Goodman Group · ASX:GMG
Goodman — Macquarie Goodman Group — FY2005 Earnings Presentation
57 slides from Goodman's earnings presentation, August 2005
Slide 1: Macquarie Goodman Group Results for the year ended 30 June 2005
Macquarie Goodman Group Results for the year ended 30 June 2005
Slide 2: Contents
Contents Section 1 Year in Review Section 2 Financial Performance Section 3 Property Investment Section 4 Management Divisions Section 5 Capital Management Section 6 Outlook Section 7 Appendices 2
Slide 3: Section 1 – Year in Review
Section 1 – Year in Review
Slide 4: Year in Review: Financial Highlights
Year in Review Financial Highlights Æ Successful merger of MGI and MGM to form the Macquarie Goodman Group (MGQ) Æ Normalised full year distribution per security of 25.90 cents, in line with Explanatory Memorandum Æ Normalised full year earnings per security of 23.96 cents, above the Explanatory Mem
Slide 5: Year in Review: Operational Highlights
Year in Review Operational Highlights Æ Acquisitions totalling $973 million Æ Growth in assets under management to $7.0 billion Æ $2.3 billion in external funds under management: Æ MGP total return 27% Æ A-REIT total return 56% Æ Completed restructure of MGP in April 2005: Æ Total MGP assets increas
Slide 6: Year in Review: Portfolio Highlights
Year in Review Portfolio Highlights Æ Secured 311,000 sqm of leasing deals on existing space totalling $35 million net annual rental Æ Completed 240,000 sqm of development properties with an end value of $290 million Æ Commenced 316,000 sqm in new developments with an estimated end value of $532 mil
Slide 7: Section 2 – Financial Performance
Section 2 – Financial Performance
Slide 8: Financial Highlights
Financial Highlights 2005 Explanatory Actual Memorandum $m forecast $m Normalised full year distribution per security 25.90 25.90 Normalised full year earnings per security 23.96 23.65 MGQ net profit attributable to Securityholders 50.0 14.2 Total assets 5,171 4,213 Net tangible assets per security
Slide 9: Financial Performance
Financial Performance MGQ Results 30 June 2005 $m Net property income 128.9 Management income 51.4 Development and portfolio rationalisation 17.0 Investment income 10.4 Total income 207.7 Expenses from operations (30.3) Diminution in value of management rights (net of tax) (77.3) Merger transaction
Slide 10: Reconciliation
Reconciliation Normalised Reconciliation 6 months Annualised 30 June 2005 $m MGI normalised profits (6 months to June 2005) 129.9 MGM normalised profits (6 months to June 2005) 23.5 Total normalised profit 153.4 Profits adjusted in the merged Group 15.5 Pari Parsu for distribution entitlement 3.6 To
Slide 11: Revenue: Breakdown by Business Activity
Revenue Breakdown by Business Activity Revenue 2005 2006 $m $m Net Property Income 128.9 420.5 Investment Income 10.4 18.4 Management Income 51.4 33.3 Development and Portfolio rationalisation 17.0 20.0 Total 207.7 492.2 11
Slide 12: Revenue: Breakdown by Geographic Region
Revenue Breakdown by Geographic Region Revenue 2005 2006 $m $m Australia 169.1 437.6 New Zealand 28.8 25.1 Asia 9.8 29.5 Total 207.7 492.2 12
Slide 13: Source of Management Revenue
Source of Management Revenue Æ Current management revenue streams for 2005 Revenue 2005 2006 $m $m Funds Management 18.1 10.5 Property Development 22.8 9.9 Development and Portfolio rationalisation 17.0 20.0 Property Services 10.5 12.9 Total 68.4 53.3 13
Slide 14: Section 3 – Property Investment
Section 3 – Property Investment
Slide 15: Core Portfolio Overview
Core Portfolio Overview Æ 125 properties in Australia, New Zealand and Hong Kong with a total value of $4.7 billion Æ 98% occupancy and a weighted average lease expiry of 5.1 years Æ 560 customers Æ Strategically diversified across key asset types Æ Located in key industrial areas in close proximity
Slide 16: Portfolio Achievements
Portfolio Achievements Æ Existing investment portfolio: Æ 311,000 sqm in new leasing transactions on existing space representing $35 million in net rental Æ Retention rate of 81% for the year Æ Average increase of 3.4% on passing rental Æ Revaluation of the portfolio added $64 million in value Æ Dev
Slide 17: Cornerstone Investments
Cornerstone Investments Æ The Group holds strategic cornerstone investments in MGP and A-REIT Æ Provides alignment of interests between MGQ and its third party managed listed property trusts Æ Strong performance from investments in 2005 delivering substantial returns: Æ $83 million (47%) increase on
Slide 18: Section 4 – Management Divisions
Section 4 – Management Divisions
Slide 19: Funds Management: Overview
Funds Management Overview Æ Third party funds management of two listed property trusts in New Zealand (MGP) and Singapore (A-REIT) Æ Investment management of core portfolio in Australia, New Zealand and Hong Kong Æ Total assets under management of $7 billion 19
Slide 20: Funds Management: New Zealand – MGP
Funds Management New Zealand – MGP* Æ Strong investment performance over the past 12 months: Æ Total return 27% Æ 19% growth in gross distributions per unit Æ Critical market coverage: Æ Total assets $493 million Æ Market capitalisation $345 million Æ 2nd largest LPT in New Zealand, and entry into t
Slide 21: Funds Management: Singapore – A-REIT
Funds Management Singapore – A-REIT* Æ Solid investment performance in 2005: Æ Total return 55.6% Æ 17% growth in distributions per unit Æ 48% increase in unit price from S$1.27 to S$1.88 Æ Assets under management of $1.6 billion: Æ Acquisition of 20 properties for $0.8 billion Æ Market capitalisati
Slide 22: Funds Management: Hong Kong
Funds Management Hong Kong Æ Focus on roll out of our successful funds management business in collaboration with Macquarie Bank Limited Æ Appointment of Senior Management and Property Services team Æ Total assets under management $400 million Æ Expected to launch Hong Kong REIT in first half 2006 Æ
Slide 23: Property Development: Regional Property Development
Property Development Regional Property Development Æ Completed developments: Æ 242,378 sqm* ( MGQ 240,035 sqm, MGP 2,343 sqm) Æ $301million end value (MGQ $290 million, MGP $11million) Æ Commenced developments: Æ 315,889 sqm* ( MGQ 315,889 sqm, MGP 14,184 sqm) Æ $532 million end value (MGQ $523 mill
Slide 24: Property Development: Major Developments
Property Development Major Developments Æ Highbrook Business Park: Æ 153 hectares of developable land in Auckland, New Zealand Æ To be developed over the next 7 years into a Business Park with an expected end value of $0.9 billion Æ Acquired a 75% interest in June 2004 Æ M7 Business Hub: Æ 150 hecta
Slide 25: Property Services: Overview and Achievements
Property Services Overview and Achievements Æ Property Services capabilities provided throughout Australia, New Zealand and Hong Kong Æ Team of 66 across the region Æ Intensive asset management delivering strong underlying property fundamentals Core Portfolio MGP* Hong Kong Number of people 50 12 4
Slide 26: Section 5 – Capital Management
Section 5 – Capital Management
Slide 27: Capital Management: Summary
Capital Management Summary Æ $565.1 million in new equity raised during the period including: Æ Entitlement Offer - $458.4 million Æ DRP - $38.1 million Æ RePS conversion - $29.0 million Æ Total group borrowings increased to $1,863.2 million resulting in stabilised gearing of 35.9%: Æ New $1.4 billi
Slide 28: Section 6 – Outlook
Section 6 – Outlook
Slide 29: Outlook: 2006 Initiatives
Outlook 2006 Initiatives Æ Forecast earnings: Æ Earnings per security - 25.8 cents (Ç7.7% on 23.96 cents) Æ Distributions per security - 27.5 cents (Ç6.2% on 25.90 cents) Æ 106.6% payout ratio Æ Work towards closing the EPU:DPU gap Æ Explore Macquarie Goodman Australian Wholesale Fund Æ Launch Hong
Slide 30: Section 7 - Appendices
Section 7 - Appendices
Slide 31: Key Impacts of AIFRS: Financial Performance
Key Impacts of AIFRS Statement of Financial Performance For year ending 30 June 2005 $m Net profit after tax as reported under AGAAP 50.0 Impact of adoption of AIFRS Revaluation of investment properties 33.0 Deferred tax adjustments (4.3) Adjustment for straight-lining of fixed step-ups in rents 4.5
Slide 32: Key Impacts of AIFRS: Financial Position
Key Impacts of AIFRS Statement of Financial Position As at 30 June 2005 $m Net assets under AGAAP 3,093.1 Impact of adoption of AIFRS Adjustment for straight-lining of fixed step-ups in rents 4.5 Amortisation of rent incentives on developed properties (3.7) Tax on revaluation of A-REIT units (10.5)
Slide 33: MGI Results
MGI Results Overview of Results 2005 Financial Year FY $m 03/04 $m Dec 04 Jun 05 FY 04/05 Net property income 159.5 154.0 313.5 282.7 Portfolio rationalisation 7.8 15.9 23.7 2.7 Trust expense (10.7) (6.6) (17.3) (37.8) Interest expense (33.5) (30.5) (64.0) (52.9) Profit attributable to outside equit
Slide 34: MGM Results
MGM Results Overview of Results 30 June 2005 30 June 2004 $m $m Funds Management 18.0 22.3 Property Services 15.9 13.9 Property Development 32.4 20.4 Cornerstone Investments 7.7 6.3 Expenses (29.7) (24.1) Interest expense (4.7) (2.7) Tax expense 0 (11.1) Profit available for distribution (normalised
Slide 35: Customer Service Model
Customer Service Model Æ Our customer service model operates at the heart of our business Æ Designed to identify the diverse property requirements of over 1250 customers and provide them with complete property solutions Æ Over the past year we have completed 42 transactions with existing customers p
Slide 36: Geographic Activity
MACQUARIE c o E o fe) 0 O o ‘= © 5 T O © = Geographic Activity So ” 13" ia(elite MCelale fm Gross Assets |HKS1.5 billion Services Funds Management Property Services Development Management ‘ Singapore i 2 billion Australia [Properties _| 43 Funds Management “Ascondes — MGM AV stat Funds Management Pr
Slide 37: Property Investment: Occupancy and Lease Term
Property Investment Occupancy and Lease Term 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 June June June 2005 June 2004 2005 2004 % % % % Sydney South 15 4.5 4.8 98 98 Sydney West 23 4.4 5.0 97
Slide 38: Property Investment: Customer Retention
Property Investment Customer Retention Æ Solid retention in all key regions: Æ 84% for six months Æ 81% for one year Æ 80% rolling four years Region Expiry in period Retention rate % % Sydney South 20 89 Sydney West 17 75 Sydney Outer West 5 100 Sydney North 26 89 Victoria 22 59 Queensland 5 100 Auc
Slide 39: Property Investment: Leasing Deals for the Year
Property Investment Leasing Deals for the Year Æ Leased 310,882 sqm of existing space Æ $35 million net annual rental Æ Average lease term on new deals of 4.6 years Æ Average rental increases of 3.4% on passing rentals Region Area Annual Average Increase on sqm Net Rent Lease Term Passing $m years R
Slide 40: Property Investment: Major Lease Transactions
Property Investment Major Lease Transactions Property Customer Lettable Net Lease Area Rent Term sqm $m pa years Campus Business Park Samsung 12,127 1.4 5 Tranzport Distribution Centre Air International 11,820 1.3 10 Macquarie Corporate Park CCH 5,308 1.2 6 Federation Distribution Fastline Internati
Slide 41: Property Investment: Rent Review Profile
Property Investment Rent Review Profile Æ Majority fixed reviews at an average of 3.5% 41
Slide 42: 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 42
Slide 43: 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 June 2005 12 months to June 2006 Sydney South 1.8 2.3 Sydney West 2.2 4.3 Sydney Outer West 0.5 2.8 Sydn
Slide 44: Property Investment: Property Revaluations
Property Investment Property Revaluations Æ Increase of $64.3 million reflecting 2.6% on revalued assets Æ Solid increases in South Sydney, Victoria and Queensland Æ Firming in capitalisation rates of 40bps to 8.5% on revalued assets Region Book Valuation Value Increase Weighted Cap Rate Value Addit
Slide 45: Property Investment: Top Customers (by net income)
Property Investment Top 25 Customers (by net income) 45
Slide 46: Property Investment: Developments Completed in Year
Property Investment Developments Completed in Year Æ Significant completions of $290 million Æ 63% of projects in New South Wales Æ Average yield after all costs of 8.6% on completed developments Æ Weighted average lease term of 8.1 years Region Area Initial Est. End % of Total Weighted sqm Yield Va
Slide 47: Property Development: Global Development Management
Property Development Global Development Management Æ 507,830 sqm of development product over 26 properties currently underway Æ Estimated end value of $795 million Æ Total development pipeline of 2.96 billion sqm of developable land 47
Slide 48: Development Commencements – Core Portfolio
Property Development Development Commencements – Core Portfolio Æ $532 million of new projects underway Æ Expected 8.3% yield on total project cost Æ Weighted average lease term of 11.5 years Region Area Initial Est. End % of Total Weighted sqm Yield Value Developments Average % $m Lease Term Sydney
Slide 49: Property Development: Development Pipeline
Property Development Development Pipeline Æ 2.96 million square metres of developable land in the portfolio Region Total Site Committed Committed Remaining Area Area Area as % of Area sqm sqm Total Area sqm Sydney South 115,278 49,500 43% 65,778 Sydney West 280,906 103,300 37% 177,606 Sydney Outer W
Slide 50: Acquisitions and Disposals
Acquisitions and Disposals Æ Acquisitions Æ $973 million in acquisitions for the year Æ $248 million in Hong Kong Æ $177 million in development land to seed development pipeline Æ Disposals Æ $391 million in disposals for the year Æ $289 million of New Zealand assets Æ Continued rationalisation of n
Slide 51: Acquisitions: Major Transactions
Acquisitions Major Transactions Property Purchase Price $m Remaining 25% interest in former Colonial First State Industrial Property Trust 130.3 Upper Global Gateway, Hong Kong 125.7 Lower Global Gateway, Hong Kong 122.0* IBC Business Park, Homebush NSW 88.0 St Leonards Corporate Centre, St Leonards
Slide 52: Disposals: Major Transactions
Disposals Major Transactions Property Disposal Price $m NZ Portfolio 289.0 Forsyth Distribution Centre, Hoppers Crossing, VIC 41.0 Peninsula Business Park, Brookvale, NSW 21.0 Hume Distribution Centre, Chullora, NSW 19.0 Queensport Quays Business Park, Metroplex, Qld (remaining land) 9.9 52
Slide 53: Capital Management: Equity
Capital Management Equity Æ $565.1 million in new equity raised during period Æ 1,405.0 million securities on issue at 30 June 2005 Æ $5,732.3 million market capitalisation at 30 June 2005 Amount Raised Securities $m Issued Entitlement Offer 458.4 125,924,433 Dividend Reinvestment Plan 38.1 10,209,4
Slide 54: Capital Management: Debt
Capital Management Debt Æ Refinance completed on 29 July 2005 Æ $1.4 billion Syndicated Multi Currency Facility (SMCF): Æ Refinance existing facilities Æ Bring stapled group borrowings under one facility Æ Platform for moving to unsecured debt capital markets over medium term 54
Slide 55: Capital Management: Debt Hedging and Gearing
Capital Management Debt* Æ Hedging Profile Æ Weighted average interest cost of 5.978%** A$ - 6.38% NZ$ - 7. 37% HK$ - 3.91% S$ - 2.11% Æ Average interest rate hedge maturity of 3.7 years Æ Fixed rate debt percentage of 74% Æ Gearing: Æ Target gearing range of 35.0% to 40.0% Æ Gearing (net cash) of 3
Slide 56: Capital Management: Interest Rate Hedging Profile
Capital Management Interest Rate Hedging Profile* * Including line fees and margins 56
Slide 57: Thank you
Thank you Disclaimer This presentation for the year ended 30 June 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 and Ascenda
Macquarie Goodman Group — FY2005 Earnings Presentation on 6ix