jun-16 (%) ($m)1,2 ($m)1 (%) (%) (%) Victoria (continued) Bentons Square Neig
Slide 57: Organisational chart
Organisational chart Structured to support strategy execution For personal use only CEO and Managing Director Angus McNaughton Chief Investment EGM EGM Chief Financial EGM EGM Officer and Acting Business General Counsel Digital, Marketing, Officer EGM Development Leasing Shopping Centres Development
Slide 58: Key dates
Key dates Investor calendar For personal use only Key dates FY16 annual results 17 August 2016 June 2016 distribution payment 30 August 2016 2016 Annual General Meeting 18 November 2016 Ex-distribution date for December 2016 distribution 29 December 2016 Record date for December 2016 distribution 30
Slide 59: Contact details and disclaimer
Contact details and disclaimer For further information please contact: For personal use only 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 Disclaimer This document i