Goodman Group · ASX:GMG
Goodman — H1 FY2019 Earnings Presentation
45 slides from Goodman's earnings presentation, Feb 14, 2019
Slide 1: Results for the half year ended 31 December 2018
Results for the half year ended 31 December 2018 14 February 2019 Rochedale Motorway Estate, QLD, Australia
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer + 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) Li
Slide 3: Contents
Contents + Section 1 – Highlights + Section 2 – Results overview + Section 3 – Operational performance + Section 4 – Outlook + Appendices - Results analysis - Property investment - Development - Management - Capital management 3
Slide 4: Section 1 - Highlights
Section1 - Highlights bel || Goodman Business Park East, Japan
Slide 5: Highlights
Highlights + Market fundamentals remain positive with the Group delivering a strong 1H19 performance. Key financial metrics include: – Operating profit1 of $465.0m million, up 10.4% on 1H18 – Operating earnings per share (EPS)2 of 25.5 cents, up 9.4% on 1H18 – Gearing 6.5%³ (5.1% at FY18) – Distribu
Slide 6: Highlights
Highlights + Improving property fundamentals – Tight supply in our locations has continued to support strong performance across the investment portfolio with like for like net property income (NPI) growth of 3.2% and occupancy maintained at 98% as at 31 December 2018 + Strong capital position – $3.1
Slide 7: Highlights
Highlights + Occupancy maintained at 98% and WALE of 4.7 years + Like for like NPI growth at 3.2% supported by tight supply in infill markets Own + Leased 1.6 million sqm across the global platform equating to $223 million of annual rental property income across the Group and Partnerships in 1H19 +
Slide 8: Section 2 - Results overview
Section 2 - Results overview
Slide 9: Results overview
Results overview + Operating EPS of 25.5 cents per security, up 9.4% on 1H18 1H FY19 + DPS of 15.0 cents per security, up 9.1% on 1H18 Operating profit ($m) 465.0 + Statutory accounting profit $929.2 million – Includes property valuations, derivative and foreign currency Statutory accounting profit
Slide 10: Profit and loss
Profit and loss + Half year statutory accounting profit of $929.2 million, includes property Income statement valuations, derivative mark-to-markets and other non-cash or non- 1H18 1H19 recurring items $M $M – Global property revaluation gains for 1H19 were $2.4 billion driven by rent Property inves
Slide 11: Balance sheet
Balance sheet + Strong balance sheet and intention to maintain low leverage Balance sheet – Gearing at 6.5%5 (up from 5.1% FY18) and 17.6%1 on a look through 30 June 31 December basis 2018 2018 $m $m + Stabilised investment properties increasing through positive valuations Stabilised investment prop
Slide 12: Group liquidity position
Group liquidity position + Cash and available lines of credit of $3.1 billion as at 31 December 2018 - $2.1 billion in cash Goodman Group drawn debt expiry profile - $1.0 billion of available lines + Significant liquidity and balance sheet capacity maintained - Weighted average debt maturity profile
Slide 13: Section 3 - Operational performance
Section 3 - Operational performance
Slide 14: Property investment
Property investment + Property fundamentals remain strong, reflecting the quality of the portfolio Property investment ($m) 1H18 1H19 after the clear and structured asset sale programme Direct 60.3 37.8 – High occupancy at 98% – Like for like NPI growth of 3.2% Cornerstones 132.8 144.0 Property inve
Slide 15: Development
Development + WIP robust at $3.6bn and growing Development ($M) 1H18 1H19 – An increase in demand from our customers, driven by structural change, is Development income 597.2 793.9 expected to increase development activity. Volumes are expected to trend higher with WIP likely to exceed $4 billion De
Slide 16: Management
Management + Management earnings up 15% on 1H18 Management ($M) 1H18 1H19 – AUM increase due to strong revaluation gains and development completions across the Management earnings 164.7 189.4 platform – Performance fees continue to grow following consistent Partnership outperformance returns over se
Slide 17: Management platform – largest Partnerships
Management platform – largest Partnerships GAIP GHKLP GEP GCLP GAP GNAP GMT3 GJCP GUKP Total assets $7.8bn $6.9bn $5.7bn $4.1bn $4.0bn $2.9bn $2.5bn $2.5bn $0.4bn GMG co-investment 27.9% 20.0% 20.4% 20.0% 19.9% 55.0% 21.2% 17.3% 33.3% GMG co-investment $1.5bn $1.0bn $0.7bn $0.6bn $0.7bn $1.5bn $0.4b
Slide 18: Section 4 - Outlook
Section 4 - Outlook zt ™ MURA aa
Slide 19: Outlook
Outlook + Our customers’ industries continue to experience considerable change which is creating opportunity – Consumer behaviour and rapidly changing technology solutions are driving change in consumer fulfilment – Most industries including e-commerce, traditional retail and 3PL’s are re-evaluating
Slide 20: Outlook
Outlook + Underlying real estate fundamentals should continue to drive sustainable growth - Customer structural change and locational preferences are consistent with our business strategy - Robust market rental growth and high occupancy - Strong and growing pipeline of development product should see
Slide 21: Appendix 1 – Results analysis
Appendix 1 – Results analysis
Slide 22: Profit and loss
Profit and loss Total income by business segment for the half year ended 31 December 2018 Category Total Property Management Development Operating Non- investment expenses operating items $M $M $M $M $M $M Gross property income 56.0 56.1 - - - (0.1) Management income 189.4 - 189.4 - - - Development
Slide 23: Profit and loss (cont'd)
Profit and loss (cont’d) Category Total Property Management Development Operating Non-operating investment expenses items $M $M $M $M $M $M EBIT / Segment operating earnings 1,047.9 181.8 189.4 273.3 (132.1) 535.5 Net gain from fair value adjustments on investment properties (100.8) (100.8) Share of
Slide 24: Reconciliation non-operating items
Reconciliation non-operating items Non-operating items in statutory income statement Half year ended 31 December 2018 $M $M Property valuation related movements Net gain from fair value adjustments attributable to investment properties 100.8 Share of net gain from fair value adjustments attributable
Slide 25: Financial position
Financial position As at 31 December 2018 Direct Assets Property Developments Other Total $M investments $M $M $M $M Capital allocation Cash - - 2,062.6 2,062.6 Receivables - - 405.0 313.5 718.5 Inventories - - 935.7 - 935.7 Investment properties 1,705.2 - 106.6 - 1,811.8 Investments accounted for u
Slide 26: Net tangible asset movement
Net tangible asset movement + For year ended 31 December 2018¹ 1. Calculated on 1,813.9 million securities being closing securities on issue 26
Slide 27: Property valuations
Property valuations + The Group’s results for 1H19 reflect the high quality of the global portfolio and current strong industrial market fundamentals + Market rental growth, cap rate compression, development completions within the Partnerships and FX have been the drivers of the valuation increase +
Slide 28: Appendix 2 – Property investment
Appendix 2 – Property investment
Slide 29: Leasing
Leasing Across the Group and Partnerships: + 1.6 million sqm leased during the period + Occupancy maintained at 98% + Like for like NPI growth at 3.2% Region Leasing area (sqm) Net annual rent ($M) Average lease term (years) Australia / New Zealand 601,253 85.2 4.1 Asia 607,270 107.8 3.3 UK / Contin
Slide 30: Customers
Customers Top 20 global customers (by net income - look through basis) 30
Slide 31: Geographic exposure
Geographic exposure Top 20 sub-regions (by AUM) 31
Slide 32: Direct portfolio detail
Direct portfolio detail Portfolio snapshot Key metrics¹ Total assets A$1.7 billion + 24 properties with a total value of $1.7 billion located primarily in the Sydney market Customers 296 Number of properties 24 – Represents a significant part of the urban renewal portfolio Occupancy 90% Weighted ave
Slide 33: Appendix 3 – Development
Appendix 3 – Development
Slide 34: Developments
Developments 1H19 Developments Completions Commencements Work in progress Value ($bn) 2.1 1.9 3.6 Area (m sqm) 1.1 1.1 2.2 Yield (%) 7.1 6.8 7.1 Committed (%) 82 54 54 Weighted average lease term (years) 8.9 10.9 8.7 Development for third parties or Partnerships (%) 81 80 79 Australia / New Zealand
Slide 35: Developments (cont'd)
Developments (cont’d) + Strong demand from customers supporting WIP at $3.6 Development volume billion and expected to grow to $4 billion in future periods + Maintained development pipeline of $10 billion – Forecast GLA of 5.2 million sqm – Development pipeline allocated as Australia/New Zealand 15%
Slide 36: Appendix 4 - Management
Appendix 4 - Management _ ,..Goodman,Longquan Logistics Centre,China,
Slide 37: Global platform
Global platform $8.2bn AUM 5 PROPERTIES $1 4.6bn AUM ~ < 57 mms PROPERTIES ROPE/UK ee =) < = Lu - = oO O THE AMERI OBAL NETWORK 5 $42.9 (© TOTAL ASSETS UNDER MANAGEMENT (AUM) 3 384 PROPERTIES 17 COUNTRIES R + DENOTES GOODMAN OFFICE za ‘© Current Goodman global presence. As at 31 December 2018 (Austr
Slide 38: Management - AUM
Management - AUM + Major achievements completed during the year include Third party AUM by region – GCLP equity upsize of $US1.75bn – GMT settlement of viaduct sale to Blackstone – GNAP acquired 616,992 sq ft logistics centre in Teterboro, New Jersey Third party assets under management Total AUM 38
Slide 39: Appendix 5 – Capital management
Appendix 5 – Capital management
Slide 40: Currency mix
Currency mix Currency mix – including the impact Currency mix – outstanding debt of Capital Hedging FX Swaps 40
Slide 41: Financial risk management
Financial risk management + The Group has implemented a robust capital management framework, under its revised Financial Risk Management (FRM) policy. This provides: ‒ Stronger balance sheet which has been reflected in higher credit ratings upgrade from S&P and Moody’s BBB+ / Baa1 respectively ‒ Cov
Slide 42: Financial risk management (cont'd)
Financial risk management (cont’d) Interest rate hedge profile + Interest rates are hedged to 94% over next 12 months + Weighted average hedge rate of 3.34%1 - NZD – hedge rate 3.31% - JPY – hedge rate 3.05% - HKD – hedge rate 2.55% - GBP – hedge rate 2.85% - Euro – hedge rate 1.25%2 - USD – hedge r
Slide 43: Financial risk management (cont'd)
Financial risk management (cont’d) Foreign currency denominated balance sheet hedging maturity profile Currency Weighted average Weighted average Amount receivable1 Amount payable1 maturity exchange rate NZ$ 3.7 years 1.0943 A$274.2m NZ$300.0m HK$ 3.7 years 5.7594 A$762.4m HK$4,390.0m € 4.1 years 0.
Slide 44: Exchange rates
Exchange rates + Statement of Financial Position – exchange rates as at 31 December 2018 – AUDGBP – 0.5525 (30 June 2018: 0.5604) – AUDEUR – 0.6151 (30 June 2018: 0.6332) – AUDHKD – 5.5156 (30 June 2018: 5.8015) – AUDBRL – 2.7338 (30 June 2018: 2.8565) – AUDNZD – 1.0494 (30 June 2018: 1.0922) – AUDU
Slide 45: Thank you
Thank you Important Notice This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071) and Goodman Funds Management Limited (ABN 48 067 796 641) (AFSL 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839)). The details in this presentation provi