Goodman Group · ASX:GMG
Goodman — H1 FY2010 Earnings Presentation
61 slides from Goodman's earnings presentation, Feb 24, 2010
Slide 1: Results for the half-year ended 31 December 2009
Goodman Group Results for the half-year ended 31 December 2009+ For personal use only 24 February 2010
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) and Goodman Funds Management Limited (ABN 48 067 796 641) (AFSL Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839)). Th
Slide 3: Contents
Contents For personal use only + Section 1 Introduction + Section 2 Results overview + Section 3 Operational performance + Section 4 Outlook & summary + Appendices – Results analysis – Investment – Development – Management – Capital management 3
Slide 4: Section 1 Introduction
For personal use only Section 1+ Introduction Amazon, United Kingdom 4
Slide 5: Introduction
Introduction For personal use only + First half has been a period of transition, punctuated by the significant recapitalisation of the Group + Operating profit of $139 million on target with operational momentum building – Operating earnings per security of 2.8 cents1 – Distribution per security of
Slide 6: Introduction (cont.)
Introduction (cont.) For personal use only + Funds management platform well supported – $12.6 billion of external AUM, down 6% on constant currency basis – AUM drivers - ($0.2) billion net investments; ($0.7) billion revaluation movement; ($0.8) billion FX movement – $0.7 billion of new committed eq
Slide 7: Key achievements
Key achievements For personal use only + Completed major refinance and recapitalisation across Group and Funds – including the introduction of new capital partners CIC and CPPIB + Fund investors are again looking for new prime quality, core investment opportunities. $0.7 billion of new third party e
Slide 8: Section 2 Results overview
For personal use only Section 2+ Results overview Venlo North Logistics Centre, The Netherlands 8
Slide 9: Results overview
Results overview For personal use only + Underlying fundamentals remain sound 1H FY10 – >7% ROA in investment, stable occupancy and rents Operating earnings ($M) 139 – Services margin ~50%, AUM reduction due primarily to FX and Operating earnings per security (cents)1 2.8 valuation shift Operating e
Slide 10: 1H 2010 results – profit and loss
1H 2010 results – profit and loss For personal use only + Half year operating profit of $138.5 million 31 December 2009 income statement 1H FY09 1H FY10 $m $m – Statutory loss of $500 million includes non realised property Investment (look through) 245.8 236.1 valuation movements and non-operating i
Slide 11: 1H FY10 results – balance sheet
1H FY10 results – balance sheet For personal use only + Revaluations have resulted in $0.5 billion reduction in 31 December 2009 balance sheet aggregate assets since 30 June 2009 30 Jun 2009 31 Dec 2009 $m $m – Look-through portfolio weighted average cap rate of 8.1% post Stabilised assets 2,820 2,4
Slide 12: Property Valuations
Property Valuations For personal use only + Liquidity is returning to all markets + Completed investment property values down c. 5% (plus geared effect in Funds and land) – WACR of 8.1% - up from 7.9% in June – Reduced short term market rent growth assumption to “flat” overall in DCF valuation – was
Slide 13: Intangibles, derivatives and currency
Intangibles, derivatives and currency For personal use only + Intangible impairment of $7 million relates to Intangibles – segment carrying values European Business Parks Adjusted for Book value acquisitions Book value – Recent and new capital initiatives and improving demand 30 June 2009 and FX 31
Slide 14: Section 3 Operational performance
For personal use only Section 3+ Operational performance M7 Business Hub, Australia 14
Slide 15: Investment
Investment For personal use only + Investments directly held or in Funds reflect high Investment ($m) 1H FY09 1H FY10 quality, well located property, which remains a core Direct 106.0 85.4 activity of the Group Cornerstones 139.8 150.7 Look through EBITDA 245.8 236.1 + Overall cash flows remain stab
Slide 16: Development
Development For personal use only + Development remains a key component of the Development ($m) 1H FY09 1H FY10 Goodman business Revenue 81.3 19.5 EBITDA 63.2 6.5 – Built out value of all projects under Group control estimated to exceed $10 billion1 Key metrics FY09 1H FY10 + Development business ha
Slide 17: Development projects
Development projects For personal use only + Major development projects commenced during first half UK – Greater Manchester New Zealand – Ingram Hong Kong - Interlink Police Forces HQ Micro Europe – Staples Area 222,000 sqm Area 22,510 sqm Area 10,355 sqm Area 21,581 sqm Lease term 5 years Lease ter
Slide 18: Development projects
Development projects For personal use only + Major development projects commenced since 31 December 2009 UK – Greater Manchester Police UK – Co-op Divisional HQ Australia – Kmart Area 43,484 sqm Area 11,638 sqm Area 76,735 sqm Lease term 20 years Lease term n/a Lease term 15 years Contracted owner U
Slide 19: Management
Management For personal use only + $12.6 billion of external Assets Under Management (AUM), Management ($m) 1H FY09 1H FY10 down 6% on constant currency basis Base fees 46.1 31.8 – ($0.2) billion movement in net investments Performance fees 2.8 3.7 Property service fees 32.1 26.2 – ($0.7) billion mo
Slide 20: Management - AUM
For personal use only Management - AUM 20
Slide 21: Management platform
Management platform For personal use only + Funds focused on core returns with measured exposure to development land + Capital being attracted to Fund platform as property valuations have stabilised + Significant headroom to covenants with average cap rate expansion to breach of 345 bps4 Goodman’s f
Slide 22: Section 4 Outlook & summary
For personal use only Section 4+ Outlook & summary Korbach Industrial Estate, Germany 22
Slide 23: Outlook and summary
Outlook and summary For personal use only + Strong operating focus to continue building momentum during 2H FY2010 + Strategic focus on: - Maintaining strong financial position – gearing managed to balance sheet composition and liquidity maximised Strategy and outlook - Expanding Funds Management pla
Slide 24: Appendix 1 Results analysis
For personal use only Appendix 1+ Results analysis Kersdonk Industrial Estate, Belgium 24
Slide 25: Profit and loss
For personal use only Profit and loss 25
Slide 26: Profit and loss (cont)
Profit and loss (cont) For personal use only GMG results Half Year ended Half Year ended Increase / 31 Dec 2008 31 Dec 2009 (decrease) $M $M $M Property investment 176.0 164.0 (12.0) Management services 91.9 54.8 (37.1) Development 60.3 19.5 (40.8) Operating revenue net of property expenses 328.2 23
Slide 27: Profit and loss (cont)
Profit and loss (cont) For personal use only + Total income by business segment for half year ended 31 December 2009 Category Total Investment Management Development Unallocated Non-operating items1 $M $M $M $M $M $M Property income 119.8 121.3 (1.5) Net unrealised gain/(loss) from fair value adjust
Slide 28: Profit and loss (cont)
Profit and loss (cont) For personal use only Category Total Investment Management Development Unallocated Non-operating items1 $M $M $M $M $M $M EBIT – per statutory accounts (415.5) 165.5 26.0 6.5 (17.9) (595.6) Unrealised gains/losses on investment property revaluations 195.9 195.9 Unrealised gain
Slide 29: Reconciliation non-operating items
Reconciliation non-operating items For personal use only Non-operating Items in statutory profit & loss Notes Half Year ended 31 Dec 2009 $M $M Property Valuation Direct portfolio (195.9) Fund portfolio – associates (271.3) Fund portfolio – joint ventures (11.6) Subtotal (478.8) Impairments Impairme
Slide 30: Financial position
Financial position For personal use only + Headline gearing of 25.2% As at 31 December 2009 Asia Pacific Europe Total $M $M $M Investment properties 2,167.8 869.2 3,037.0 Investments in funds 1,667.2 632.5 2,299.7 Other segment assets1 460.9 1,363.0 1,823.9 Cash 676.3 Other assets 71.4 Total assets
Slide 31: Capital allocation
Capital allocation For personal use only + Total property investment portfolio $4.8 billion – reduction in directly owned assets $0.4 billion – decrease of $0.4 billion cornerstone investment1 – $0.5 billion devaluation of direct property and proportionate share of Fund owned properties + Group owne
Slide 32: Gearing bridge
Gearing bridge For personal use only + 30 June 2009 to 31 December 2009 32
Slide 33: Net tangible assets
Net tangible assets For personal use only + Movement in net tangible assets for the half year ended 31 December 2009 Net tangible asset reconciliation $M $M Per security Total equity at 1 July 2009 3,777.6 1.38 Valuation of non-current assets during the year Valuation of investments properties (195.
Slide 34: Net tangible asset bridge
Net tangible asset bridge For personal use only + For half year ended 31 December 2009 1. Calculated on 6,164.2 million securities being closing securities on issue of 6,205.7 million less 41.5 million securities related to ESAP and excludes minority interest 34
Slide 35: Appendix 2 Investment
For personal use only Appendix 2+ Investment Interlink Industrial Estate, Australia 35
Slide 36: Leasing
Leasing For personal use only + Customer confidence returning as leasing volumes increase with some expansion evident + Global platform creating opportunities with marked increase in cross border enquiry + Minimal new supply keeping vacancy low + Minimal rental arrears + Like on like property income
Slide 37: Customers
Customers For personal use only Top 20 global customer base (look through)1 1. Includes customers of GMG and its managed funds and is based on net rental income 37
Slide 38: Direct portfolio detail – Australia
Direct portfolio detail – Australia For personal use only Portfolio snapshot Key metrics1 + 34 properties with a total value of $1.9 billion located across Total assets A$1.9 billion key Australian markets Customers 230 + Leasing deals remain strong across the portfolio: Number of properties 34 – 12
Slide 39: Direct portfolio detail – UK
Direct portfolio detail – UK For personal use only Portfolio snapshot Key metrics1 + Leases executed subsequent to balance date will see occupancy Total assets A$0.4 billion increase to 85.6% Customers 21 + Strong enquiry on remaining vacant area Number of properties 21 + Strong WALE of 7.6 years Oc
Slide 40: Appendix 3 Development
For personal use only Appendix 3+ Development Homebush Corporate Park, Australia 40
Slide 41: Developments
Developments For personal use only 1HFY10 Developments Completions Commitments Work in progress Value ($M) 280 742 1,005 Area (m sqm) 0.3 0.3 0.4 Yield (%) 8.0 9.6 9.1 Pre-committed (%) 99 59 66 Weighted Average Lease Term (years) 9.2 5.4 6.1 Development for Third Parties or Funds (%) 100 59 67 Asia
Slide 42: Developments
Developments For personal use only + The Group has a development pipeline in excess of $10 billion – Across Group and Funds – Based on forecast end value – Based on currency as at 31 December 2009 – Allocated as Asia Pacific $3bn and Europe $7bn – Forecast GLA of over 6.8 million sqm – Development t
Slide 43: Appendix 4 Management
For personal use only Appendix 4+ Management Dynamic Cargo Centre, Hong Kong 43
Slide 44: Goodman Australia Industrial Fund
Goodman Australia Industrial Fund For personal use only Key events Key metrics1 + Successfully closed a fully subscribed $200 million equity Total assets A$4.5 billion raising to existing unit holders Interest bearing liabilities A$1.8 billion + 12 month mandatory DRP approved by investors from 1 Ge
Slide 45: Arlington Business Parks Partnership (UK)
Arlington Business Parks Partnership (UK) For personal use only Key events Key metrics1 + Completed restructuring of financing facilities with Total assets A$2.3 billion amended covenant package Interest bearing liabilities A$1.3 billion + Completed £117m of disposals in the 6 months to Gearing2 54.
Slide 46: Goodman European Logistics Fund
Goodman European Logistics Fund For personal use only Key events Key metrics1 + Secured 1 year extension of Fund debt facility to Total assets A$2.2 billion December 2012 and relaxation of debt financing covenants Interest bearing liabilities A$1.2 billion Gearing2 52.2% + Sale of three properties f
Slide 47: Goodman Hong Kong Logistics Fund
Goodman Hong Kong Logistics Fund For personal use only Key events Key metrics1 + Approximately 100,000sqm or 13% of the portfolio leased Total assets A$1.5 billion during 1H 2010 Interest bearing liabilities A$0.4 billion + Commencement of Interlink development in JV with GMG, with forecast 222,000
Slide 48: Goodman Property Trust
Goodman Property Trust For personal use only Key events Key metrics1 + Diversified borrowing sources, completing a 5 year, Total assets A$1.3 billion NZ$150 million secured bond issue, rated BBB+ by S&P Interest bearing liabilities A$0.5 billion + Over 15,000 sqm of new development commencements Gea
Slide 49: Goodman China Logistics Holding
Goodman China Logistics Holding For personal use only Key events Key metrics1 + Goodman China Logistics Holding (GCLH) is a 80/20 JV Total assets A$0.2 billion between CPPIB and Goodman. Established in September Interest bearing liabilities - 2009, GCLH invests in high quality stabilised logistics a
Slide 50: Goodman European Business Parks Fund
Goodman European Business Parks Fund For personal use only Key events Key metrics1 + €34.2 million facility extended for two years from January Total assets A$0.5 billion 2010 Interest bearing liabilities A$0.3 billion + Sale of Paris asset for €28m in February 2010 reduces Gearing2 63.1% gearing Cu
Slide 51: Macquarie Goodman Japan Logistics Fund
Macquarie Goodman Japan Logistics Fund For personal use only Key events Key metrics 1 + Macquarie Goodman Japan Logistics Fund (MGJLF) Total assets A$0.8 billion invests in high quality logistics assets in recognised and Interest bearing liabilities A$0.5 billion emerging warehouse, distribution and
Slide 52: Appendix 5 Capital management
For personal use only Appendix 5+ Capital management Viersen Logistics Centre, Germany 52
Slide 53: Group financial covenants
Group financial covenants For personal use only + Goodman amended some of its key banking covenants as part of the refinancing process in August 2009, maintaining significant headroom Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is not more Gearing
Slide 54: Group liquidity position
Group liquidity position For personal use only + Cash and available lines of credit of $1,407 million at 31 Dec 2009: + $676 million cash, $731 million available lines + Liquidity is $0.2 billion better than at time of capital raising: + FX benefit $0.04 billion + Lower net cash outflow $0.1 billion
Slide 55: Currency mix
For personal use only Currency mix 55
Slide 56: Financial risk management
Financial risk management For personal use only + Financial risk management in line with Group board policy – interest risk management: – 94% hedged in the first 12 months – Weighted average hedge maturity of 5.0 years – Weighted average hedge rate of 5.36%1 vs spot2 3.14% – Current “all in” net WAC
Slide 57: Financial risk management
Financial risk management For personal use only Interest rate + Interest rates are hedged to 94% over next 12 months + Weighted average hedge rate of 5.36%1 vs spot2 3.14% - NZD – (hedge 8.11%, spot 5.18%) - JPY – (hedge 1.59%, spot 0.73%) - HKD – (hedge 3.63%, spot 2.50%) - GBP – (hedge 7.47%1, spo
Slide 58: Financial risk management
Financial risk management For personal use only Interest rate hedging profile Euro payable GBP payable HKD payable NZD payable JPY payable Fixed Fixed1 Fixed Fixed rate Fixed rate rate rate % rate As at June €M % £M % HK$M % NZ$M ¥M % 2010 (430.0) 4.55% (635.0) 6.22% (1,550.0) 3.69% (165.6) 7.98% (1
Slide 59: Financial risk management
Financial risk management For personal use only Currency hedging profile Amount Amount Maturing in Hedge rate payable Hedge rate payable year ending June HK$M NZ$M 2010 5.3870 (9.5) 1.1486 (5.3) 2011 5.0557 (62.6) 1.1630 (5.3) 2012 4.9743 (62.6) 1.1768 (5.3) 2013 4.8940 (62.6) 1.1932 (5.0) Foreign c
Slide 60: Exchange rates
Exchange rates For personal use only + Statement of Financial Position – exchange rates as at 31 December 2009 – AUDGBP – 0.5581 (31 December 2008 : 0.4796) – AUDEUR – 0.6241 (31 December 2008 : 0.4919) – AUDHKD – 6.9669 (31 December 2008 : 5.4615) – AUDSGD – 1.2623 (31 December 2008 : 1.0113) – AUD
Slide 61: Thank you
For personal use only Thank you+