Gpt Group · ASX:GPT
Gpt — Merger or Acquisition (September 2004)
82 slides from Gpt's merger presentation, Sep 16, 2004
Slide 1: Stock Exchange Announcement: Joint Market Briefing
GPT MANAGEMENT 16 September 2004 Companies Announcement Office Australian Stock Exchange Limited Exchange Centre Level 6 20 Bridge Street Sydney NSW 2000 Attention: Andrew Black Dear Sir Steck Exchange Announcement Lend Lease Corporation Limited & General Property Trust Joint Market Briefing The Mer
Slide 2: The Merged Lend Lease Group: Philosophy, Strategy, Operations
The Merged Lend Lease Group Philosophy, Strategy, Operations September 2004
Slide 3: Merger Update
Merger Update Lend Lease View GPT View Merged Group Profile Merged Group Operating Philosophy Merged Group Strategy and Management Processes VV VV VV WV Management Presentations - Investment Management & Retail - Construction & Development — Asia Pacific & US - Construction & Development - UK & EMEA
Slide 4: Lend Lease proposed merger May 2004
> Lend Lease proposed merger 24 May 2004 > GPT Board recommendation to proceed 6 August 2004 > Revised terms reflect agreement on - Financial terms — Non financial terms > Current timetable -— Explanatory Memoranda due mid October — Investor meetings to be held mid November - Implementation December
Slide 5: Lend Lease view: quality businesses with strong growth potential
> Quality businesses with strong growth potential — Real estate funds management and asset management - Retail asset, development and property management — Urban community development — UK PFls — Project and construction management > Experienced and qualified workforce, diverse skills, knowledge, ca
Slide 6: Core Businesses: Key Operational Benefits
Core Businesses Key Operational Benefits Funds Management, Asset Management and Ownership * Access to assets outside Australia * Access to assets through broader business relationships + Ability to accelerate wholesale funds management business growth (co- investment, asset warehousing) + Complete a
Slide 7: GPT view: quality portfolio with consistent earnings growth
> Quality portfolio with consistent earnings growth - Diversified by sector and geography — $8 billion domestic assets — Experienced and capable management team - Strong balance sheet > Needs growth in a changing sector — Incrementally introduced higher growth activities - Investors rewarding strong
Slide 8: Financial terms address risk
> Financial terms address risk > Maintain high quality portfolio — Diversity and stability of income retained - Quality offshore assets - Development pipeline > Continuity in management — Maintain intellectual capital, systems and processes - Retail development expertise > Strong and proven focus on
Slide 9: Leading diversified entity in the LPT sector
Leading diversified entity in the LPT sector Asset Ownership > > Vv $10 billion in quality investment assets $5.7 billion retail portfolio — 30oftop 10 performing Australian centres - Operating metrics significantly ahead of industry averages — Investment in strongly performing UK & US assets $3.0 b
Slide 10: Listed Property Trust focus
> Listed Property Trust focus — Competitive earnings growth — Limit volatility in earnings and distributions - Strong risk-adjusted total returns Transparency and disclosure Prudent capital and financial risk management
Slide 11: Australia and Overseas strategy
Australia > Continue GPT’s current portfolio strategy — Focus on consistency in earnings - Optimise portfolio to maximise performance - Selectively expand to enhance earnings growth — Continue to diversify earnings stream to reduce volatility — Drive development pipeline in retail and industrial > L
Slide 12: Merged Entity Earnings
Merged Entity Earnings Vv Stable and growing earnings base Objective to maintain investment income around 70% - Lend Lease investment income growth in FY04 12% > Senior management variable compensation to be based on achieving intended target 7% p.a. growth in distributable earnings Operational Earn
Slide 13: Overall allocation of capital for investment versus corporate activity
> Overall allocation of capital for investment versus corporate activity established - Strategy determines capital availability, return requirements and overall allocation between investment and corporate activities > Corporate earnings - Strategy determines identification of opportunities - Busines
Slide 14: Allocation process
» Allocation process — Long-term allocation and return requirements create investment template ~ Businesses operating within individual templates to identify opportunities and evaluate risks » Group level sensitivity analysis — Identify appropriate outcomes/risk management evaluation — Prioritise op
Slide 15: Financial Risk Management
Financial Risk Management > Focus on maintaining strong balance sheet > Total real estate investment assets $10 billion > Policy guideline of 25-35% gearing — Maintain appropriate risk profile - “A’ credit rating objective — Standard & Poor’s indicating “A” or “A-” and Mocdy’s “A2” or “A3” > Capital
Slide 16: Prudent Hedge Profile
Prudent Hedge Profile USD exchange rate v USD hedge rate 0.85 5 0.8 5 0.75 5 074 0.65 + 08 5 0.55 4 0.5 4 0.45 30-Jun-99 30-Jun-00 30-Jun-04 AUD/USD exchange rate 30-Jun-02 30-Jun-03 AUDIUSD effective net rate 30-Jun-04 > Offshore earnings hedging policy has been effective in mitigating currency vol
Slide 17: Maintain best practice LPT style disclosure and Investor Relations model
Maintain ‘best practice’ LPT style disclosure and Investor Relations model Full Year / Half Year presentations Regular portfolio / business updates and detailed information VV V WV Program of access to several layers of management - MD and CEOs - Portfolio Managers — Operational management > One-on-
Slide 18: Management structure: CEO / MD
CEO/ MD Greg Clarke CEO Development & Construction Asia Pacific & Americas Ross Taylor Responsible for: > Retail - Global > Diversified Asset Portfolio — Global > Wholesale Funds Management - Global Responsible for: > Urban Community Development — Australia & Americas > Project and Construction Mana
Slide 19: Merged group business structure
Real Estate Funds Management, Asset Management and Ownership Retail Asset Development and Management Urban Community Development i * Delfin Lend Lease i * Lend Lease re _ Actus Lend Lease BRAC | progrann PFls ? _ Market ee eee . Market watch _ Project and Construction Management . ~ Bovis Lend Lease
Slide 20: Strategic & Operational Overview: Investment Management
The Merged Lend Lease Group Strategic & Operational Overview Nic Lyons - CEO Investment Management 19
Slide 21: Investment Management agenda
> Strategy > Structure > Asset Ownership - Overview - Growth Opportunities > Retail - Overview - Growth Opportunities > Wholesale funds management - Overview - Growth Opportunities > Risk Management Disciplines 20
Slide 22: Maintain and enhance a quality diversified portfolio of assets
> To maintain and enhance a quality diversified portfolio of assets providing superior risk-adjusted returns > Continue to develop and grow wholesale funds management businesses to provide strong returns for investors > Capitalise on significant retail development pipeline in wholesale and owned ass
Slide 23: Continuity of management
> Continuity of management >» Ability to leverage domestic expertise into offshore markets
Slide 24: Diversified Asset Ownership
Diversified Asset Ownership > Large scale, diverse, quality portfolio > Australian Office Portfolio -— $3.0 billion — 98% prime assets - 93% occupancy, strong tenant profile — Average lease term 6.3 years > Australian Hotel / Tourism Portfolio — $778 million — Unique, quality assets — Dominant posit
Slide 25: National Building at Docklands; The Point at Dusk, Bedarra Island
National Building at Docklands The Point at Dusk, Bedarra Island 24
Slide 26: Diversified Asset Ownership: Growth Opportunities
Diversified Asset Ownership: Growth Opportunities > Maintain current strategies, investment templates and quality focus > Maintain intensive asset management focus > Growth through selected acquisitions across all portfolios > Office - National Buildings & Darling Park 3 - Market recovery > Hotel /
Slide 27: Retail
Retail > Large scale, quality portfolio > 3 of 10 top performing Australian centres > No 1 centre in UK > Strong retail development and management > Platform in Australia, UK and Singapore Retail Assets 0 UK Retail @ US Retail && Domestic Homemaker @ Domestic Shopping Centres 26
Slide 28: Sunshine Plaza
Sunshine Plaza 27
Slide 29: Australian Retail Portfolio
Australian Retail Portfolio ($3.9 billion) > Ownership and management of 15 shopping centres and 14 Homemaker assets > High levels of productivity (at $9,009 for regionals - June 04) > Base rent / sqm up 3.9% (June 04) > Significant exposure to major growth markets Growth Opportunities > Maintain cu
Slide 30: Retail development pipeline timeline
2004 2005 | 2006 | 2007 2008 Floreat Forum Erina Fair Melbourne Central Penrith Plaza Macarthur Square Rouse Hill Regional Centre Charlestown Square Chirnside Wollongong Central Sunshine Plaza Complete * Approximate value and timing 29
Slide 31: UK Retail
UK Retail > Management of a portfolio of high quality assets — Assets under Management $5.6 billion — Funds under Management $2.0 billion > Strong reputation and proven track record — Leading asset and property management skill base — Successful development track record > Established relationships w
Slide 32: UK Shopping Centre Management Track Record
UK Shopping Centre Management Track Record UK Retail Total Development Track Record * (GBP) Development Cost 1,033 Value on Completion 1,470 Value Today 1,985 Value Add 952 * Bluewater, Overgate, Touchwood 14% 12% 10% 8% 6% 4% Total Returns Vs Benchmark Assets Under Management Three Year Average 200
Slide 33: UK Retail: Growth Opportunities
UK Retail: Growth Opportunities > Maximise returns from existing assets - Capitalise on strong performance and rent review profile - Continue active management to drive performance > Exploit proven operating platform in large and growing market with value add opportunities - Undercapitalised assets,
Slide 34: Singapore Retail
Singapore Retail > Management of $606 million retail portfolio on behalf of APIC — Cornerstone investment — Parkway Parade - Singapore’s largest and No 1 ranked suburban retail centre > Established operating platform - Successfully operating in Singapore for 30 years — Leading skill base in retail d
Slide 35: Singapore Development Track Record
Singapore Development Track Record Singapore $ Parkway Parade Acquisition cost ($M) 496 Acquisition yield 5.7% Redevelopment cost ($M) 36 Total 532 Value on completion ($M) 625 Yield on completion 6.2% Development profit ($M) 93 Development margin 17.5% 90% 80% 70% 60% 50% Parkway Parade Net Income
Slide 36: Singapore Retail: Growth Opportunities
Singapore Retail: Growth Opportunities > Play a leading role in the consolidation of the Singapore retail market — Fragmented ownership market, entering a consolidation phase — Exploit established relationships to secure opportunities > Selectively participate in greenfield retail development — Mark
Slide 37: Wholesale Funds Management
Wholesale Funds Management > Established scale, diversity and long term track record > Existing vehicles delivering performance > Strong capital inflows > Excellent platform for growth Fund Total Assets 1 Yr Return (June 04) APPF Retail $1.7 billion 18.9% APPF Commercial $604 million 10.0% APPF Indu
Slide 38: Wholesale Funds Management: Growth Opportunities
Wholesale Funds Management: Growth Opportunities > Potential for greater alignment, co-investment and joint venture ownership arrangements > Expanded pipeline of opportunities to meet investor demand and grow funds under management > Capitalise on performance and strong outlook of existing vehicles
Slide 39: Financial management - earnings target
Financial management - earnings target Quarterly asset reviews Detailed asset planning process Pipeline process for acquisitions / developments Diversity of earnings Caps on portfolio exposures Management accountability and high levels of disclosure > > > > > > > > Disciplined development process
Slide 40: Investment Management Operational Disciplines
CEOs / CFO establish EPS targets Investment templates established by Operating Business Capital Transactions Grou| Operating Business Investment opportunity identified Business works up proposal Investment proposal Investment Proposal signed off nae submitted by CEO / CFO to Board Investment proposa
Slide 41: Investment Management Operational Disciplines
Slide 42: Proven platforms across all business areas
> Proven platforms across all business areas > Solid reputation and track record > Strong skill base, with experienced people and proven processes > Ability to overlay Australian expertise with offshore expertise > Integrated opportunities in retail development, ownership and property management acr
Slide 43: Strategic & Operational Overview: Asia Pacific & Americas
The Merged Lend Lease Group Strategic & Operational Overview Ross Taylor - CEO Asia Pacific & Americas Development & Construction 42
Slide 44: Strategy, Structure, Business Overview, Operational Disciplines
> Strategy > Structure > Business Overview/Growth > Operational Disciplines
Slide 45: Strengthen position as leading residential urban community developer
Strengthen Lend Lease’s position as the leading residential urban community developer in Australia Cement Actus’ leadership position in Military housing privatisation and look to establish a Delfin style US business Return Bovis Lend Lease Asia Pacific to solid profits and, having achieved this, the
Slide 46: Asia Pacific & Americas business structure
> Delfin Lend Lease >Lend Lease Development > Senior Living (RBD) > Actus Lend > Bovis Lend Lease Lease Australia > Bovis Lend Lease Asia > Bovis Lend Lease Americas
Slide 47: Results 2003/04 (A$ million)
Results 2003/04 (A$ million) Urban Urban Community Community Development Development Bovis Lend Lease Bovis Lend Lease Asia Pacific Americas Asia Pacific Americas Profit after tax 86 5 (27) 62 Backlog 59,000 units 24,400 units 83 GPM 195 GPM
Slide 48: Caroline Springs, Twin Waters, Victoria Harbour
ain nn M Caroline Springs, Victoria Twin Waters, Queensland Victoria Harbour, Victoria 47
Slide 49: Average underlying housing demand
200,000 180,000 160,000 140,000 120,000 400,000 Recession, high Recession interest rates 80,000 40,000 20,000 0 Average Underlying Demand 60,000 on Asian crisis, recession No Recession, high interest rates, stock oversupply DS oN dh 2 © PELE ELS PPS 2 GST "pull-thru" Low interest stock balance Forec
Slide 50: Major Players Estimated Backlog
Major Players Estimated Backlog Land Units Senior Total Lend Lease 51,000 8,000 224 59,224 Stockland 32,300 1,500 33,800 Peet & Co 24,000 24,000 Australand 17,635 2,662 20,297 Mirvac 14,500 4,750 19,250 Multiplex 5,655 6,674 12,329 AV Jennings 8,000 8,000 49
Slide 51: Backlog Lots
Backlog Lots 2013 & Beyond Trading The Chase 250 Fairway 150 Riverside Gardens 550 Forest Lake 450 Craigiebum 1,200 Forest Gardens 750 Varsity Lakes 400 Springfield Lakes 9,900 Holroyd Gardens 200 Caroline Springs 4,000 Edgewater 250 Pakenham 1,450 Mawson Lakes 1,750 Start-up St Marys 5,350 Nelson's
Slide 52: Backlog lots timeline
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 & beyond Backlog lots = Maturing Newington 500 Jacksons Landing 550 Twin Waters Communities 220 Emerging St Patricks, Manly 100 EE Twin Waters Resort 380 ee Hyatt Coolum 550 ee Victoria Harbour 2,200 ee eC Rouse Hill 1,500 Daikyo 2,000 Total Backlog
Slide 53: Fort Campbell, Fort Hood, Beaufort
Fort Campbell, Kentucky Fort Hood, Texas Beaufort, South Carolina §2
Slide 54: Military housing market share
au Miller Valentine Landmark 2% Other 4% 2% American Eagle 6% Lincoln 5% GMH 16% Hunt 5% Forrest City Picerne 6% 12% §3
Slide 55: Secured Units by project
Secured Units 2004 2005 2006 200720082009 2010 2011 2012 «2013 2014 2015 Fort Hood 5,900 | Beaufort Tri-Command 1,700 Fort Campbell 3,500 | Preferred Hawaii RCI 7,700 Hickam AFB 1,300 Fort Drum RCI 3,500 Bid opportunity Housing privatisation Barrack privatisation Lodging Construction Asset managemen
Slide 56: Darling Park 3, Nokia Rollout, 126 Phillip Street
Hi) pil ie Ws Le Darling Park 3, Sydney Nokia Rollout, Japan 126 Phillip Street, Sydney 55
Slide 57: Revenue by source: Funds, Lend Lease, External
Funds 13% Lend Lease Development and Delfin Lend Lease Extemal 23% 64% 36% of revenue from within Lend Lease for year ended 30 June 2004 56
Slide 58: Segment Cycles & Growth
Segment Cycles & Growth 7,000 Australian non-residential construction activity 6,000 ~~ 5,000 Ll 4,000 wa Sy, \ 3,000 eee 2,000 —_—_* Sy 4,000 a ee Ae SN 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 — Hotels ~+ Retail ~ Factories —* Other Bus Premises Source: BIS Shrapn
Slide 59: Time Warner Centre, Trump Tower, BP
Time Warner Centre, New York Trump Tower, New York BP, Global 58
Slide 60: Sector Position
Sector Position Healthcare Multi-Unit Residential Military Housing Government Offices Hotels / Motels Pharmaceutical Plants / R&D Labs Senior Living (estimated, not ENR) Commercial / Office #1 #4 #1 #4 #5 #5 #5 #6 PRIMARY COMPETITION - SKANSKA, TURNER, CENTEX, CLARK‘ Source — 2003 ENR (McGraw Hill)
Slide 61: Market Share by Geography
Market Share by Geography New York 28% Miami 10% New Jersey 8% Washington DC 7% Boston 5% Charlotte 5% Chicago 4% Raleigh 4% Atlanta 2%
Slide 62: US$ Market Growth
$US Market Growth US$500 billion market size 2003 G 2004 m 2005 C 2006 & 2007 Source: McGraw Hill, FW Dodge 61
Slide 63: ian
a a I ian 62
Slide 64: Strategic Fit
Strategic Fit > Building a business not event development > We must have a competitive advantage — hence focus on LMPUCs and Retail > Large Scale - barriers to entry > Recognised growth corridors - try to dominate if possible > No large capital outlays ahead of zoning > Third party capital model whe
Slide 65: Time, cost and risk management
Time Risk pass through to subcontractors Program contingencies Detailed programming with peer and supply chain reviews Experienced project managers Lend Lease foreman and construction workers > Most of the value is subcontracted > Preferred and proven subcontractors > Contingencies > Two stage lump
Slide 66: Slide 66
Slide 67: Strategic & Operational Overview: UK & EMEA
The Merged Lend Lease Group Strategic & Operational Overview Adrian Chamberlain - CEO UK & Europe, Middle East & Africa Development & Construction 66
Slide 68: Development, construction and real estate investment business
> Development, construction and real estate investment business based predominantly in the UK > Number 1 UK construction business > Leading participant in Private Finance Initiative (PFI) programme > Developer and manager of UKk’s premier retail and urban development schemes > Substantial opportunit
Slide 69: Three business streams complementing each other
> Three business streams complementing each other in a growing and increasingly interlinked market - Bovis Lend Lease: high growth, market leadership, focus on major projects and established customers: * Government * Private Sector (particularly Commercial Office and Retail) — PFis/ PPPs: ((Healthca
Slide 70: EMEA - Management Structure
Slide 71: UK Construction Market Share
VV Vv Established 120 years ago UK Construction Market Share - Top 4 UK market leader (No. 1) 259) Long term client relationships with 20, leading property companies and ° institutions 15% Asset clients delivering more than 50% of 10% GPM (mosily negotiated contracts / limited competition) 5% Market
Slide 72: UK market growth outlook (GBP Billion)
75 - GBP Billion Ss 8.5 25 CAGR% Outlook UK Government housing budget up from 82 £4.8 billion (02/03) to £5.9 billion (05/06) Health spending increases by 7% p.a. 02-07 Defence Estates spending increases 5% p.a. to 2006 * Redevelopment of existing retail centres - Revival in office development Actua
Slide 73: Current Three Year Outlook
Current Three Year Outlook 5% 24% 5% 29% 41% 4% 8% 35% =NHS "Asset Clients “MOD "“Multisite "Other Source: Global Insight and Bovis Lend Lease Projections 72
Slide 74: Robust risk procedures
Robust risk procedures Processes for two stage lump sum projects, from submission to close out GoiN Bid Process >» GoiNo Go > Limits of Authority > Tender Period Checklist > Limits of Authority > Limits of Authority > Key Document File > Credit Assessment > Audit Programme Scorecard > Procurement St
Slide 75: Potential UK Health Sector Projects
Potential UK Health Sector Projects 2004 - 2008 & Pn ve PFI is a key UK Government long term funding strategy — Committed to 10 years of investment in Health and Education — Health capex >£2 billion p.a. Lend Lease has established a leading market share in UK — Building sustainable long term returns
Slide 76: UK Defence Estates, Government accommodation, Education
> UK Defence Estates (PPPs) - Focus on long term earnings streams * 5 to 7 years > UK Government accommodation — HM Treasury project * Stage 1 completed * Stage 2 completion Oct 2004 > UK Education — Current portfolio: 4 projects — Renewed focus HM Treasury, London rks)
Slide 77: PFI unitary payment breakdown
Construction period Unitary Payment Breakdown. (per annum) { 4 7 10 13 16 19 22 25 28 31 34 Concession Period (years) HiLHard Services §|SoftServices ELL Life Cycle OEquity Debt 76
Slide 78: Illustrative profit profile - Health & Education sectors
Illustrative profit profile - Health & Education sectors Z_— Year 1 wwaea Construction GPM cain FM GPM > ow INVestment Inc. wo PAT Year 10
Slide 79: Significant opportunity in UK for Urban Community Development
> Significant opportunity in UK for Lend Lease’s Urban Community Development business model -— Supply / demand imbalance — UK Government plan to increase supply — 200,000 new homes by 2016 in 4 growth areas in South East England > Focus on large land management projects > Lend Lease well placed on b
Slide 80: Greenwich Peninsula
Greenwich Peninsula > New community for London which maximises urban density - 10,000 homes, 20,000 residents - 3.5m sq ft commercial - 0.35m sq ft retail - End value £5 billion (A$13 billion) > Largest planning approval in UK - Achieved in record time > Significant enhancement to Lend Lease’s reput
Slide 81: UK & EMEA Development & Construction Summary
Slide 82: Disclaimer