Stockland : 2017 Annual Review

Innovation through diversity

ANNUAL REVIEW

30 June 2017

About this report

Our full corporate reporting suite for 2017 includes:

Annual Review

(online only)

Focusing on strategy, corporate governance, and our integrated financial, social and environmental performance.

Financial Report A detailed account of our FY17 financial performance.

Property Portfolio Details on each of the assets within our portfolio, updated every six months.

Sustainability Reporting

(online only)

Our in-depth sustainability performance, case studies and management approaches in accordance with GRI G4 "comprehensive".

Shareholder Review A concise version of the Annual Review sent to all our securityholders.

Copies of all reports are available online at:

www.stockland.com.au/ corporate-reporting

CONTENTS

Letter from the Chairman 02

Letter from the Managing Director and CEO 04

Our performance 06

Our business and strategy 11

Governance and remuneration 19

OUR STRATEGIC PRIORITIES

Grow asset returns and our customer base 29

Capital strength 35

Operational excellence 39

CREATING SHARED VALUE

Shape thriving communities 43

Optimise and innovate 49

Enrich our value chain 57

Our reporting approach 63

Assurance 68

Stockland is a signatory to the United Nations Global Compact (UNGC) and supports the Ten Principles of the Global Compact on human rights, labour, environment and anti-corruption and the Sustainable Development Goal of the UNGC. Stockland's Sustainability Reporting also serves as its UNGC Communication on Progress.

FEEDBACK

We welcome your questions and value your feedback about our reporting approach. Please contact us atreporting@stockland.com.au.

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About this report | 01

Letter from the Chairman

Our focus on delivering diverse and affordable housing options for

all Australians, coupled with positive market conditions, resulted in record Residential and Retirement Living sales.

TOM POCKETT

CHAIRMAN

STRENGTH THROUGH DIVERSITY

Funds from operations (FFO) grew by 8.5% to $802 million and FFO per security grew 7.4% on the prior year. This was slightly above our previous guidance range for the year. Statutory profit was $1,195 million,

up 34.4%.

In our Commercial Propertybusiness, our Retail Town Centres are the largest component of our portfolio. We delivered 3.5% comparable FFO growth, and continued to remix our assets to reflect changing customer trends.

Within the financial year we made good progress on our Commercial Property development pipeline. The first stage opening of our $412 million Stockland Green Hills shopping centre redevelopment in Maitland, NSW, was well received by locals, and our customers in Ballarat eagerly anticipate the opening of our $37 million redevelopment of Stockland Wendouree.

Our Logistics and Business Parks portfolio achieved strong comparable FFO growth with positive leasing results. Recent industrial redevelopments in Sydney

and Melbourne were completed on budget and fully leased.

Our focus on delivering diverse and affordable housing options for all Australians, coupled with positive market conditions, resulted in record Residential and Retirement Living sales.

Profitability of our Residentialbusiness improved strongly, at 17.4% growth on the previous year. A record 6,604 lots were settled in the financial year, with 75%

of sales to owner occupiers and more than 50% of net deposits coming from first home buyers.

We have made a number of strategic land acquisitions over the past 12 months to significantly restock our portfolio, acquiring 9,900 lots. The majority of these are in the high-performing Melbourne market. Our landbank now totals over 80,000 future housing lots nationally.

Our focus remains on owner occupiers and first home buyers, placing us in a preferred position for residential lending trends and government growth initiatives.

Our Retirement Livingdevelopment pipeline is also proceeding well and

we remain committed to providing high quality retirement living options for

our residents. We delivered our Urban Development Institute of Australia (UDIA) award winning apartments at Cardinal Freeman The Residences in Sydney's inner-west, our vertical village at Birtinya, Sunshine Coast is making good progress, and planning is underway at a number

of brownfield projects.

DISTRIBUTION

As forecast, our full year distribution was 25.5 cents per security, representing a payout ratio of 77% of funds from operations.

We saw a good take-up of our distribution reinvestment plan with over 20% of securities participating, providing funds for our accretive development pipeline.

We are targeting to increase distributions by 4% to 26.5 cents per security in FY18, assuming there is no material change

in market conditions.

02 | Stockland Annual Review 2017