Goodman New Zealand Limited & Goodman Property Services Limited Units · NZX:GNZ
Goodman New Zealand Limited & Goodman Property Services Limited Units — Goodman Property Trust — FY2016 Earnings Presentation
42 slides from Goodman New Zealand Limited & Goodman Property Services Limited Units's earnings presentation, May 19, 2016
Slide 1: The Properties of Quality - Annual Result
THE PROPERTIES OF QUALITY ANNUAL RESULT 2018
Slide 2: Overview, Financial Overview, Investment Portfolio, Development Portfolio
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Slide 3: Overview
Slide 4: Key themes for the year
i 1. Continuation f development led growth 2. Asset recycling is funding development and investment activity 3. Reweighting the portfolio towards Auckland industrial 4. Improvement in underlying cash earnings 5. New debt initiatives increasing funding diversity and tenor
Slide 5: Asset recycling is refining the portfolio
01 + asset recycling is refining the portfolio + asset sales of $124.2 million funding new development and investment + accelerated development programme with $148.7 million of new projects + lower land weighting will improve cash earnings + Auckland industrial assets now make up 68% of GMT’s portfo
Slide 6: Financial Overview
Slide 7: Record profit
475m |) 145.8m record profit portiolio before tax revaluation NS \‘e \ ee 1170n | 33.9% operating earnings ook through loan before tax 10 value ratio % aA) 204cnu e 9.41cpu | G.65epu - fet tangible operating earnings = cash distribution assel backing i before tax
Slide 8: Income from new developments partially offset disposals
02 + $7.7 million of income from new developments has partially offset impact of asset disposals + modest rental growth in the underlying portfolio $ million 150.0 145.0 143.1 2.8 141.2 (12.7) 4.0 9.3 140.0 6.5 7.7 135.0 134.7 133.8 130.0 125.0 120.0 FY15 Viaduct joint venture Disposals Developments
Slide 9: Reduced capitalised interest and improved earnings quality
02 + development activity has reduced interest capitalised to land and improved quality of earnings + asset recycling and portfolio renewal has reduced the level of maintenance capex 9
Slide 10: Debt funding initiatives and renewals
02 + USPP offer secured US$120 million of debt funding, swapped to NZ$156.8 million + $100 million seven year senior secured retail bond + extension and renewal of $300 million of GMT’s main facility1 + no unfunded maturities before FY19 + look through loan to value ratio of 33.9%2 + an interest cov
Slide 11: Non-bank funding, WATE and hedging
02 + around 50% of drawn debt is from non-bank funding + WATE1 of 5.4 years at 29 April 2016 + WACD of 6.3% in FY16, 5.1% forecast for FY17 + FY17 interest costs are 60% hedged 1 excludes GMT’s 51% share of Viaduct joint venture debt facility. As at 31 March 2016 Wynyard Precinct Holdings has a $112
Slide 12: Investment Portfolio
Slide 13: Portfolio snapshot: developments, sales, occupancy
148.7m §124.2m new development assel sales el f F 2.31 , 109,000.08 property porto = eased onmew OF revised terms 6% | 5.7 years average portfolio Weighted average = | Occupancy lease term
Slide 14: Valuation gain of $145.8m
03 + valuation gain of $145.8m ($75.3m in FY15) + investment portfolio1 recorded a gain of $146.1m or 7.9% + $12.6m attributable to completed developments, reflecting a 17.7% gain + weighted average cap rate firmed 55bps to 6.95% + market rentals increased 0.6% + portfolio over-renting around 2.8% +
Slide 15: Increased investment in Auckland industrial
03 + increased investment in prime Auckland industrial real estate + $148.7 million of Auckland industrial development commitments in FY16 + sale of Christchurch assets totaling $121 million over two years has contributed to the increase in Auckland weighting to 96% 15
Slide 16: Disposals in FY16
03 + $124.2 million of disposals in FY16 + capitalised on a strong investment market + consistent with range identified at the beginning of the year + funding development and investment activity + continuation of recycling strategy in FY17 1 1 Conditional contract for sale in March 2016 with settlem
Slide 17: Leasing activity
03 + around 14% of the portfolio leased on new or revised terms + average 142,000 sqm of leasing over the last 5 years 1 net lettable area (net of canopies and yard) 17
Slide 18: Customer demand and occupancy
03 Portfolio Income (%) + sustained economic growth and strong property fundamentals are supporting greater levels of customer demand + average occupancy of 96% during year, 97% at 31 March 2016 + modest rental growth across the portfolio 1 net lettable area (net of canopies and yard) 18
Slide 19: Weighted average lease term
03 Portfolio Income (%) + weighted average lease term of 5.7 years at 31 March 2016 + WALT of 6.0 years across industrial assets + WALT of 5.0 years across office assets + 5.3% of income due to expire in FY17 + upcoming expiries remain a key focus 1 net lettable area (net of canopies and yard) 19
Slide 20: VXV Precinct
03 + Fonterra Centre acquisition settled in February 2016 + Datacom development to complete in mid 2017 + Heads of agreement signed for VXV20 VXV Precinct VXV Precinct 20
Slide 21: Tamaki Estate
TAMAKI ESTATE 9.8 hectares 6% yield after leasing activity Zoned mixed use under proposed Auckland Unitary Plan
Slide 22: Development Portfolio
Slide 23: Reduced land weighting will enhance cash earnings
04 + completed 7 projects in FY16 totalling $72.6 million, yielding 7.5% + new development projects totalling $148.7 million + almost 75,000sqm of net lettable area + yield on cost of around 7.1% + expected to provide development margin of 10-15% + continuation of the current development programme w
Slide 24: Rising construction costs and development margins
04 + strength of property market has seen a rise in construction costs + cost escalation mitigated by cap rate firming + maintaining development margins of around 15% Data points represent individual industrial development projects in Auckland. The size of the data point reflects the relative scale
Slide 25: Highbrook completed projects
04 COMPLETED PROJECTS. MACHINERY HOUSE SYNWEX & GWA CAROMA 104m 4.807 ‘mm $23.9 igen value nth value NILA COMPLETION DECEMBER 2015 COMPLETION MARCH 2016
Slide 26: Active development projects
ms 11,450sm § 3,482: Orora HU 2 & M20 Warehouse EE 745B.n 414,624 Maitan = Highbr ok Highbrook mj Highrook 2820s |7500 sqm The Gate iin, E Scalzo Expansion, EDL Fasteners, i D alasteeam sin r ms The Gate ” Highhrook 2 Highbrook 3 = Savill L Link A 930i Hossam : A G50 sin 2940. | Cola - bug 5, The Pa
Slide 27: Highbrook Drive
Highbrook Drive d | Hic HB RO J AC ~ m on Supersite: ‘ = > c [EDL Fasteners | eee \col The Tl » =¢4 Highbrook Drive ane of — - 6 active developments 31,440sqm of net lettable area utilising 7.7ha of development land total project cost of $84.1 million 7.2% weighted yield on cost
Slide 28: a AN
a AN
Slide 29: Outlook and FY17 guidance
05 + continuation of an accelerated development programme + increased weighting toward Auckland industrial property + asset recycling continues to fund new development and investment activity + maintain balance sheet strength with lower debt levels providing funding capacity + FY17 pre-tax operating
Slide 30: www.goodman.com/nz
WWW.GOODMAN.COM/Nz O@®@
Slide 31: Appendices
Slide 32: Income statement summary
2016 2015 Change $ million $ million % Net rental and related income 133.8 134.7 (0.7) Net finance costs (20.5) (24.1) (14.9) Share of operating earnings before tax from joint ventures 6.3 4.4 43.2 Other administrative expenses (2.6) (2.7) (3.7) Operating earnings before income tax1 117.0 112.3 4.2
Slide 33: Balance sheet summary
2016 2015 Change as at $ million $ million % Total assets 2,475.5 2,177.6 13.7 Property assets 2,296.8 2,095.7 9.6 Net borrowings 753.2 694.2 8.5 Total liabilities 939.3 800.9 17.3 Equity 1,536.2 1,376.7 11.6 Net borrowings to property assets (%) 32.8 33.1 (0.3) Look through loan to value ratio1 (%)
Slide 34: Five-year profit or loss summary
2016 2015 2014 20131 2012 2 $ million Restated Profit or loss Net property income 133.8 134.7 127.8 102.2 111.3 Share of operating earnings before tax from joint ventures 6.3 4.4 4.0 15.0 - Net interest costs (20.5) (24.1) (21.1) (17.6) (21.9) Administrative expenses (2.6) (2.7) (9.6) (11.9) (8.5) O
Slide 35: Five-year balance sheet and portfolio summary
2016 2015 2014 20131 2012 2 $ million Restated Balance sheet Investment property assets 2,296.8 2,095.7 2,039.8 1,931.3 1,629.5 Investment in joint venture 63.2 59.1 54.5 52.0 - Total assets 2,475.5 2,177.6 2,118.3 2,019.2 1,674.3 Borrowings for LVR calculation 753.2 694.2 734.2 672.3 581.2 Total li
Slide 36: Property valuations by estate
$ million Valuation Acquisitions Net Fair value Disposals / Valuation Net lettable Market 2016 2015 / Transfers in expenditure movement Transfers out 2016 area sqm1 cap rate Occupancy WALE years Business park Highbrook Business Park, East Tamaki 671.2 55.2 0.7 62.2 - 789.3 386,610 5.5% - 7.3% 99% 6.
Slide 37: Development projects schedule
Completion Total Project Cost Net Lettable Area Development Project Estate Status Date $m sqm Viridian Warehouse Expansion Highbrook Business Park Mar-16 15.5 10,486 Pre-committed Holden Warehouse Expansion Savill Link Industry Park May-16 3.5 2,002 Pre-committed Orora Warehouse M20 Business Park Ma
Slide 38: Portfolio metrics: WALT, customers, NLA
as at Mar-16 Mar-15 Mar-14 Mar-13 Mar-12 1 NLA (sqm) 1,040,991 983,182 1,034,996 1,000,418 987,569 Weighted average capitalisation rate (%) 6.95 7.5 7.9 8.1 8.5 Portfolio occupancy (%) 97 96 97 96 96 2 WALT (years) 5.7 5.1 5.5 5.3 5.4 Customers 281 251 254 256 246 1 net lettable area (net of canopie
Slide 39: Portfolio metrics: rent reviews, industry exposure
APPENDIX PORTFOLIO METRICS RENT REVIEWS NEXT REVIEW TYPE CPI Market Review 24% Fixed 50% INDUSTRY EXPOSURE PORTFOLIO INCOME (%) Food and Utilities agriculture 2.9% 7.5% Transportation and warehousing oir Z res 75% Consumer services and supplies 16.0% Commercial Manufacturing services and 22.2% suppl
Slide 40: Investment property movement
2,600 2,500 145.8 2,480.7 2,400 33.9 161.7 48.0 99.5 25.5 1.3 2,300 (82.8) 2,209.5 2,200 113.7 2,100 2,319.0 2,000 2,095.8 1,900 1,800 31 March 2015 capital capitalised acquisitions disposals deferred costs GMT share of revaluation 31 March 2016 expenditure holding costs joint venture March 2016 inv
Slide 41: Financial summary
APPENDIX 5 YEAR FINANCIAL SUMMARY Profit after tax Operating earings before tax Net rental income incising GMT 51% of WH) ‘$ milion $ million ‘$ million 1170 141.2 143.1 133.8 117.0 12 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Total assets NTA per unit Loan to value ratio (GN took trough) $
Slide 42: Hedging profile
% hedged 100% 90% 80% 70% 60% 60% 50% 40% 30% 20% 10% 0% Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Period 42
Goodman Property Trust — FY2016 Earnings Presentation on 6ix