COMMERCIAL UPDATE 21 September 2006

Transcription

1 COMMERCIAL UPDATE 21 September

2 STEVE MANN CEO, Commercial & Industrial Division Stockland Commercial Division update 2

3 PRESENTATION AGENDA C&I Business Model C&I Mission SEE The Future of Australian Office Markets SEE Strategic Pillars C&I Business Wrap 3

4 Human Resources C&I OPERATING BUSINESS MODEL Owner Manager Developer Best practice operating model FUND ASSET 4 Development Marketing/CRM Finance Business Development Marketing/CRM Specialist drivers Operating business

5 C&I CLUSTER ASSET MODEL Office Clusters Sydney CBD North Shore Melbourne Brisbane Canberra Senior Asset Manager Asset Manager(s) Portfolio Accountant Portfolio Administrator Facilities Manager Facilities Controller(s) 5

6 STOCKLAND C&I MISSION: SEE GROWTH STAKEHOLDERS SYSTEMS & PROCESSES PRODUCT & SUSTAINABILITY STOCKLANDC&I ENGAGING ENVIRONMENTS BRAND PEOPLE 6

7 SEE GROWTH StocklandC&I Engaging Environments To grow by developing new opportunities, partnerships & excellence in benchmarking Acquisitions Development & MPGs Joint Ventures Industry Relationships Research & forecasting Partnering internally with UPF 7

8 SIMON FAIRFAX General Manager, Business Development The Future of Australia Office Markets 8

9 OFFICE MARKET OVERVIEW DEMAND Company Profit Growth & Office Demand 40% 600 Growth in Company Profits (% p.a) 30% 20% 10% 0% -10% -20% -30% Company Profits Net Absorption - Capital City CBDs Net Absorption ('000m2) -40% FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY Demand recovery since mid 2004 Some moderation is expected in 2007 Momentum of rental growth continues Source: ABS, PCA 9

10 OFFICE MARKET OVERVIEW SUPPLY Current Rent as a % of Economic Development Rent Brisbane & Perth - the largest gap in rents for existing and brand new space. Gap expected to close.but supply capped by financial viability Sydney & Melbourne relatively small differential. New supply may pose some risk for existing buildings.. 100% Ratio of Current to Economic Rent 80% 60% 40% 20% 0% Source: CB Richard Ellis, December 2005 Brisbane Perth Sydney Melbourne 10

11 SYDNEY GROWTH DUE TO TIGHT SUPPLY Office Market Demand Sydney CBD Office Market Supply Sydney CBD FY02 FY01 FY00 FY05 FY04 FY03 FY08 FY07 FY06 FY % 3% 0% -3% -6% -200 Net Additions to Stock Percentage of Stock Sustained positive absorption Low supply relative to size of market 11 Source: PCA, JLL, Access Economics Net Absorption ('000 2 ) Office Based Employment Growth (% p.a) Net Additions to Stock ('000m 2 ) Net Absorption Office Based Employment Forecast 9% 300 Forecast % of Stock 6% 4% 2% 0% FY09 FY01 FY00 FY03 FY02 FY05 FY04 FY07 FY06 FY %

12 MELBOURNE SOLID DEMAND BASE Office Market Supply Melbourne CBD Office Market Demand Melbourne CBD 250 Forecast 6% 250 Forecast 6% Net Additions to Stock ('000m 2 ) FY09 FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01 FY00 Net Additions to Stock Percentage of Stock 5% 3% 2% 0% -2% -3% % of Stock Net Absorption ('000 m 2 ) FY09 FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01 FY00 Net Absorption Office Based Employment 5% 4% 3% 2% 1% 0% -1% -2% -3% Office Based Employment Growth (% p.a) Several strong years of supply & solid pipeline in the CBD Vacancy rate to edge up as supply starts outstripping demand Source: PCA, JLL, Access Economics 12

13 BRISBANE PENT-UP DEMAND REALISED Office Market Supply & Demand Brisbane CBD Net Additions to Stock & Net Absorption ('000m2) FY09 FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01 FY00 Prime Office Rents Brisbane CBD Forecast 8% 7% 6% 5% 4% 3% 2% 1% 0% Vacancy Rate (%) Gross Rent ($/m2) Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Forecast Jun-08 Jun-09 Net Additions to Stock Net Absorption Vacancy Rate Face Effective Vacancy well below equilibrium as demand outstrips supply Incentives to rise as supply levels pick up Source: PCA, JLL, Access Economics 13

14 PERTH DEEP RESOURCES BOOM Office Market Supply & Demand Perth CBD Net Additions to Stock & Net Absorption ('000m2) FY00 FY01 FY02 FY03 FY04 FY05 Prime Office Rents Perth CBD Forecast 16% 12% 8% 4% Vacancy Rate (%) Gross Rent ($/m2) FY06 FY07 FY08 FY09 0% 0 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Forecast Jun-07 Jun-08 Jun-09 Net Additions to Stock Net Absorption Vacancy Rate Face Effective High economic rent contributed to very tight supply Very strong demand has virtually extinguished incentives and is driving rent growth Source: PCA, JLL, Access Economics 14

15 CANBERRA SHORT TERM FAVOURABLE ADELAIDE SUBDUED DEMAND Net Additions to Stock & Net Absorption ('000m2) Office Market Dynamics Canberra Region FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 7% 6% 5% 4% 3% 2% 1% 0% -1% Net Additions to Stock Net Absorption Office Based Employment Canberra Forecast New supply 70% pre-committed but backfill space a long term issue Office Based Emp. Growth (% p.a) Net Additions to Stock ('000m2) Office Market Dynamics Adelaide CBD FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 Forecast FY08 FY09 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% Net Additions to Stock Net Absorption Office Based Employment Adelaide New supply largely pre-committed but backfill space a long term issue Office Based Employment Growth (% p.a) Solid demand driven by short term strength in office based job growth Source: PCA, JLL, Access Economics Positive short term demand outlook with moderate rental growth 15

16 JAMES MAH-CHUT General Manager, Development Growth Through Development 16

17 GROWTH THROUGH DEVELOPMENT - PIPELINE Project Status Total Cost ($m) Yield Building Area m 2 Pipeline Under Construction Optus HQ 100% Pre lease % 84, Waterloo Road 33% Pre lease % 10,400 Yennora Building 8B 100% Pre lease 7 8.0% 8,000 Project Status Total Cost Est ($m) Est Yield Building Area m 2 Pipeline Yet to Commence Lot 21, Riverside Section 96 lodged % 54,000 Yennora Building 8A DA approved, subject to pre lease 7 8.0% 8,000 North Lakes, QLD Masterplanning % 100,000 Wacol 3976 Ipswich Road, QLD (Joint Venture) Design development % to 7.5% 53,000 TOTAL PIPELINE ,400 17

18 MIXED USE DEVELOPMENT Eagle Street Pier Site area 1.0 ha Zoning Multi Purpose Centre 1 (MP1) Design Masterplanning commenced for Apartments, Retail and Commercial Opportunity Prime golden triangle location and views 18

19 MIXED USE DEVELOPMENT Toowong Site area Acquisitions: 11,234sqm High St 88 Jephson St Design Masterplanning commenced Zoning Multi purpose Centre (MP2) FSR (Current) FSR Potential (TOD) 2.5:1 (30,650 sqm) 5:1 (61,300 sqm) 19

20 GEORGE WEBSDALE General Manager, Commercial Commercial Portfolio Update SEE Pillars SEE Stakeholders SEE Systems and Processes 20

21 OFFICE PORTFOLIO SUMMARY Properties: 28 Lettable Area: 516,720m2 Grade: 72% prime Value: $2.0b VIC 9% WA 5% SA 4% ACT 7% QLD 13% NSW 62% Excludes 157 Liverpool Street at 30 June

22 CONTINUED LEASING MOMENTUM Commercial Lease Expiry June 06 By Area FY11+ 39% Vacant <1% FY07 16% FY08 12% 13,500sqm of new deals since June 2006 Waterfront Place benchmark rents Addressing FY08 expiries Opportunities in strengthening markets FY09 14% FY10 18% WALT: 4.2yrs Excludes 157 Liverpool Street 22

23 CUSTOMER FOCUSED MANAGEMENT DRIVES GROWTH Strong retention driving occupancy levels Occupancies remained above 96% since June 2002 Stockland Commercial have outperformed the National occupancy by over 5% for 5 years Occupancy 100.0% 98.0% 96.0% 94.0% 92.0% 90.0% 88.0% 86.0% 84.0% 82.0% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% Retention 80.0% FY02 FY03 FY04 FY05 FY06 SGP Occupancy PCA National Office Occupancy SGP Retention 0.0% Excluded Properties: 157 Liverpool Street, 50 Pitt Street : BY GLA as at 30 June

24 MAJOR LEASING SUCCESS Edmund Barton Building, Canberra 3 year extension agreed with Department of Agriculture, Forestry and Fisheries over 41,000m² from Mar $330 psm. Terms include: Rent reviews 5% per annum Stockland assumes rights of access to undertake refurbishment of the asset, providing two years fully funded let up ($26m) DAFF to pay Stockland full cost of make good 24

25 REFURBISHMENT VALUE ASSESSMENT 175 Castlereagh Street & 50 Pitt Street 175 Castlereagh Street 50 Pitt Street 40% vacancy with strong attraction to State Govt tenants 880m 2 rectangular floorplates, with side core, 2.7m ceiling height Circa $50 psm rental uplift post refurbishment Solid capital gain projected ($4m) 90% vacancy with no pre-commitment Small, inefficient floors (590m2) with central core. Low ceiling height (2.4m) Inherent risk of achieving rents required to support feasibility Minimal development profit for refurbishment or strata conversion with significant risk 25

26 SEE STAKEHOLDERS StocklandC&I Engaging Environments Foster a customer centric culture and partner with our stakeholders to deliver mutually beneficial outcomes Stockland Service Centre CRM program Industry relationships Customer satisfaction surveys 26

27 KEY INITIATIVE STOCKLAND SERVICE CENTRE Globally benchmarked Facilities Management Platform Integrated Call Centre FMA award winner 2005 and 2006 Dashboard performance reporting Risk Arena Web portal 27

28 SEE SYSTEMS AND PROCESSES StocklandC&I Engaging Environments Quality systems & efficient processes to facilitate best practice business operations C&I Best Practice Lease admin system Budget, forecasting & valuation tool 28

29 C&I BEST PRACTICE 29

30 CHRISTINE CALLINAN General Manager, Marketing SEE Product & Sustainability SEE - Brand 30

31 SEE PRODUCT AND SUSTAINABILITY StocklandC&I Engaging Environments Manage and develop sustainable & engaging environments A culture that strives to deliver smart sustainable solutions Tenant partnering and education Social initiatives Market leadership with benchmark new products 31

32 SUSTAINABILITY Energy - Targeting 24% reduction by FY08 - ABGR portfolio average is 2.6 and we are targeting 3.6 by New developments are committed to achieve a minimum 4.5 Water - One of the first to rate portfolio using NABERS - Targeting a 30% water saving Waste to landfill - 50% diversion from landfill achieved 32

33 SEE BRAND StocklandC&I Engaging Environments Stockland C&I will be recognised and respected for creating engaging environments Business positioning strategy Internal culture Promote and communicate internally and externally 33

34 STOCKLAND S NEW HEAD OFFICE Project Vision The Stockland Head Office will be an Engaging Environment that unifies our business, fosters the potential of our people and expresses who we are. Opportunity To create a benchmark project which showcases our office refurbishment capability and brings Engaging Environments to life. 34

35 STEVE MANN CEO, Commercial & Industrial Division SEE People Commercial & Industrial Business Wrap 35

36 SEE PEOPLE StocklandC&I Engaging Environments A high performance team built on a culture of collaboration and enjoyment High calibre people Talent management Link performance & reward A culture of teamwork & individual empowerment Celebration & enjoyment 36

37 COMMERICAL & INDUSTRIAL BUSINESS WRAP Best Practice Business Model Depth of management and experience Strategic Focus to deliver our mission StocklandC&I Engaging Environments Platform with opportunities for growth 37

38 DISCLAIMER Corporation/ Responsible Entity Stockland Corporation Limited ACN Stockland Trust Management Limited ACN th Floor 157 Liverpool Street SYDNEY NSW 2000 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. 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. 38