Slide 1: Results for the half year ended 31 December 2014
Results for the half year ended 31 December 2014 12 February 2015 For personal use only Millennium Centre, New Zealand
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only + This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071), Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839) and Good
Slide 3: Contents
Contents For personal use only + Section 1 Highlights + Section 2 Results overview + Section 3 Operational performance + Section 4 Outlook and summary + Appendices - Results analysis - Investment - Development - Management - Capital management 3
Slide 4: Section 1 Highlights
For personal use only Section1+1+ Section Highlights Highlights Goodman Interlink, Hong Kong Erfurt, Zalando, Germany 4
Slide 5: Highlights
Highlights For personal use only + Maintaining focused strategy delivering above expectation performance – Operating profit1 of $327 million, up 10% on 1H FY14 – Statutory profit of $513 million (1H FY14 $160 million) – Operating EPS1 of 18.7 cents2, up 9% on 1H FY14 – Distribution per security of 1
Slide 6: Highlights
Highlights For personal use only + Capital partners continue to support sector specialist model – Assets under management have grown to $29.4 billion on the back of development completions and growth in asset pricing – $1.5 billion of third party equity commitments raised in the 1H FY15 – Discipline
Slide 7: Highlights
Highlights For personal use only + High occupancy maintained at 96% + Retention rate of 75% and WALE of 4.8 years Own + Like for like rental growth at 2.6% and positive lease reversions of 3.4% on new leasing deals + Leased 1.7 million sqm across the global platform equating to $179 million of prope
Slide 8: Section 2 Results overview
For personal use only Section Section2+2+ Results Results Overview overview Stockyards Industrial Estate, Australia M7 Business Hub, Australia 8
Slide 9: Results overview
Results overview For personal use only + Operating results ahead of expectations and full year forecast: 1H FY15 – 1H FY15 operating earnings 50% of revised FY15 forecast – Development business and sound property fundamentals driving Operating profit ($m) 327.1 overall outperformance Statutory accou
Slide 10: Profit and loss
Profit and loss For personal use only + Half year operating profit of $327 million: Income statement 1H FY14 1H FY15 – Investment income in line with balance sheet initiatives $M $M with ROA > 7% maintained Investment (look through)¹ 244.4 248.8 – Increasing asset values growing management earnings
Slide 11: Balance sheet
Balance sheet For personal use only + Strong balance sheet maintained: Balance sheet – 60% payout ratio of operating profit and DRP ensure the 30 June 2014 31 Dec 2014 Group is sustainably funded for the long term $M $M Stabilised investment properties 2,191 2,349 – Realisation of urban renewal site
Slide 12: Group liquidity position
Group liquidity position For personal use only + Capital structure and hedge strategies have Goodman Group debt maturity profile¹ enabled the Group to withstand foreign currency volatility + Goodman Group has cash and available lines of credit of $1,531 million at 31 December 2014: – $480 million ca
Slide 13: Section 3 Operational Performance
For personal use only Section 3+ Operational Performance Interlink, Berlin Goodman Fiege Brieseleang, Hong Kong Osaka Nanko, Japan
Slide 14: Investment
Investment For personal use only + Property fundamentals remain robust reflecting Investment ($m) 1H FY14 1H FY15 quality of the portfolio and customers: Direct 77.2 74.7 – Maintained occupancy at 96% Cornerstones 167.2 174.1 Look through EBITDA 244.4 248.8 – Retention remains high at 75% – WALE of
Slide 15: Development
Development For personal use only + Development WIP at $2.9 billion Development ($M) 1H FY14 1H FY15 – Contribution from America’s at 19% of WIP Revenue 132.8 157.8 + Structural changes remain a key driver of EBITDA 102.3 127.3 development volumes – Improved business activity in UK and NZ will contr
Slide 16: Management
Management For personal use only + Average managed fund total returns of 15% Management ($M) 1H FY14 1H FY15 + External assets under management of $24.6 billion Management income² 97.6 105.0 increased 10% on 30 June 2014 EBITDA 57.5 59.7 + Development completions organically growing assets under man
Slide 17: Management – AUM
Management – AUM For personal use only + Major achievements during the half year include: Third party AUM by region – CPPIB increased equity commitment to GNAP by US$500 million – Commitment of a further US$500 million for GCLH taking total equity for that fund to US$2.0 billion – ¥23 billion equity
Slide 18: Management platform
Management platform For personal use only GAIF GTA GELF GHKLF GMT1 GCLH ABBP EPF GJCF2 Total assets $6.0bn $3.6bn $3.6bn $3.5bn $2.1bn $1.7bn $1.2bn $1.2bn $1.1bn3 GMG co-investment 27.5% 19.9% 20.4% 20.0% 17.8%3 20.0% 43.1% 37.4% 22.8% GMG co-investment $1.0bn $0.4bn $0.4bn $0.5bn $0.2bn3 $0.3bn $0
Slide 19: Section 4 Outlook and Summary
For personal use only Section 3+ Section 4+ Capital Management Outlook and Initiatives Summary Pudong International Airport Logistics Park, China Pudong International Airport Logistics Park, China
Slide 20: Strategy and outlook
Strategy and outlook For personal use only + Australian listed, leading global industrial property operator and fund manager + Rotating assets to fund development opportunities which in turn is improving property portfolio quality and performance + Globally diversified operating platform across key
Slide 21: Appendix 1 Results analysis
For personal use only Appendix 1+ Results analysis Westney Pinnacle Industry Corporate Park, Park, New Zealand Australia Banfield Distribution Centre, Australia Kobe, Japan
Slide 22: Profit and loss
Profit and loss Total income by business segment for the half year ended 31 December 2014 For personal use only Category Total Investment Management Development Unallocated Non- operating items $M $M $M $M $M $M Gross property income 104.3 104.8 - - - (0.5) Management income 104.8 - 104.8 - - - Deve
Slide 23: Profit and loss (cont)
Profit and loss (cont) For personal use only Category Total Investment Management Development Unallocated Non-operating items $M $M $M $M $M $M EBIT – per statutory accounts 620.0 195.4 59.7 127.3 (28.7) 266.3 Net gain from fair value adjustments on investment properties (183.5) - - - - (183.5) Shar
Slide 24: Reconciliation non-operating items
Reconciliation non-operating items For personal use only Non-operating items in statutory profit & loss Half Year ended 31 Dec 2014 $M $M Property valuations Net gain from fair value adjustments on investment properties 183.5 Share of net gain from fair value adjustments on investment properties in
Slide 25: Financial position
Financial position For personal use only As at 31 December 2014 Direct Assets Investments Developments Other Total $M $M $M $M $M Capital allocation Cash - - - 480.0 480.0 Receivables - 34.9 210.0 334.0 578.9 Inventories - - 1,333.2 - 1,333.2 Investment properties 2,348.9 - 348.1 - 2,697.0 Investmen
Slide 26: Net tangible asset bridge
Net tangible asset bridge For personal use only + For period ended 31 December 2014¹ 1. Calculated on 1,745.5 million securities being closing securities on issue and excludes minority interest 26
Slide 27: Property valuations
Property valuations For personal use only + Cap rate compression continuing to be realised across most markets with WACR firming to 7.3% + Firming UK cap rates driven by asset sales and the resulting change in portfolio mix + Continental Europe devaluation arising from the write down of the European
Slide 28: Appendix 2 Investment
For personal use only Appendix 2+ Investment Goodman Interlink, Hong Kong
Slide 29: Leasing
Leasing For personal use only Across the Group and Funds platform: + 1.7 million sqm leased during the half year + Positive lease reversions of 3.4% on new leasing deals, with like for like NPI growing at 2.6% + Occupancy maintained at 96% Region Leasing area (sqm) Net annual rent (A$M) Average leas
Slide 30: Customers
Customers For personal use only Top 20 global customers (by net income – look through basis) 30
Slide 31: Geographic exposure
Geographic exposure For personal use only 31
Slide 32: Direct portfolio detail
Direct portfolio detail For personal use only Portfolio snapshot Key metrics Total assets $2.3 billion + 37 properties with a total value of $2.3 billion located across key Australian and UK markets Customers 298 + Leasing deals remain strong across the portfolio: Number of properties 37 – 294,674 s
Slide 33: Appendix 3 Development
Rheinberg Logistics Centre , Germany For personal use only Appendix 3+ Development Bungarribee Industrial Estate, Australia
Slide 34: Developments
Developments For personal use only 1HFY15 Developments Completions Commencements Work in progress Value ($M) 1,336 1,440 2,867 Area (m sqm) 1.1 1.2 2.4 Yield (%) 9.0 8.7 8.7 Pre-committed (%) 85 68 61 Weighted Average Lease Term (years) 9.4 10.2 9.8 Development for Third Parties or Funds (%) 90 60 7
Slide 35: Developments (cont)
Developments (cont) For personal use only + Development pipeline from controlled land sites maintained Developments volume at $10 billion + Development holdings increasing on the back of increased activity in Japan, North America and Brazil + The Group’s development future cash commitments Cash comm
Slide 36: Appendix 4 Management
For personal use only Appendix 4+ Management Senec Logistics Centre, BirminghamBusiness Slovakia Park, U.K Interlink Industrial Estate, Australia
Slide 37: Global platform
For personal use only Global platform 37
Slide 38: Goodman Australia Industrial Fund
Goodman Australia Industrial Fund For personal use only Key events Key metrics¹ Total assets A$6.0 billion + Acquired South Sydney industrial property for $14 million Interest bearing liabilities A$2.3 billion + Execution of asset recycling strategy disposing $86 million Gearing² 37.4% of investment
Slide 39: Goodman Trust Australia
Goodman Trust Australia For personal use only Key events Key metrics¹ Total assets A$3.6 billion + Acquired adjoining re-development site in Redbank, Interest bearing liabilities A$1.3 billion Queensland for $80 million Gearing² 34.9% + Completed 69,602 sqm of developments with an end Customers 272
Slide 40: Goodman European Logistics Fund
Goodman European Logistics Fund For personal use only Key events Key metrics¹ Total assets A$3.6 billion + Commitments on new acquisitions and developments Interest bearing liabilities A$1.3 billion total €116 million over the last 6 months: Gearing ² 36.3% – GMG €108 million (including on-balance s
Slide 41: Goodman Hong Kong Logistics Fund
Goodman Hong Kong Logistics Fund For personal use only Key events Key metrics¹ Total assets A$3.5 billion + A total of 90,134 sqm of new leases and renewals were transacted from July to December 2014, representing Interest bearing liabilities A$0.8 billion 6.2% of the GLA in the portfolio Gearing2 2
Slide 42: Goodman Property Trust
Goodman Property Trust For personal use only Key events Key metrics1 Total assets A$2.1 billion + New Viaduct joint venture created with GIC, subject to Interest bearing liabilities A$0.8billion regulatory approval Gearing 36.5% + Capital management program: Customers 251 – NZ$64 million of assets d
Slide 43: Goodman China Logistics Holding
Goodman China Logistics Holding For personal use only Key events Key metrics¹ + Strong support from capital partners to capitalise on the Total assets A$1.7 billion ongoing demand for prime logistics space in China Interest bearing liabilities A$0.2 billion Gearing² 9.4% + US$500 million equity upsi
Slide 44: Arlington Business Parks Partnership
Arlington Business Parks Partnership For personal use only Key Events Key metrics¹ Total assets A$1.2 billion + Arlington Business Parks Partnership (ABPP) is a core plus unlisted fund which invests, develops and manages Interest bearing liabilities A$0.3 billion business parks located in key UK reg
Slide 45: Goodman Japan Core Fund
Goodman Japan Core Fund For personal use only Key Events Key metrics1 Total assets3 A$1.1 billion + Acquired a new industrial asset from the Goodman Interest bearing liabilities A$0.3 billion Japan Development Partnership in December 2014 for ¥17.3 billion Gearing² 33.5% Customers 19 + 100% Occupanc
Slide 46: Appendix 5 Capital management
For personal use only Appendix 5+ Capital management Torun Logistics Centre, Poland
Slide 47: Group financial covenants
Group financial covenants For personal use only Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is Gearing ratio 55.0% 28.1% 26.9% not more than 55.0% Interest cover ratio EBITDA to interest expense at least 2.0x 2.0x 5.9x 3.9x Secured debt as a percen
Slide 48: Currency mix
Currency mix For personal use only Currency mix – including the impact of Currency mix – outstanding debt Capital Hedging FX Swaps 48
Slide 49: Financial risk management
Financial risk management For personal use only Financial risk management in line with Group Board policy + Interest risk management: – 84% hedged over next 12 months – Weighted average hedge maturity of 5.2 years – Weighted average hedge rate of 4.86%1 vs spot 1.17%2 + Foreign currency risk managem
Slide 50: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate Interest rate hedge profile + Interest rates are hedged to 84% over next 12 months + Weighted average hedge rate of 4.86%1 vs spot 1.17%2 - NZD – (hedge 4.67%, spot 3.56%) - JPY – (hedge 1.40%, spot 0.28%) - HKD – (hedge 1.80%, spo
Slide 51: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate hedging profile Euro payable GBP payable HKD payable NZD payable JPY payable USD payable AUD receivable Fixed Fixed1 Fixed Fixed Fixed Fixed A$M Fixed rate rate rate rate rate rate Rate As at €M % £M % HK$M % NZ$M % ¥M % US$M % % D
Slide 52: Financial risk management (cont)
Financial risk management (cont) For personal use only Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Weighted average Amount receivable1 Amount payable1 exchange rate NZ$ 2017 / 2018 1.2252 A$65.4m NZ$100.0m HK$ 2016 / 2018 7.8154 A$332.5m HK$2,590.0m ¥ 2017 /
Slide 53: Exchange rates
Exchange rates For personal use only + Statement of Financial Position – exchange rates as at 31 December 2014 – AUDGBP – 0.5240 (31 December 2013 : 0.5388) – AUDEUR – 0.6748 (31 December 2013 : 0.6475) – AUDHKD – 6.3309 (31 December 2013 : 6.9219) – AUDBRL – 2.1700 (31 December 2013 : 2.1090) – AUD
Slide 54: Thank you
For personal use only thank+you 54