STOCKLAND — AGM Information 2011

Oct 24, 2011

133 Castlereagh Street T 02 9035 2552 Sydney NSW 2000 F 02 8988 2552

www.stockland.com.au

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25 October 2011 ASX/MEDIA RELEASE

STOCKLAND 2011 ANNUAL GENERAL MEETING

Stockland has released first quarter sales figures at its Annual General Meeting in Sydney today, with its three core businesses all showing good results.

In its Residential Communities business, Stockland started FY12 with record contracts on hand. For the three months to 30 September 2011, a total of 1,092 net deposits were achieved. The results for September, which saw the start of the annual Spring marketing campaign, were particularly strong with 499 net deposits – the best monthly result since October last year. Improved momentum has continued this month and while two months doesn‟t represent a trend, the figures are encouraging.

A positive shift in market sentiment started in late August, particularly in the key South East Queensland market which was soft following the floods earlier this year. The Queensland Government $10,000 Building Boost Grant, available to anyone building or buying a new home in Queensland under $600,000 between 1 August 2011 and 31 January 2012, has improved sentiment and activity in this market. While sales in Victoria are down from the very high levels of a year ago, they seem to be stabilising.

The figures also reflect the sales success at recent launches of new projects at Allura in Melbourne, Vale in Queensland and Whiteman Edge in Perth and with strong interest at Brooks Reach in NSW, to be launched next week, it is clear that our strategy of focusing on affordable product is working. These projects are in the early stages of development and settlements will not take place until after Christmas which will result in a skew in reported profits to the second half of the financial year.

Stockland‟s Retirement Living business recorded its best ever monthly sales result in September on the back of a highly successful marketing campaign. In total, 130 net reservations were achieved in established villages in the first quarter, and 87 net reservations in new villages under development[1] .

Turning to Retail, September comparable Moving Annual Turnover (MAT) from shopping centres was up 3.4% on the previous year. This is a creditable result given the current difficult retail environment, and reflects the retail mix in Stockland centres, which focuses on day-to-day value and convenience, as well as the location of many centres in strongly performing regional locations.

Managing Director Matthew Quinn said the first quarter figures firstly demonstrated a recent general improvement in customer sentiment and buying activity at Stockland projects and secondly, that the focus on high quality, affordable products is bearing

1 Stockland recognises a reservation when a customer has entered a contract to sell their existing home.

fruit with outperformance against key benchmarks. This gives the company confidence that it is on the right path with its focus on Residential Communities, Retirement Living and Retail as the three key building blocks for vibrant local communities, a point of differentiation which provides a competitive advantage when dealing with customers and government.

“Our goal is to cater for diverse groups (of customers), providing affordable housing solutions built around community hubs with high quality retail centres, social infrastructure and employment generating facilities,” Mr Quinn told shareholders.

“By value, over 60% of our Retail centres have Stockland Residential Communities and/or Stockland Retirement Villages within their trade area and this will grow as new projects come to fruition, further enhancing cross business synergies.”

Mr Quinn said an essential part of the product strategy for all three businesses is to focus on affordable, needs-based customer buying decisions, a category outperforming the high value discretionary segment which is under more pressure.

“Time and time again we have demonstrated that this core customer segment of ours is more resilient and less volatile through the cycles,” he said.

Turning to capital management, Mr Quinn said Stockland was constantly looking for ways to improve the return on funds employed and selling office and industrial assets from its $3.3 billion portfolio was a more cost-effective source of capital than traditional debt or equity.

With the increased cost of debt and the decision to instigate a share buyback, the asset sales target has been lifted from $400-$500 million of assets each year to over $600 million for FY12. Good progress has already been made this financial year with settlements and contracted sales totalling $260 million and more assets in due diligence. The majority of sales are being achieved at, or slightly above, 30 June 2011 book valuations.

The issue of executive remuneration was also addressed at the AGM with Chairman Graham Bradley telling shareholders that the management of executive remuneration is one of the Board‟s most important responsibilities.

Mr Bradley said the approach to fixed pay over recent years had been one of restraint.

“For example, the Managing Director has had no increase in fixed pay for the past four years. Indeed, although during that time our external advice has been that increases in Mr Quinn's fixed pay may have been justified by market comparisons, Mr Quinn has not sought any increases and asked the Committee not to recommend any increases to the Board.

“Pay rises for our top team last year were mainly to recognise promotion or enlarged job responsibilities, and there have been no fixed pay rises awarded to any of our top executives for the current financial year,” said Mr Bradley.

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The Board regularly reviews Stockland‟s remuneration policies to ensure that they meet best market practice and has been undertaking a comprehensive review over the past few months. While the review is still underway, Stockland has already announced changes to the structure of Short Term Incentives (STI) for the current financial year. The Executive Committee will now receive a portion of STI in securities and vesting of this equity portion will be deferred until future years. Executives will forfeit these deferred securities if they leave the company before the securities vest.

Summing up his address at the AGM, Mr Quinn said that while challenges arising from global uncertainty and weak consumer and business sentiment were clear, Stockland was in good shape to tackle them head on.

“We have a clear strategy, but we also recognise the need to continually finesse it in response to changing circumstances,” he said.

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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.

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Chairman’s address AGM 2011

I will now present my report on Stockland‟s performance in the 2011 financial year and our Managing Director Matthew Quinn will then provide an update on our operations.

It is pleasing to report that Stockland delivered solid results for the 2011 financial year, despite uncertain global economic conditions and the impact of natural disasters that adversely affected the Australian economy. Our Underlying Profit of $752.4 million was our highest ever, and was an increase of 8.7 per cent on the previous year. This result was underpinned by growth in all our core businesses, and a particularly strong performance by our Residential business.

As securityholders know, we believe that Underlying Profit is the most meaningful indicator of our operating performance since it measures results undistorted by nonrecurring and sometimes volatile items such as investment property valuations.

As it turns out, because property values were relatively stable in FY11, our Statutory Profit was almost the same as our Underlying Profit this year – $755 million, an increase of 58 percent on last year‟s statutory result.

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Our solid profit result enabled us to increase distributions to securityholders to 23.7 cents per security, an increase of 8.7 per cent on last year. In line with our distribution policy, we distributed 75 per cent of Underlying Profit back to our securityholders.

Stockland achieved this profit growth while maintaining a conservative balance sheet policy with low gearing and ample cash reserves, appropriate in the face of problematic global financial markets.

During the year we made a number of capital-efficient acquisitions including several major new residential projects, two subregional shopping centres (at Hervey Bay in Queensland and Point Cook in Victoria) and the Aevum retirement village group which almost doubled the size of our business in this sector. We also continued our investment in redeveloping retail centres in locations with strong population and retail trade growth profiles.

Pleasingly, in FY11 we continued to demonstrate our strong commitment to creating communities and properties that meet the highest environmental and social standards. As a result Stockland was recognised as the most sustainable property company in the world in the 2011/12 Dow Jones Sustainability index rankings. We are proud of this acknowledgement as we believe sustainability is a key brand value for Stockland. I invite you to read about our sustainability achievements in our Corporate Responsibility and Sustainability Report on the Stockland website.

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As I recount all these positive results for the year, I am, however, very aware that the price performance of our securities has been disappointing. Investor concerns about Australian consumer confidence and the residential property market have weighed heavily, as have the sovereign debt and deficit crises in Europe and USA which has negatively affected confidence on share markets worldwide.

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This graph shows the movement of our security price over the last three financial

years and also shows the A-REIT index. As you can see we outperformed our peers, represented by the A-REIT index, throughout that period. In the May-September period, however, our security price fell below the A-REIT Index and we also fell below the net asset backing of our securities. Concerns about issues such as Australian house prices, consumer confidence and the possible future impact of online shopping on retail asset returns all contributed to this fall. We believe that these concerns have been overstated. As our Managing Director Matthew Quinn will demonstrate in his address – our business is in good shape. I am pleased to see, however, that over the

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past month our security price has risen 15 per cent against an index rise of about 5 per cent, bringing our price back to the index.

The recent decline did, however, take our security price to a level that your Board believes does not reflect the underlying value of our assets, our business capability and our strong capital position. For this reason, in August we announced an onmarket buyback of up to 5 per cent of issued Stockland securities. This buy-back will be value accretive for our securityholders. As at 24 October, we have bought back some 45.9 million securities at an average of $2.86, for a total consideration of $131.6 million.

I would now like to address the issue of executive remuneration which understandably receives considerable attention from investors at times like these. Investors are particularly concerned to ensure that remuneration is being managed appropriately.

Your Board has always viewed managing executive remuneration as one of our most important responsibilities. Our Board Human Resources Committee, chaired by Peter Scott and with Carolyn Hewson and myself as members, meets regularly to oversee our remuneration policies which are set out in considerable detail in our Remuneration Report.

As I outlined in my letter to investors with the Notice of Meeting last month, the Board regularly reviews Stockland‟s remuneration policies to ensure that they meet best market practice. We have been undertaking a comprehensive review over the past

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few months and we will announce the full outcomes once is the review is complete. We have, however, already announced some early decisions and I would like to take this opportunity to explain our pay philosophy and the changes we are making.

Most importantly, our approach to remuneration – both fixed pay and incentive pay – has long been underpinned by rigorous external benchmarking by independent remuneration consultants and seeks to closely link pay and business outcomes. Our executives must achieve stretching goals – which are goals set above the level we are confident of achieving – in order to earn short and long-term incentives.

The fixed pay our executives receive is set with reference to external market benchmarks and competitive market conditions. Over recent years our approach to fixed pay has been one of restraint. For example, the Managing Director has had no increase in fixed pay for the past four years. Indeed, although during that time our external advice has been that increases in Mr Quinn's fixed pay may have been justified by market comparisons, Mr Quinn has not sought any increases and asked the Committee not to recommend any increases to the Board. Pay rises for our top team last year were mainly to recognise promotion or enlarged job responsibilities, and there have been no fixed pay rises awarded to any of our top executives for the current financial year.

As I outlined at the start of my address, the Group‟s performance in the last financial year was strong. Our earnings per security growth of 8.6 per cent was well above our stretch target of 7.0 per cent, and our executives also scored well against other

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important performance objectives. Accordingly, short-term incentives reflected these achievements and were higher than in the previous year. Our executives need to produce strong results to earn their bonuses; if they don‟t perform they will not.

Our executives‟ pay arrangements also include long-term incentives in the form of rights to earn Stockland securities based on two objectives which must be achieved over a three year period. The first objective is a stretch earnings per security cumulative growth target which must be exceeded before any incentive is earned and the second is a total securityholder return objective which requires our securityholder returns to exceed those of our peer companies before any part of the incentive is paid.

The way these long-term incentives must be reported in our Remuneration Report is often misunderstood by investors and by journalists. The statutory accounting remuneration table must reflect the applicable long-term incentive expense of all current unvested grants, even though they are conditional on meeting hurdles three years later and may never be paid at all if the hurdles are not met.

For the past three years, including FY11, 50 per cent of our long-term incentives due in that year have been forfeited by our executives because in one difficult year, FY09, our earnings performance fell disappointingly short of the target which had been set by the Board, partly because of global factors beyond the control of our management. We do not change our targets during the year when global or local market conditions change, even dramatically.

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While we did achieve total securityholder returns well above other property groups over the last three year period, which resulted in the 50 per cent of long-term incentive which did vest, we are now behind on this measure for the three-year period in respect of which our 2009 long-term incentives will be judged. Stockland will have to achieve a substantial improvement in relative security price performance to clear this hurdle in 2012.

I believe these outcomes clearly demonstrate that our long-term incentives are genuinely “at risk”, are broadly aligned to our securityholders‟ returns and provide a strong incentive to executives to deliver the best possible business performance.

This year, we are taking steps to bring our pay policies into even greater alignment with value created for our investors to respond to feedback we have received from our investors. We have announced the earnings per security target we have set for incentive purposes. At 6.0 per cent, this target is well above our market guidance and represents a genuine stretch. We believe that given the headwinds our sector faces, this target will be challenging for our executives to achieve. Reaching it would be a very good outcome for securityholders.

In addition, we announced earlier this month a significant change to the structure of our short-term incentives for the current financial year. Executives will now receive a portion of these incentives, if earned, in securities and this portion will not be paid immediately but will be deferred until future years, further strengthening alignment

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with our securityholders. Executives will forfeit these deferred securities if they leave the company before they vest.

You may also have noted that at this year‟s meeting there is no resolution seeking a long-term incentive allocation of performance rights to the Managing Director in FY12. Mr Quinn already has a substantial personal holding of Stockland securities and, in the Board‟s view, adequate „at risk‟ performance rights allocated in prior periods to provide a strong incentive to strive for improved security price performance. This decision was initially proposed by Mr Quinn and subsequently was agreed by the Board and Mr Quinn being appropriate in the current market circumstances. This change represents a significant reduction in Mr Quinn‟s potential total reward over the next three years.

Awarding security-based incentives rather than cash incentives is designed to motivate executives by ensuring they are directly affected by rises and falls in security price that investors experience. To further support this, in 2010 the Board adopted a policy that requires executives to retain Stockland securities awarded to them under our incentive programs until they have accumulated and continue to hold Stockland securities equal in value to their base pay and twice base pay in the case of the Managing Director. This further ensures that our executives have real “skin in the game” as they work to increase securityholder value.

Ladies and gentlemen, I have covered this topic at some length because it is important that you appreciate how seriously the Board approaches its responsibility to

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align our executive pay policies with the interests of our investors and to strike the right balance between market competitiveness, incentive for performance and the creation of value for investors.

Let me now conclude my report by thanking my Board and executive colleagues for their engagement and hard work throughout the past year. I believe Stockland investors are well served by a very diligent Board which provides the right degree of oversight, challenge and support for our capable management team. Each member of the Board brings considerable professional skill and experience to the table and works with a spirit of collaboration and a sense of responsibility for guiding the direction of the company and its management.

Thank you.

I would now like to invite Matthew Quinn, your Managing Director, to provide an update on the company‟s operations.

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Managing Director’s address AGM 2011

Thank you Graham, and good afternoon ladies and gentlemen.

INTRODUCTION

Several years ago we set ourselves the goal of becoming Australia‟s leading diversified property group. We recognise that to create real value out of diversification we must achieve synergies between our various businesses that enhance revenue and lower costs. Ultimately we must demonstrate that the whole is greater than the sum of the parts.

While we acknowledge that the current share price does not reflect this outcome, we are confident in our strategy, our ability to outperform in our chosen business lines and importantly we are increasingly seeing the benefits of having them operating under the one Stockland banner in ways which create enhanced value. This will be the major theme of my presentation today.

I am also pleased to be able to share with you today our first quarter sales figures, which firstly demonstrate a recent general improvement in customer sentiment and buying activity at our projects and secondly that our focus on high quality, affordable products is bearing fruit with outperformance against key market benchmarks. It‟s too early to say that these figures represent the start of a trend; nevertheless it gives us confidence that we are on the right path.

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STRATEGY

But firstly I'll discuss our strategy. For several years now we have focused on allocating our capital to three core businesses:

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Retail development and management

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Residential Community development

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And Retirement village development and management

Our strategy is clear and simple and we refer to it as the 3-Rs. This terminology has achieved cut through both internally and externally, however we must keep it in perspective as office and Industrial properties still represent, at this point in time, a big portion of our balance sheet. Indeed, their total value of $3.3bn is around the same amount as we have invested in Residential Communities and Retirement Living combined. I'll talk more about this later.

The reason why Retail, Residential Communities and Retirement Living belong together is that they are three of the key building blocks for vibrant local communities. Successful communities have a diversity of residents from single people and young couples through to mature families and retirees. Our goal is to cater for these diverse groups, providing affordable housing solutions built around community hubs with high quality retail centres, social infrastructure and employment generating facilities. We now have 52 Residential Communities, 61 Retirement villages and 40 Retail centres across Australia.

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Importantly, over 60 per cent of our Retail centres by value have Stockland Residential Communities and/or Stockland Retirement villages within their trade area and this will grow as new projects come to fruition, further enhancing cross business synergies.

This is a key point of difference for our two key stakeholders, being firstly our customers and secondly government, and both of these stakeholders are absolutely critical to our success. We aim to be the partner of choice for government and the provider of choice for our customers, and achieve competitive advantage through these relationships:

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Firstly, by achieving faster approvals and speed to market by delivering for government the high quality communities they desire for their constituents, who are also our customers. We pride ourselves in being a key partner with government to help deliver the other essential pillars of vibrant communities such as transport, education, health and employment

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And secondly, by achieving higher rates of sale and value uplift from our customers through the quality of our products and the early delivery of this infrastructure

Our unwavering commitment to both sets of stakeholders is delivering very pleasing outcomes. Our research shows that our customers perceive greater value in our products than our competitors‟ and we have excellent working relationships with Federal, state and local governments.

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I won‟t elaborate on this any further today, as we intend to provide you with case studies at separate presentations over the next few months, starting with Residential Communities in November. This presentation will be against the backdrop of Caloundra South, a major new project that epitomises these credentials, and it will be webcast for the benefit of our shareholders.

RECENT SALES PERFORMANCE

Our ability to deliver strong performance through this strategy is reflected in the FY11 results that Graham discussed and it also shows through in our recent sales performance.

In Residential Communities we started FY12 with record contracts on hand. However, as we previously reported, activity in July was slow across our key markets and this continued into August. Pleasingly though, we started to see a positive shift in September, particularly in the key market of South East Queensland which had been very soft since the floods earlier in the year. The recent Queensland Government “new building boost” has definitely improved sentiment and activity in this market.

We recently commenced our Spring marketing campaign and the results are encouraging with 499 net deposits in September, our best monthly sales result since October 2010, taking us to a total of 1,092 net deposits for the first quarter. You can see from the chart the recent improvement in Queensland sales and while sales in Victoria are down from the very high levels of a year ago, they seem to be stabilising.

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This sales momentum has continued into October and while two months doesn‟t make a trend, the figures are nonetheless encouraging. They also reflect the sales success at recent launches of new projects at Allura in Melbourne, Vale in Queensland, Whiteman Edge in Perth and with strong interest at Brooks Reach in NSW, to be launched next week, it is clear that our strategy of focusing on affordable product is working.

These projects are in the early stages of development and settlements will not take place until after Christmas. This, together with the slow sales in July and August, will result in a skew in our reported profits to the second half of the financial year.

Retirement Living recorded its best ever monthly sales result in September and for the first quarter we achieved a total of 130 net reservations in established villages and 87 net reservations in new villages under development.

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In our Retail centres, September comparable moving annual turnover was up 3.4 per cent on the previous year. This is a creditable result given the current difficult retail

environment, and reflects the retail mix in our centres which is focused on day-to-day value and convenience.

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Indeed, an essential part of our product strategy for all three businesses is to focus on affordable, needs-based customer buying decisions. This category is outperforming the high value discretionary segment which is under more pressure both in the retail and residential sectors.

Time and time again we have demonstrated that this core customer segment of ours is more resilient and less volatile through the cycles. Furthermore, it appears that the current market conditions may be more than just a cycle and could be reflective of a structural shift towards more frugal spending and higher saving by Australian households, a trend that would favour our business.

OFFICE AND INDUSTRIAL AND ASSET SALES

I mentioned earlier our $3.3bn investment in office and industrial buildings, which remain a significant part of our overall asset base. However, office and industrial ownership and management has little synergy with our other business lines, and they don‟t add to the competitive advantages I referred to earlier through our dealings with government and our broader customer base.

We continue to achieve a solid rental stream from these buildings, but analysis of returns over the last two decades illustrates that office markets in particular are quite volatile, with a risk return profile less compelling than for Retail centres.

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We are constantly looking for ways to improve our return on funds employed, and selling office and industrial assets is presently a much more cost effective source of capital than traditional debt or equity, which are likely to remain scarce and expensive for some time to come.

However, you can be assured that while we retain ownership we will optimise rental returns through active asset management. This is reflected in our September quarter performance when we leased 28,000 square metres of office and 18,000 square metres of industrial space, maintaining our low vacancy rates.

Our plan has been to sell $400m to $500m of assets each year to fund the growth of Retail, Residential Communities and Retirement. However, with the increased cost of capital and our decision to instigate a share buyback, we have lifted our asset sales

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target for FY12 to over $600m. We have made good progress so far this financial year, already achieving settlements and contracted sales totalling $260m and we have more assets for sale in due diligence. The majority of these sales are being achieved at, or slightly above, the 30 June 2011 valuations reflected in our books.

CAPITAL COMMITMENTS AND ALLOCATION

Importantly our capital commitments are quite modest, so we can use these funds for our share buyback and also maintain our debt at relatively low levels.

In Residential Communities, we restocked extremely well last year and with the acquisition of two key projects in Perth in July, we now have over 90,000 future land lots under our control. We have good coverage of future revenue targets and we can afford to be very selective and opportunistic in our land buying this financial year.

In Retirement Living we doubled the size of the business last year with the acquisition of Aevum and we will be spending the next year consolidating this position, enhancing our capability and improving our returns. Retirement Living has significant future growth potential and it will directly benefit from the major demographic changes resulting from an ageing population. But we are in no rush to further increase our investment until we have achieved these short-term objectives.

We do believe that further consolidation in the Retirement Living industry is inevitable as there are considerable economies of scale due to the high operating costs; and its capital intensity will limit the growth of some of the smaller operators. We aspire to be

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the market leader in this industry over time, and potentially achieve this through further consolidation; however this is likely to play out over a number of years.

In Retail, we have three major projects underway at Merrylands, Townsville and Shellharbour. These projects are all going well and we expect returns to be in line with or ahead of our feasibilities. We have several other key projects set to commence in the next year or two and we are putting our efforts into achieving development approvals, locking down our construction costs and signing agreements for lease with the major retailers. To this end we recently secured development approvals for the redevelopment of Green Hills and Wetherill Park, both very highly productive retail assets that are ripe for expansion.

While these approvals are a big step forward, we are mindful that many retailers are cautious in their expansion plans and, coupled with the volatility in global financial markets, we don‟t plan to start these projects unless we are confident we can achieve returns above our cost of capital and comfortably fund them through to completion. We are also mindful of the potential changes to the retail environment from e- commerce, and we are putting a lot of effort into researching these trends to ensure our centres remain resilient and our development plans appropriate.

COSTS AND EFFICIENCY

In executing our strategy, we are very focused on business efficiency and active cost management. Indeed, we have commenced many initiatives to reduce costs and the benefits are already flowing through. Several of these initiatives involve a reduction in

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corporate costs, achieved through greater collaboration between the business units when the skills and knowledge are complimentary. A “one Stockland” approach is firmly embedded in our culture.

CONCLUSION

In conclusion, the challenges arising from global uncertainty and weak consumer and business sentiment are quite clear, but Stockland is in very good shape to tackle these challenges head on, and indeed we can turn some of them into opportunities such as the changing consumer spending patterns I referred to earlier. We have a clear strategy, but we also recognise the need to continually finesse it in response to changing circumstances.

Our management team and employees strive to maximise long term returns to shareholders and I would like to thank all of them for their hard work and dedication over the last year. We have a terrific team of people at Stockland and I am proud to lead them.

Thank you for your attendance today and your continued support.

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