Slide 1: First Half FY17 Results Presentation
SCA PROPERTY GROUP First Half FY17 Results Presentation 6 February 2017 Muswellbrook Fair, NSW
Slide 2: Agenda
AGENDA 1 Overview of First Half FY17 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 FY17 Results
1 OVERVIEW OF FIRST HALF FY17 RESULTS Anthony Mellowes Chief Executive Officer
Slide 4: First Half FY17 Highlights
FIRST HALF FY17 HIGHLIGHTS Financial Capital Active Portfolio Performance Management Management $53.5m, up by 9.6% 31.0% 98.4% 4.8% Funds from operations1 Gearing3, within 30 – 40% target range Portfolio occupancy6 Specialty vacancy6 $49.0m, up by 7.0% $2.12, up by 10.4% 6.62% Adjusted funds from op
Slide 5: Key Achievements – Delivering on Strategy
KEY ACHIEVEMENTS – DELIVERING ON STRATEGY • Specialty tenants continue to perform strongly Optimising the – Sales growth of 3.7% and occupancy cost of 9.7% Core Business – 7.6% average rental increase across 49 renewals completed during the period • Anchor tenant sales growth remains subdued, but su
Slide 6: Financial Performance
2 FINANCIAL PERFORMANCE Mark Fleming Chief Financial Officer
Slide 7: Profit & Loss
PROFIT & LOSS For the Six Months Ended 31 December 2016 • This table is consolidated including both the Australian and New Zealand assets. For a reconciliation to the statutory financial report, please refer to slide 27 • Net property income growing strongly – Anchor rental income down due to sale o
Slide 8: Funds From Operations
FUNDS FROM OPERATIONS For the Six Months Ended 31 December 2016 • Funds From Operations of $53.5m is up by 9.6% on the same period $m 1HY17 1HY16 % Change last year Net profit after tax (statutory) 204.7 90.8 125.4% – Non-cash and one-off items have been excluded Adjustment for non cash items – Whit
Slide 9: Balance Sheet
BALANCE SHEET As at 31 December 2016 • Value of Australian investment properties increased from $1,888.0m to $2,201.4m, primarily due to acquisitions ($144.3m plus transaction costs of $8.3m) and positive revaluations ($150.6m) with average valuation cap rates for Australian properties firming from
Slide 10: Debt and Capital Management
DEBT AND CAPITAL MANAGEMENT As at 31 December 2016 31 Dec 30 Jun • Gearing of 31.0%3 is within target range of 30% to 40% $m 2016 2016 Facility limit1 879.8 829.8 • Look through gearing (including the CQR and SURF 1 investments) is around 32.4% Drawn debt (net of cash)2 719.0 736.6 Gearing3 31.0% 34
Slide 11: Operational Performance
3 OPERATIONAL PERFORMANCE Anthony Mellowes Chief Executive Officer
Slide 12: Portfolio Overview
PORTFOLIO OVERVIEW Assets Number of Number of GLA Occupancy Value WALE Weighted average As at 31 December 2016 centres specialties (sqm) (% GLA) (A$m) (yrs) cap rate (%) Freestanding 1 - 9,719 100.0% 44.7 18.8 6.50 Neighbourhood 65 855 366,934 98.3% 1,612.3 9.7 6.60 Sub-regional 7 337 139,718 98.8%
Slide 13: Portfolio Occupancy
PORTFOLIO OCCUPANCY Australian portfolio occupancy is 98.4% • Total Australian portfolio occupancy is stable at 98.4% Portfolio Occupancy (% of GLA) of GLA 98.8% 98.7% 98.6% 98.4% – Specialty vacancy of 4.8% is slightly higher due to acquisitions, but still within the normalised target range of 3-5%
Slide 14: Sales Growth & Turnover Rent
SALES GROWTH & TURNOVER RENT • Supermarket MAT1 sales growth remains subdued primarily due Comparable Store MAT1 Sales Growth by Category (%) to price reductions over the last 24 months – Volumes and transactions have shown solid growth As at As at – Early signs of a recovery in supermarket sales gr
Slide 15: Specialty Key Metrics
SPECIALTY KEY METRICS Positive rent reversions are expected to continue • Specialty sales continue to grow strongly, assisted by Australian Specialty Tenant Metrics supermarket volume growth 31 Dec 2016 30 Jun 2016 • Average specialty occupancy cost is sustainable and average specialty rent / sqm re
Slide 16: Growth Initiatives
4 GROWTH INITIATIVES Anthony Mellowes Chief Executive Officer
Slide 17: Active Portfolio Management
ACTIVE PORTFOLIO MANAGEMENT Five acquisitions and NZ divestment in the six months to 31 December 2016 Acquisitions Muswellbrook Fair Shopping Centre Lillybrook Shopping Village (Muswellbrook, NSW) (Kallangur, QLD) • Acquisition completed in July 2016 for $29.3m • Acquisition completed in October 201
Slide 18: Neighbourhood Centres in Australia
NEIGHBOURHOOD CENTRES IN AUSTRALIA Fragmented ownership provides acquisition opportunities Neighbourhood Centre Landscape in Australia Ownership of Neighbourhood Centres in Australia (Number of centres) • There are over 850 Coles and Woolworths anchored Indicative neighbourhood centres in Australia
Slide 19: Indicative Development Pipeline
INDICATIVE DEVELOPMENT PIPELINE We have identified over $150m of development opportunities at 21 of our centres over the next 5 years1 Estimated Capital Investment (A$m) Development Type Centre(s) FY17 FY18 FY19 FY20 FY21 Centre Improvement Burnie, Murray Bridge, The Markets 0.3 2.7 2.6 - - Stage 3
Slide 20: Funds Management Business
FUNDS MANAGEMENT BUSINESS Potential to deliver additional earnings growth in the future • First fund “SURF 1” progressing well – Investment property valuation increased from $60.9m in Woolworths & Big W, Katoomba October 2015 to $64.8m as at 31 December 2016, with NTA per unit increasing from $0.95
Slide 21: Key Priorities and Outlook
5 KEY PRIORITIES AND OUTLOOK Anthony Mellowes Chief Executive Officer Mark Fleming Chief Financial Officer
Slide 22: Core Strategy Unchanged
CORE STRATEGY UNCHANGED Defensive, resilient cashflows to support secure distributions to our unitholders Weighted to Focus on convenience- Long leases to non-discretionary based retail centres quality anchor tenants retail segments Appropriate Growth capital structure opportunities 22
Slide 23: Potential Earnings Growth Trends
POTENTIAL EARNINGS GROWTH TRENDS Continued solid earnings growth expected over time Indicative Contribution to FFO Growth Rate (% pa) Description and Assumptions (medium to longer term) Anchor • Anchor rental income represents about 54% of overall gross property income 0 - 1% Rental • Once turnover
Slide 24: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK Continue to deliver on strategy in FY17 • Increase specialty rent per sqm by optimising tenancy mix and achieving rental uplifts Optimising the on renewals Core Business • Bunnings to open in the ex-Masters tenancy at Mount Gambier in 1H FY18 • Continue to explore value-ac
Slide 25: Questions
SGA Property Group 6 QUESTIONS
Slide 26: Appendices
SGA Property Group 7 APPENDICES
Slide 27: Profit & Loss Reconciliation (A$)
PROFIT & LOSS RECONCILIATION (A$) For the Six Months Ended 31 December 2016 • The accounting standards require separate disclosure as a “discontinued operation” when a reported segment is sold. As such, our New Zealand earnings have been reclassified as “discontinued operation” and the prior year co
Slide 28: Sustainability
SUSTAINABILITY We continue to focus on long-term sustainable performance Our Sustainability Objectives SCP has established a sustainability strategy (environment, social and governance) that aims to reduce risks, improve operations and enhance stakeholder relationships for the Strengthen the relatio
Slide 29: Long Term Leases to Woolworths and Wesfarmers Group
LONG TERM LEASES TO WOOLWORTHS AND WESFARMERS GROUP • 54% of gross rent generated by Woolworths (43%) Overall Lease Expiry (% of gross rent) and Wesfarmers Group (11%) (on a fully leased basis), with an Anchor WALE of 13.4 years 45.2% • Opportunity to realise positive rent reversions from specialty
Slide 30: Anchor Tenants
ANCHOR TENANTS Increasing exposure to Wesfarmers Limited 30 June 2016 30 June 2013 30 June 2014 30 June 2015 post NZ sale 31 December 2016 • All of our centres are currently Woolworths Limited anchored by either Woolworths Woolworths 50 51 53 53 54 Limited or Wesfarmers Limited Big W 8 9 9 8 8 retai
Slide 31: Investment Properties Value
INVESTMENT PROPERTIES VALUE • Acquisitions of $144.3m being A$m Muswellbrook Fair ($29.3m), 2,500 Jimboomba Junction ($27.5m), 5.4 2,201.4 Belmont Central ($28.5m), Annandale 157.4 150.6 Central ($33.5m) and Lillybrook 2,000 1,888.0 Shopping Village ($25.5m). $8.3m of stamp duty and other transactio
Slide 32: Debt Facilities & Interest Rate Hedging
DEBT FACILITIES & INTEREST RATE HEDGING Facility Limit Drawn Debt Undrawn $m (A$m) (A$m) (A$m) Maturity Bank Facilities Bank bilateral 190.0 120.0 70.0 Nov – Dec 2018 Bank bilateral 25.0 25.0 - Feb 2019 Bank bilateral1 230.0 145.0 85.0 Dec 2019 Debt Facilities 445.0 290.0 155.0 as at Medium Term Not
Slide 33: Acquisitions During the Period
ACQUISITIONS DURING THE PERIOD Six months to 31 December 2016 Implied Anchor Specialty Total Total Purchase Acquisition Acquisition GLA GLA GLA % GLA Price Cap Rate Centre Type Date (sqm) (sqm) (sqm) Committed ($m) (Fully-Let) Acquired Properties Muswellbrook Fair, NSW Neighbourhood Jul 2016 5,103 3
Slide 34: Divestments During the Period
DIVESTMENTS DURING THE PERIOD Six months to 31 December 2016 Anchor Specialty Total Total Sale Divestment GLA GLA GLA % GLA Price Divestment Centre Type Date (sqm) (sqm) (sqm) Committed (NZ$m) Cap Rate Divested Properties (NZ) Neighbourhood / Tranche 1 Jul 2016 22,927 6,397 29,324 98.6% 128.2 Freest
Slide 35: Portfolio List (I)
PORTFOLIO LIST (I) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Dec-16 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Australia Lilydale VIC Sub-Regional WOW; Big W; Aldi Jul-13 22,066 100% 58 12.6 6.25% 103.0 Pakenh
Slide 36: Portfolio List (II)
PORTFOLIO LIST (II) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Dec-16 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Australia Annandale Central QLD Neighbourhood Coles Oct-07 6,685 93% 20 8.0 7.25% 33.5 Ayr QLD Ne
Slide 37: Portfolio List (III)
PORTFOLIO LIST (III) WALE Valuation Completion Total GLA Occupancy Number of (Years by Valuation Dec-16 Property State Property Type Anchor Tenant(s) Date (sqm) (% by GLA) Specialties GLA) Cap Rate (A$m) Properties Under Management - "SURF 1" Burwood DM NSW Freestanding Dan Murphy's Nov-09 1,400 100
Slide 38: Management Team
MANAGEMENT TEAM Anthony Mellowes, Chief Executive Officer Mark Fleming, Chief Financial Officer • Mr Mellowes is an experienced property executive. Prior to joining SCA • Mr Fleming worked for 8 years at Woolworths Limited from 2003 to 2011, Property Group as an Executive Director, Mr Mellowes was e
Slide 39: SCA Property Group
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 of Shopping Centres Au