Slide 1: Results for the half year ended 31 December 2016
Results for the half year ended 31 December 2016 16 February 2016 For personal use only DRAFT Millennium Centre, New Zealand
Slide 2: For personal use only
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 Goodman Logistics (HK) Limited (Comp
Slide 3: Contents
CONTENTS SECTION 1 — HIGHLIGHTS : SECTION 2 — RESULTS OVERVIEW —_' a SECTION ¢ — OPERATIONAL PERFORMANCE SECTION 4 — OUTLOOK AND SUMMARY APPENDIGES — RESULTS ANALYSIS | — INVESTMENT — DEVELOPMENT — MANAGEMENT q — CAPITAL MANAGEMENT. jaf
Slide 4: Section 1: Highlights
For personal use only Section1+1+ Section DRAFT Highlights Highlights Goodman Interlink, Hong Kong Erfurt, Zalando, Germany
Slide 5: Highlights
For personal use only + Continued execution of strategy and sound market conditions driving strong first half – Operating profit1 of $388.2 million, up 9% on 1H FY16 – Operating EPS1 of 21.6 cents2, up 7.5% on 1H FY16 – Gearing reduced to 8.7%³ – Distribution per security of 12.7 cents, up 7% on 1H
Slide 6: Highlights: capital management and outlook
For personal use only + Capital management initiatives continue to drive balance sheet strength and financial flexibility – Strength of balance sheet reflected in the $2.8 billion of liquidity to meet near term obligations and capacity for investment opportunities in the right circumstances – Urban
Slide 7: Operational highlights
For personal use only + High occupancy maintained at 96% with a customer retention rate of 81% and WALE of 4.8 years + Like for like rental growth at 2.6% and positive lease reversions of 2.9% on new leasing deals Own + Leased 1.7 million sqm across the global platform equating to $220 million of an
Slide 8: Section 2: Results Overview
For personal use only Section Section2+2+ Results Results Overview overview Stockyards Industrial Estate, Australia
Slide 9: Results overview
For personal use only + First half performance expected to continue for the full year 1H FY17 – Result of development strategy and portfolio returns Operating profit ($m) 388.2 – Dilutive impact of asset sales to slow going forward Statutory accounting profit ($m) 556.8 + Investment EBIT contributin
Slide 10: Profit and loss
Profit and loss For personal use only Income statement + Half year statutory profit of $557 million, includes property 1H FY16 1H FY17 $M $M valuations, derivative mark-to-markets and other non-cash or non-recurring items Investment (look through) 260.9 253.8 – Cap rate compression, higher market re
Slide 11: Balance sheet
For personal use only Balance sheet + Balance sheet continues to strengthen 30 June 31 December – Financial leverage reduced through asset sales and 2016 2016 revaluations. Likely to reduce further this year $M $M Stabilised investment properties 2,553 2,373 + Further increase in liquidity to $2.8 b
Slide 12: Group liquidity position
Group liquidity position For personal use only + Goodman Group has cash and available lines of credit of $2.8 Goodman Group debt maturity profile billion as at 31 December 2016 – $1.7 billion cash – $1.1 billion available credit lines + Average debt maturity profile of 4.1 years + Strong operating c
Slide 13: Section 3: Operational Performance
For personal use only Section 3+ Operational Performance Interlink, Berlin Goodman Fiege Brieseleang, Hong Kong Osaka Nanko, Japan
Slide 14: Investment
Investment For personal use only + Clear and structured program of concentrating the portfolio in Investment ($m) 1H FY16 1H FY17 gateway cities and continues to be reflected in key Direct 69.6 69.9 performance indicators Cornerstones 191.3 183.9 + Capital allocation to direct and cornerstone invest
Slide 15: Development
For personal use only + Development WIP at $3.5 billion Development ($M) 1H FY16 1H FY17 – Selective choice of developments Revenue 218.0 257.2 + Partnerships favouring a develop to hold strategy resulting in a EBITDA 177.2 198.4 higher return on equity for the Group – Partnerships increased their a
Slide 16: Management
For personal use only + Management income up for 1H FY17 Management ($M) 1H FY16 1H FY17 – Valuation results strong, driving base management income Management income² 147.2 156.5 – Strong cumulative Partnership returns supporting ongoing EBITDA 99.3 110.2 performance fees – Transactional activity le
Slide 17: Third party assets under management
For personal use only + Major achievements completed during the half year include Third party AUM by region – GAIP Inaugural rating from Moody’s Investor Services of Baa1 (stable) and rating upgrade from S&P Global from BBB to BBB+, followed by debut US$600 million 144A bond issue – GAP continued ex
Slide 18: Partnerships summary
For personal use only GAIP GHKLP GEP GAP GCLP GMT1 GJCP5 GNAP ABPP 1 Total assets $6.9bn $4.9bn $4.1bn $3.8bn $2.9bn $2.4bn $1.9bn $1.3bn $0.8bn GMG co-investment 27.5% 20.0% 20.4% 19.9% 20.0% 20.9%2 16.8%2 55% 43.1% GMG co-investment $1.2bn $0.8bn $0.5bn $0.6bn $0.5bn $0.3bn2 $0.2bn2 $0.7bn $0.2bn
Slide 19: Section 4: Outlook and Summary
For personal use only Section 3+ Section 4+ DRAFT Capital Management Outlook and Initiatives Summary Pudong International Airport Logistics Park, China Pudong International Airport Logistics Park, China
Slide 20: Outlook and summary
For personal use only + Macro structural themes continue to sustain business growth – Growth in consumerism globally, focus on consumer demand dominated markets – The evolution of e-commerce and supply chain transformation is underway but still in early stages – Continued focus on gateway cities + B
Slide 21: Appendix 1: Results analysis
For personal use only Appendix 1+ DRAFT Results analysis Westney Pinnacle Industry Corporate Park, Park, New Zealand Australia Banfield Distribution Centre, Australia Kobe, Japan
Slide 22: Total income by business segment
For personal use only Total income by business segment for the half year ended 31 December 2016 Category Total Investment Management Development Unallocated Non- operating items $M $M $M $M $M $M Gross property income 94.4 95.1 (0.7) Management income 156.3 156.3 Development income 510.2 510.2 Net g
Slide 23: Operating profit reconciliation
For personal use only Category Total Investment Management Development Unallocated Non-operating items $M $M $M $M $M $M EBIT – per statutory accounts 671.2 196.1 110.2 198.4 (30.3) 196.8 Net gain from fair value adjustments on investment properties (132.0) (132.0) Net gain on disposal of investment
Slide 24: Non-operating items in statutory profit and loss
For personal use only Non-operating items in statutory profit & loss Half year ended 31 December 2016 $M $M Property valuations Net gain from fair value adjustments on investment properties 132.0 Share of net gain from fair value adjustments on investment properties in associates and joint ventures
Slide 25: Capital allocation
For personal use only As at 31 December 2016 Direct Investments Developments Other Total Assets $M $M $M $M $M Capital allocation Cash - 1,709.5 1,709.5 Receivables - 140.9 194.5 335.4 Inventories - 1,455.2 1,455.2 Investment properties 2,373.3 178.6 2,551.9 Investments accounted for using equity me
Slide 26: Earnings per security
For personal use only + For the half year ended 31 December 2016¹ 1. Calculated on 1,789.1 million securities being closing securities on issue 26
Slide 27: Property valuations
For personal use only + The global valuation program has resulted in an $275 million increase for the six months to 31 December 2016 + This improvement in the quality of the global portfolio has seen the global average weighted cap rate tighten 40bps to 6.0% for the period + Urban Renewal sites in A
Slide 28: Appendix 2: Investment
For personal use only Appendix 2+ DRAFT Investment Goodman Interlink, Hong Kong
Slide 29: Leasing activity
For personal use only Across the Group and Partnerships: + 1.7 million sqm leased during the period + Reversions of 2.9% on new leasing deals, with like for like NPI growing at 2.6% + Occupancy maintained at 96% Region Leasing area (sqm) Net annual rent ($M) Average lease term (years) Australia 662,
Slide 30: Top global customers
For personal use only Top 20 global customers (by net income – look through basis) 30
Slide 31: Top sub-regions by AUM
For personal use only Top 20 sub-regions (by AUM) 31
Slide 32: Portfolio snapshot
For personal use only Portfolio snapshot Key metrics + 27 properties with a total value of $2.4 billion located Total assets A$2.4 billion primarily in the Sydney market Customers 272 – Represents a significant part of the urban renewal portfolio Number of properties 27 Occupancy 91% + Leasing deals
Slide 33: Appendix 3: Development
Rheinberg Logistics Centre , Germany For personal use only Appendix 3+ DRAFT Development Bungarribee Industrial Estate, Australia
Slide 34: 1H FY17 developments
For personal use only 1H FY17 Developments Completions Commencements Work in progress Value ($M) 1,298 1,497 3,523 Area (m sqm) 1.0 1.2 2.7 Yield (%)¹ 7.7 7.4 7.6 Pre-committed (%) 90 64 62 Weighted average lease term (years) 8.9 9.6 10.2 Development for third parties or Partnerships (%) 72 53 69 Au
Slide 35: Development volume
For personal use only Development volume + Maintained development pipeline of over $10 billion – Forecast GLA of 7 million sqm – Development pipeline allocated as Asia Pacific 57%, Europe 28% and Americas 15% + The Group’s development future cash commitments Commitments as at 31 December 2016 $M Gro
Slide 36: Appendix 4: Management
For personal use only Appendix 4+ DRAFT Management Senec Logistics Centre, BirminghamBusiness Slovakia Park, U.K Interlink Industrial Estate, Australia
Slide 37: Global platform
GLOBAL PLATFORM North America 40 people A$3.0bn in assets" 16 properties Current Goodman global presence ‘As at 31 December 2016 (Australian currency). 1. Estimated end value Europe/UK A$1.0bn in assets 5 properties 263 people AS6.1bn in assets 138 properties A$0.2bn in assels 3 properties Brazil 25
Slide 38: GAIP key events and metrics
For personal use only Key events Key metrics¹ Total assets $6.9 billion + Continued execution of asset rotation strategy in disposing $390 million of non core assets in the six months Interest bearing liabilities $2.2 billion Gearing² 29.2% + Completed 38,020 sqm of developments with an end value of
Slide 39: GHKLP key events and metrics
For personal use only Key events Key metrics¹ Total assets $4.9 billion + Leased 235,214 sqm (17% of portfolio GLA) in the six months, Interest bearing liabilities $0.7 billion resulting in HK$226 million of additional annual rental income Gearing2 10.3% + 98% occupancy with a weighted average lease
Slide 40: GEP key events and metrics
For personal use only Key events Key metrics¹ Total assets $4.1 billion + Successfully executed the 2016 liquidity review in July, with Interest bearing liabilities $1.6 billion 96% of Unitholders approving the proposed changes. A Gearing ² 35.8% limited amount (~2.5%) of Unitholders requested liqui
Slide 41: GAP key events and metrics
For personal use only Key events Key metrics¹ Total assets $3.8 billion + Continue execution of asset rotation strategy by disposing $440 million of non core assets Interest bearing liabilities $0.6 billion Gearing² 15.7% + Completed 17,146sqm of developments with end value of Customers 268 $46.5 mi
Slide 42: GCLP key events and metrics
For personal use only Key events Key metrics¹ Total assets $2.9 billion + Platform expansion via high quality developments with 48 Interest bearing liabilities $0.3 billion properties offering 4.3 million sqm of GLA on a fully developed basis Gearing² 6.1% Customers 80 + Strong leasing activities wi
Slide 43: GMT key events and metrics
For personal use only Key events Key metrics¹ Total assets $2.4 billion + Operating earnings of NZ$59.9 million before tax or NZ4.70 Interest bearing liabilities $0.8 billion cents per unit on a weighted average issued unit basis, Gearing3 28.8% compared to NZ4.64 cents per unit in the previous peri
Slide 44: GJCP key events and metrics
For personal use only Key Events Key metrics1 Total assets $1.9 billion + Acquired a new industrial asset from Goodman Japan Interest bearing liabilities $0.8 billion Development Partnership in August 2016 and further Gearing² 35.7% improved the quality of the portfolio Customers 24 + Recycled non c
Slide 45: GNAP key events and metrics
For personal use only Key Events Key metrics¹ + Stabilized portfolio of 3.4m sqft with an end value of $390 Total assets $1.3 billion million USD Interest bearing liabilities n/a Gearing n/a + Work in progress of 2.5m sqft with end an end value of Customers 7 $253 million USD as at 31 December 2016
Slide 46: ABPP key events and metrics
For personal use only Key Events Key metrics¹ Total assets $0.8 billion + The disposal programme continued and over two years Interest bearing liabilities $0.3 billion £202.8m ($345.1m) of assets have been sold Gearing² 31.6% Customers 67 + The remaining portfolio is in the process of being sold wit
Slide 47: Appendix 5: Capital management
For personal use only Appendix 5+ DRAFT Capital management Torun Logistics Centre, Poland
Slide 48: Debt covenants
For personal use only Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is Gearing ratio 55.0% 17.7% 37.3% not more than 55.0% Interest cover ratio EBITDA to interest expense at least 2.0x 2.0x 6.9x 4.9x Secured debt as a percentage of total tangible ass
Slide 49: Currency mix
For personal use only Currency mix – including the impact Currency mix – outstanding debt of Capital Hedging FX Swaps 49
Slide 50: Financial risk management
For personal use only Financial risk management in line with Group Board policy + Interest risk management: - Policy to ensure between 60% and 100% of current year interest rates are fixed - 90% hedged over next 12 months - Weighted average hedge maturity of 4.8 years - Weighted average hedge rate o
Slide 51: Interest rate hedge profile
For personal use only Interest rate Interest rate hedge profile + Interest rates are hedged to 90% over next 12 months + Weighted average hedge rate of 4.21%1 - NZD – hedge rate 4.06% - JPY – hedge rate 2.84% - HKD – hedge rate 2.15% - GBP – hedge rate 4.91%² - Euro – hedge rate 1.77% - USD – hedge
Slide 52: Interest rate hedging profile
For personal use only Interest rate hedging profile1 Euro payable GBP payable HKD payable NZD payable JPY payable USD payable AUD receivable As at Fixed Fixed2 Fixed Fixed Fixed Fixed Fixed Dec rate rate rate rate rate rate Rate €M % £M % HK$M % NZ$M % ¥M % US$M % A$M % 2017 (599.6) 2.21 (405.0) 7.3
Slide 53: Foreign currency balance sheet hedging maturity profile
For personal use only Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Weighted average Amount receivable1 Amount payable1 exchange rate NZ$ 2017 / 2018 / 2021 1.1674 A$65.4m NZ$100.0m HK$ 2018 / 2020 / 2021 / 2022 6.5396 A$529.4m HK$3,390.0m € 2017 / 2018 / 2020
Slide 54: Exchange rates
For personal use only + Statement of Financial Position – exchange rates as at 31 December 2016 – AUDGBP – 0.5847 (31 December 2015: 0.4949) – AUDEUR – 0.6846 (31 December 2015: 0.6710) – AUDHKD – 5.5958 (31 December 2015: 5.6502) – AUDBRL – 2.3487 (31 December 2015: 2.8884) – AUDNZD – 1.0397 (31 De
Slide 55: Results for the half year ended December 2016
RESULTS FOR THE WALF YEAR ENDED 31 DECEMBER 2016 ‘eee