Goodman Group · ASX:GMG
Goodman — Macquarie Goodman Group — H1 FY2006 Earnings Presentation
52 slides from Goodman's earnings presentation, Feb 28, 2006
Slide 1: Macquarie Goodman Group Half Year Results – 31 December 2005
Macquarie Goodman Group Half Year Results – 31 December 2005 28 February 2006
Slide 2: Contents
Contents Section 1 Half Year Review Section 2 Financial Performance Section 3 Regional Activities Section 4 Capital Management Section 5 Summary and Outlook Section 6 Appendices 2
Slide 3: Section 1 – Half Year Review
Section 1 – Half Year Review
Slide 4: Half Year Review: Highlights
Half Year Review Highlights Æ Macquarie Goodman Group profit after tax of $239.9 million Æ Strong performance of core Australian property portfolio with 3.2% increase on new lease transactions Æ Significant new development commitments totalling $384 million at an average yield on cost of 8.5% Æ Succ
Slide 5: Half Year Review: Operational Highlights
Half Year Review Operational Highlights Æ Australia Æ Successful launch of Macquarie Goodman Wholesale Fund (“MGW”) with an initial portfolio of $1.0 billion* Æ Intensive management of $4.0 billion core property portfolio Æ 223,000 sqm of existing space leased Æ Like on like rental growth of 3.3% Æ
Slide 6: Half Year Review: Operational Highlights
Half Year Review Operational Highlights Æ Singapore Æ A-REIT DPU increase of 29% over pcp Æ Continued to grow acquiring an additional S$399 million of new properties Æ Total FUM of S$2.7 billion (+59% over pcp) Æ Hong Kong Æ Control a high grade portfolio of A$830 million at an average yield of 6.4%
Slide 7: Section 2 – Financial Performance
Section 2 – Financial Performance
Slide 8: Financial Highlights
Half Year Review Financial Highlights Period Ending Explanatory December 2005 Memorandum and PDS Forecast* Profit after tax ($million) 239.9 - Profit after tax (excluding AIFRS adjustments) ($million) 184.3 186.6 Adjusted earnings per security*** (cents) 12.92 12.90 Distribution per security (cents)
Slide 9: Financial Performance
Financial Performance MGQ Results 6 months to 31 December 2005 ($million) Net property income 187.7 Management income 40.9 Investment income 9.8 238.4 Unrealised gains on investment properties 55.6 Total income 294.0 Expenses from operations (8.8) Net interest expense (42.0) Tax (3.8) Minority inter
Slide 10: Key Impacts of AIFRS on Financial Performance
Key Impacts of AIFRS on Financial Performance MGQ Results 6 months to 31 December 2005 ($million) Profit after tax attributable to Securityholders 239.9 Less unrealised gains on investment property revaluations (55.6) 184.3 Add / (Subtract) other AIFRS adjustments: Gain on disposals recognised in Ju
Slide 11: Revenue Analysis by Business Segment
Revenue Analysis by Business Segment Category Total Net Management Investment Unrealised ($million) Property Income Income Gains on Income Investment Properties Gross property income 224.0 224.0 Net gain from fair value adjustment on investment properties: - realised (wholesale fund 67.4%) 18.3 18.3
Slide 12: Management Income Analysis by Geographic Segment
Management Income Analysis by Geographic Segment Category Total Australia New Zealand Singapore Hong UK ($million) Kong Creation of wholesale fund 19.0 19.0 Fund management fees 5.5 0.1 2.0 1.9* (0.1)* 1.6 Development management fees 4.7 3.2 1.5 Property management fees 1.2 1.2 Development profits 7
Slide 13: Financial Position
Financial Position MGQ Results As at 31 December 2005 ($million) Investment properties 4,345.6 Cornerstone investments in managed funds 548.5 Intangible assets 459.0 Other assets 287.4 Total assets 5,640.5 Interest bearing liabilities 1,943.3 Other liabilities and creditors 496.8 Total liabilities 2
Slide 14: Financial Position
Financial Position Æ Headline gearing of 34.5% Æ Adjusted gearing of 37.8% inclusive of “off balance sheet” financing (MGQ share of Hong Kong seed assets) Æ Conservative balance sheet allocation to off shore operations ($million) Australia New Singapore UK/ Total Hong Adjusted Zealand Europe Kong In
Slide 15: Section 3 – Regional Activities
Section 3 – Regional Activities
Slide 16: Australian Investment Portfolio
Australian Investment Portfolio Æ 92 properties located across all key Australian markets with a total value of $4.0 billion Æ 98% occupancy and a weighted average lease expiry of 5.1 years Æ Strong portfolio performance over the half year Æ 222,952 sqm in new lease transactions ($21.6 million net a
Slide 17: Development Portfolio
Development Portfolio Æ $419 million of developments completed at an initial yield of 8.7% with an average lease expiry of 7.8 years Æ $384 million of new commitments secured across all groups at an initial yield of 8.5% with an average lease term of 11.7 years Æ 43% of development projects secured
Slide 18: Development Pipeline
Development Pipeline Æ 3.3 million sqm of developable land Æ Continue to provide high quality investment product for both MGQ and third party managed funds Æ Ability to provide “off-market” organic growth for third party funds management activities Æ Strategically located in key development location
Slide 19: Funds Management – New Initiatives
Funds Management – New Initiatives Æ Macquarie Goodman Wholesale Fund (Australia) Æ Successful launch of initial portfolio valued at $1.0 billion* Æ Follow-on acquisitions and developments totalling $150 million Æ Forecast funds under management of $1.2 billion on completion of committed projects Æ
Slide 20: New Zealand Operations
New Zealand Operations Æ MGQ owns property and development assets worth NZ$345 million to provide growth opportunities to the MGP fund Æ Funds Management - MGP Æ Gross assets of NZ$639 million Æ Market capitalisation of NZ$480 million Æ Strong total returns to unitholders of 14.8% (6 months to Septe
Slide 21: Singapore Operations
Singapore Operations Æ A-REIT has provided strong investment performance over the past 6 months with 29% growth in distributions per unit (compared to pcp**) Æ Assets under management of S$2.7 billion (+59% over pcp) Æ Acquisition of 16 properties for S$399 million Æ Raised S$240 million worth of ne
Slide 22: UK/European Platform
UK/European Platform Æ Successful acquisition of Arlington in December 2005 Æ Specialist in funds management, development management and property services Æ Access to 274 people across the UK and Continental Europe Æ Significant funds under management platform Æ A$7.2 billion business space assets u
Slide 23: Total Funds Under Management
Total Funds Under Management 23
Slide 24: Section 4 – Capital Management
Section 4 – Capital Management
Slide 25: Capital Management
Capital Management Summary Æ Total group borrowings increased to $1,943 million resulting in headline gearing of 34.5% and adjusted gearing of 37.8% which is within the target range of 35%-40% Æ $182.6 million in new equity raised during the period including Æ DRP - $135.6 million Æ RePS conversion
Slide 26: Section 5 – Summary and Outlook
Section 5 – Summary and Outlook
Slide 27: Summary and Outlook
Summary and Outlook Æ Continue to extend our MGQ Customer Service Model across our expanded international platform Æ Committed focus to the core Australian Investment portfolio Æ Continued strong organic growth in development commitments in Australia and New Zealand at attractive yields Æ Significan
Slide 28: Section 6 - Appendices
Section 6 - Appendices
Slide 29: Key Balance Sheet Impact of AIFRS
Key Balance Sheet Impact of AIFRS Net Tangible Asset Reconciliation ($million) ($million) Per Security* Net assets as at 30 June 2005 (Previous AGAAP) 3,093.1 2.15 AIFRS adjustments Deferred tax (12.7) Employee Security Acquisition Plan (ESAP) (19.6) Deferred leasing costs and incentives (6.1) Other
Slide 30: Movement in Net Assets
Movement in Net Assets Net Tangible Asset Reconciliation ($million) ($million) Per Security* Net assets at 1 July under AIFRS 2,986.4 2.08 Revaluation of non-current investments during the period Revaluation of wholesale properties (unrealised) 8.9 Revaluation of investment properties 46.7 55.6 0.04
Slide 31: Capital Management: Debt
Capital Management Debt Æ Refinanced bank debt facilities completed in July 2005 Æ $1.4 billion Syndicated Multi Currency Facility (SMCF) Æ Refinance existing facilities Æ Bring stapled group borrowings primarily under one facility Æ Platform for moving to unsecured debt capital markets over medium
Slide 32: Capital Management: Debt
Capital Management Debt Æ Gearing Æ Total interest bearing liabilities $1,943.3 million Æ Target gearing range of 35% to 40% Æ Headline gearing of 34.5%, adjusted gearing of 37.8% Æ Interest Cover Æ EBITDA to interest expense of 3.5 times Æ Hedging Profile Æ Weighted average hedge rate of 5.31% AUD$
Slide 33: Interest Rate Hedging Profile
Capital Management Interest Rate Hedging Profile 33
Slide 34: Capital Management: Equity
Capital Management Equity Æ Final number of securities on issue 1,455.1 million Æ Weighted average number of securities 1,426.1 million* Æ Value of new equity raised $182.6 million Æ Market capitalisation $6,955.4 million Securities Issued Dividend Reinvestment Plan 33,988,496 Conversion of RePS 15,
Slide 35: Geographic Coverage
Geographic Coverage Æ Total industrial and business space assets under management of $16 billion Assets People $7.2 b 274 $0.8 b 86 $2.2 b 24 $4.9 b 231 $0.9 b 39 $16.0 b 654 35
Slide 36: Property Investment: Occupancy and Lease Expiry
Property Investment Occupancy and Lease Expiry Æ Positive performance in most regions Æ WALE maintained at 5.1 years Æ Occupancy maintained at 98% Region % of WALE WALE Occupancy Occupancy Portfolio Jun 2005 Dec Jun 2005 Dec 2005 (years) 2005 (%) (%) (years) Sydney South 15 4.5 4.2 98 99 Sydney West
Slide 37: Property Investment: Customer Retention
Property Investment Customer Retention Æ Solid retention in all key regions: Æ 87% for six months Æ 80% for rolling four years Region Expiry in period Retention rate (%) (%) Sydney South 24 81 Sydney West 33 95 Sydney Outer West 19 100 Sydney North 9 62 Victoria 13 71 Queensland 2 100 Total 100 87 3
Slide 38: Property Investment: Leasing Deals
Property Investment Leasing Deals Æ Leased 222,952 sqm of existing space Æ $21.6 million net annual rental Æ Average lease term on new deals of 4.0 years Æ Average rental increases of 3.2% on new lease transactions Region Area Net Annual Average Increase on (sqm) Rental Lease Term Passing Rental ($m
Slide 39: Property Investment: Major Leasing Transactions
Property Investment Major Leasing Transactions Property Customer Total Net Lease Area Annual Term (sqm) Rental (years) ($million) Smithfield Distribution Centre Coca Cola Amatil 34,388 2.6 3 Villawood Distribution Centre Kimberly Clark 17,810 1.5 3 Holroyd Distribution Centre Ramset Fasteners 13,051
Slide 40: Property Investment: Weighted Average Lease Expiry
Property Investment Weighted Average Lease Expiry Æ Stable lease expiry profile Æ 41% of income expiring beyond five years 40
Slide 41: Property Investment: Expiry Profile
Property Investment Expiry Profile Æ Manageable lease expiry profile over the next 12 months Region % of portfolio net income % of portfolio net income expired in the expiring in the 12 months to Dec 2005 12 months to Dec 2006 Sydney South 2.8 2.7 Sydney West 3.3 1.9 Sydney Outer West 1.6 1.9 Sydney
Slide 42: Property Investment: Property Revaluations
Property Investment Property Revaluations Æ $793 million of properties revalued at 31 December 2005 Æ 5.6% increase over previous book values Æ Solid increases in Sydney West, Sydney Outer West and Victoria Æ Revalued portfolio weighted average capitalisation rate of 7.8% Æ MGQ portfolio weighted av
Slide 43: Property Investment: Top Customers
Property Investment Top 25 Customers (by net income) Æ Top 25 customers contribute 41% of MGQ’s net property income Æ 50% of MGQ’s net property income is sourced from the top 40 customers 43
Slide 44: Property Development: Development Management
Property Development Development Management Æ 504,036 sqm of development product over 23 properties currently underway* Æ Estimated end value of $808 million with an averaged initial yield of 8.1% and 10.8 year weighted average lease term Æ $305 million (38%) under development for third party funds
Slide 45: Property Development: Completed Developments
Property Development Completed Developments Æ 397,850sqm of projects completed across all groups* in the period Æ End value of $419 million Æ 8.7% initial yield on total project cost Æ Weighted average lease term of 7.8 years Region Area Initial Est. End % of Total Weighted (sqm) Yield Value Develop
Slide 46: Property Development: Completed Developments - MGQ
Property Development Completed Developments - MGQ Æ Significant completions of $382 million in the period Æ Average initial yield after all costs of 8.6% Æ Weighted average lease term of 7.8 years Æ 38% of projects in New South Wales Region Area Initial Est. End % of Total Weighted (sqm) Yield Value
Slide 47: Property Development: Committed Developments - MGQ
Property Development Committed Developments - MGQ Æ $220 million of new projects committed in the period Æ Expected initial yield of 8.9% Æ Weighted average lease term of 8.7 years Region Area Initial Est. End % of Total Weighted (sqm) Yield Value Developments Average (%) ($m) Lease Term (years) Syd
Slide 48: Property Development: Development Pipeline - MGQ
Property Development Development Pipeline - MGQ Æ 3.3 million square metres of developable land in the portfolio Æ 27% of pipeline located in core New South Wales market Æ 19% of pipeline located in core Sydney West market Region Total Site Committed Committed Remaining % of Area Area Area as % of A
Slide 49: Acquisitions and Disposals
Acquisitions and Disposals Æ Acquisitions Æ $682 million in acquisitions for the half year Æ $472 million in Hong Kong Æ $123 million in New Zealand Æ Disposals Æ $1,385 million in disposals for the half year Æ $1,069 million to Australian wholesale fund Æ $293 million of Hong Kong assets to Macquar
Slide 50: Acquisitions
Acquisitions Major Transactions Exchanged during the Period Acquisition Price Property ($million) Part Evergain Plaza, Hong Kong (40%) 130.5 Part Dynamic Cargo Centre, Hong Kong (70%) 108.3 Tsuen Wan International Centre & Lung Wah International Godown, Hong Kong 94.7 Fountain Set Buildings, Hong Ko
Slide 51: Disposals
Disposals Major Transactions Disposal Price Property ($million) Wholesale Fund Portfolio* 1,029.6 50% of Hong Kong Portfolio 292.5 Additional wholesale fund properties - West Avenue Industrial Estate, Edinburgh Parks, SA 14.7 - Purling Distribution Centre, Edinburgh Parks, SA 24.5 Acacia Ridge Busin
Slide 52: Thank you
Thank you Disclaimer This presentation for the half year ended 31 December 2005 has been prepared by Macquarie Goodman Group comprising Macquarie Goodman Funds Management Limited (ACN 067 796 641) (AFSL 223621) as Trustee and Responsible Entity of the Macquarie Goodman Industrial, Capital, Thomas an
Macquarie Goodman Group — H1 FY2006 Earnings Presentation on 6ix