stockland 1q15 market update - asx2014/10/28 · the banner is a static image on the master slide...

133 Castlereagh Street Sydney NSW 2000

T 02 9035 2552 F 02 8988 2552

www.stockland.com.au

28 October 2014

ASX/Media Release

STOCKLAND 1Q15 MARKET UPDATE

Stockland will update securityholders on its current performance and outlook at its Annual General Meeting today. Stockland Managing Director and CEO, Mark Steinert, reconfirmed the group was on track to achieve earnings per security growth in FY15 of 6.0 – 7.5 per cent above FY14, assuming no material change in market conditions. Mr Steinert said the residential business had a particularly strong start to the financial year, underpinned by strong new projects launched in FY14 and positive market conditions, particularly in Sydney and South East Queensland. “Our Residential strategy of focusing on growth corridors is delivering, with 1,652 net deposits achieved in the first quarter, our strongest first quarter result in four years. We are on track to achieve settlements in FY15 towards the upper end of our target through the cycle range of 5000 – 6000 lots,” Mr Steinert said. “Our new projects, Willowdale in South West Sydney, Elara in North West Sydney, and Calleya in South East Perth, are generating particularly strong sales.” Mr Steinert said the Commercial property business is delivering solid returns, as Stockland continues to invest in its Retail and Logistics and Business Parks portfolios. “Our retail assets comprise around 50 per cent of our overall property portfolio and have achieved strong quarterly sales across most retail categories. We’ve seen the highest quarterly specialty sales growth since 2009 with food catering and retail services the strongest categories. Specialty sales grew 5.7 per cent in the first quarter of FY15 and comparable quarterly growth was 4.7 per cent.” During the quarter, Stockland further progressed its $460 million of active retail redevelopments in line with forecast and commenced the next two redevelopments in its pipeline – Glasshouse in the Sydney CBD and Point Cook in Victoria. International retailer H&M will open one of its largest stores in the world in the upgraded Glasshouse building on Pitt Street Mall, late in 2015. Stockland continues to grow and develop its Logistics and Business Park portfolio. Reflecting our strategic focus, this portfolio has grown from $1.2 billion at the end of FY13 to $1.6 billion today. Stockland executed leases on 10,400 square metres of space in its Logistics and Business Parks assets, and signed Heads of Agreements on a further 72,900 square metres of space during 1Q15. In its Office portfolio occupancy increased to 92.9 per cent from 90.3 per cent at 30 June 2014. Leases were executed on 5,600 square metres with tenants including St George Bank and Shell, and Heads of Agreements signed on a further 11,300 square metres during the period.

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The Retirement Living business continues to progress its organic growth strategy with developments underway at 11 villages, including the $160 million redevelopment of Cardinal Freeman Retirement Village at Ashfield in Sydney. Retirement Living reservations were lower in the first quarter of FY15, reflecting a later start to the sales campaign compared to the prior year and one less week in the reporting period. Mr Steinert confirmed the Retirement Living business remained on track to achieve its forecast for the full year, with a skew to the second half. Stockland Chairman, Graham Bradley, said: “These results reflect the good progress we have made, with all three of our major businesses – Commercial, Residential and Retirement Living – contributing positively to our improved results. The Group has now established a solid platform for future growth, supported by a considered strategy and an executive team focused on delivering sustainable returns for securityholders.

“In FY15 we expect to maintain our distribution at 24 cents per security, assuming no material decline in market conditions, and to make further progress towards our target payout ratio.”

Stockland Stockland (ASX: SGP) was founded in 1952 and has grown to become Australia’s largest diversified property group – owning, developing and managing a large portfolio of shopping centres, residential communities, retirement living villages, office and industrial assets. Stockland was recognised by the S&P Dow Jones Sustainability Indices (DJSI) with a Gold Class Award for 2014-15, which recognises companies that score within 1 per cent of the Global Real Estate Industry Group Leader. Stockland was also named one of the Global 100 Most Sustainable Corporations in the World at the World Economic Forum in Davos, Switzerland in 2014, for the fifth consecutive year.

For media enquiries Greg Spears Senior Manager - Media Relations Stockland T +61 (0)2 9035 3263 M +61 (0)406 315 014

Michelle Taylor General Manager - Stakeholder Relations Stockland T +61 (0)2 9035 2786 M +61 (0)400 356 692

For investor enquiries Antoinette Plater Senior Manager - Investor Relations Stockland T +61 (0)2 9035 3148 M +61 (0)429 621 742

Tim Mitchell Senior Analyst - Investor Relations Stockland T +61 (0)2 9035 2467 M +61 (0)478 308 513

Stockland Corporation Ltd ACN 000 181 733 Stockland Trust Management Ltd ACN 001 900 741 AFSL 241190 As Responsible Entity for Stockland Trust ARSN 092 897 348. F

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1Q15 Stockland Update

Stockland Wetherill Park, NSW

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Agenda 2

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Group Update 03

Commercial Property 05

Residential 07

Retirement Living 08

Focus on Business Priorities 09

Summary and Outlook

10

1Q15 Stockland update

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Group Update 3

Positive operating performance

Strongest quarter for comparable specialty sales since 2009

Good momentum continuing in our residential business

Australand capital profit of c.$80m – to be reinvested in growth initiatives

Progress on capital partnering:

Sale of a 50% interest in our redeveloped Townsville Shopping Centre (Qld) to an AMP Capital managed fund, for $228.7m, capitalisation rate of 6.25%1

Acquisition of a 50% interest in Sugarland Shoppingtown in Bundaberg (Qld), for $59.25m, capitalisation rate of 7.5%2

Maintained a leading position in global Sustainability indices

Our vision

To be a great Australian property company that delivers value to all stakeholders

Our values Community

Accountability

Respect

Excellence

Our primary objective

To deliver EPS growth and total risk-adjusted securityholder returns above the sector average

Our purpose We believe there’s a better way to live


1. Separate Coles and Kmart component of the investment has a capitalisation rate of 7.25%

2. Stockland has exchanged put and call contracts to buy the remaining 50% of Sugarland within 6 to 24 months on materially similar terms

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Creating sustainable, organic growth 4

Retail

50% of SGP portfolio1

Logistics & Business Parks


Office


Residential


Retirement Living


Create market leading or differentiated shopping centres

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Grow and develop a quality portfolio

Optimise returns - tactical allocation

Maximise returns by creating better places to live

Leading operator and developer

Artist’s impression Artist’s impression

Bells Reach, Qld Cardinal Freeman, NSW 135 King St / Glasshouse, NSW Balcatta, WA Stockland Baldivis, WA


1. Portfolio weightings as at 30 June 2014

Continuing to target 7-8% development yields and 12-14% IRRs for our $1.2b pipeline

Portfolio growth from $1.2b at the end of FY13 to $1.6b today

16,900sqm of leasing progress in the first quarter

Tracking towards 280 Completed Homes starts and 270 Medium Density starts in FY15

Progressing developments at 11 villages

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Retail Improving

Improving specialty sales performance

Strong quarterly sales performance from most categories

Strongest specialty categories were food catering, retail services and homewares

Comparable annual growth for major stores impacted by one less trading week compared to 1Q14

Retail development pipeline

Delivering the $1.2b retail pipeline, 12-14% IRRs

Hervey Bay, Baldivis and Wetherill Park developments progressing on time and in line with forecast

Point Cook and Glasshouse redevelopments have commenced

Progress on current development

Spend to 30 September ($m)

Total estimated cost ($m)

Estimated completion date

Hervey Bay, Qld 111 125 FY15

Baldivis, WA 24 116 FY15

Wetherill Park, NSW 85 222 FY16

Glasshouse, NSW4 - 14 FY16

Point Cook, Vic 3 24 FY16

1. Sales data includes all Stockland managed retail assets – including UPF assets 2. Quarter numbers include Merrylands and Townsville 3. Adjusted for one extra week of reported sales for the Majors 4. Reflects 50% JV costs

12 month comparable growth3:

Specialties 2.3% Supermarkets 1.7%

DDS/DS (1.4%) Mini-Majors and Other (0.8%)

Total 1.0%

5


Total Sales by Category1

to 30 September

MAT Growth

Comparable Annual Growth

1Q15 Total Growth

1Q15 Comparable

Growth2

Specialties 3.8% 2.3% 5.7% 4.7%

Supermarkets 1.2% 0.0% 3.7% 2.6%

DDS/DS (1.2)% (3.1)% 1.9% (0.5)%

Mini-Majors and Other

0.0% (0.8)% 1.6% 1.4%

Total 1.4% 0.0% 3.7% 2.5%

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Logistics and Business Parks, Office, solid leasing

Logistics & Business Parks:

Over 84,000sqm of leasing activity in the first quarter

Occupancy maintained at 96.4%

Development pipeline; both existing assets and greenfield opportunities are progressing

Development applications lodged at Ingleburn (NSW), Port Adelaide (SA), Yatala, Talavera for a potential 118,000sqm

Office:

Occupancy increased to 92.9%, up from 90.3% as at June 2014

Improving fundamentals in Sydney CBD flowing through to portfolio metrics

Over 7,000sqm of new leasing transactions completed at 135 King St (NSW) and Piccadilly Tower (NSW)

Brisbane and Perth CBD office markets remain soft

New leases completed with St George Bank and Shell at Waterfront Place (Qld)

1. As at September 30 2. By income

Logistics and Business Parks 1Q151 FY14

Leases executed 10,400sqm 349,600sqm

Leasing activity under HOA 72,900sqm 16,700sqm

Portfolio occupancy by income 96.4% 96.4%

Portfolio occupancy by area 94.5% 94.8%

Portfolio WALE2 4.7yrs 4.9yrs

6


Office 1Q151 FY14

Leases executed 5,600sqm 39,700sqm

Leasing activity under HOA 11,300sqm 6,500sqm

Portfolio occupancy by income 92.9% 90.3%

Portfolio occupancy by area 88.9% 86.6%

Portfolio WALE2 4.4yrs 4.5yrs

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Residential 7

346 380 372 506 463

394 511 560

486 519

510

598 494 417 432 188

252 74

370 238 1,438

1,741

1,500

1,779 1,652

1Q14 2Q14 3Q14 4Q14 1Q15

Vic

Qld

WA

NSW


Continuing residential strength

1,652 net deposits for the quarter, strongest 1Q result in four years

Sydney market remains strong

South East Queensland continuing to gather momentum

Melbourne steady with high levels of activity

Perth vacant land market continues to moderate

Strong demand for our new release projects Elara (NSW), Willowdale (NSW) and Calleya (WA)

Major projects at Lockerbie (Vic), Davis Road (Vic) and Caloundra (Qld) progressing well for launch in FY15, with first settlements in FY16

Commenced construction of Medium Density dwellings and Completed Homes, broadening market reach

On track to settle towards the upper end of our 5,000-6,000 lots through the cycle range

Net deposits

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Retirement Living 8

Reduced net reservations for the quarter, due to:

Later start to sales campaign in 1Q15 compared to prior year

One less week of trading in the quarter

Operating profit tracking to forecast but 1H:2H split affected by campaign timing

Developments progressing at 11 villages

Commenced seven of the 12 new stages for FY15

$160m Cardinal Freeman redevelopment progressing in line with expectations


73 67 80 74 55

164 158 138 158

128

237 225 218 232

183

1Q14 2Q14 3Q14 4Q14 1Q15

Established

Development

Net reservations

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Focus on business priorities

Achieved

Ongoing

Priority 1Q15 progress

Grow assets and customer base Retail development pipeline on track, Point Cook and Glasshouse redevelopments have commenced

Sugarland Shoppingtown acquisition

Logistics and Business Park portfolio upgrading underway

Expanding market reach to take advantage of strong residential conditions; on track for 550 new home starts in FY15

Operational Excellence Continuous process and technology system improvements

Leading Sustainability position in the 2014/15 S&P Dow Jones Sustainability Index

Capital Strength Delivery on Capital Partnering strategy with a 50%, $228.7m JV at Townsville

EUR300m Green Bond

9


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Summary & Outlook 10

Good progress on executing our business priorities

Maintaining our strategic capital allocation: 70% Trust, 30% Corporation

We remain on track to achieve our FY15 EPS growth guidance range of 6-7.5%1

FY15 Distribution per security expected to be maintained at 24.0c


1. Assumes no material decline in market conditions - excludes impact from the $80m pre tax capital profit realised from the sale of our Australand strategic stake

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Disclaimer Of Liability 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. The information provided in this presentation may not be suitable for your specific situation or needs and should not be relied upon by you in substitution of you obtaining independent advice. Subject to any terms implied by law and which cannot be excluded, Stockland accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information in this presentation. All information in this presentation is subject to change without notice.

Stockland Corporation Limited ACN 000 181 733

Stockland Trust Management Limited ACN 001 900 741; AFSL 241190 As a responsible entity for Stockland Trust ARSN 092 897 348

25th Floor 133 Castlereagh Street SYDNEY NSW 2000

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