Slide 1: Goodman Property Trust Annual Results 2017
GOODMAN PROPERTY TRUST +- ANNUAL RESULTS 2017 ft PORTEOLIR IE THEVE VERY. BEST INDUSTRIALAND= COMMERCIAL PROPERTIES:
Slide 2: Overview and presenters
Overview 3 Presented by: Financial Summary 5 John Dakin Chief Executive Officer Investment Portfolio 12 Andy Eakin Development Programme 24 Chief Financial Officer Summary & Outlook 31 James Spence Director – Investment Management Appendices 34 Unless otherwise indicated, all numerical data provided
Slide 3: Coda — Savill Link
Coda — Savill Link a THE MARK 03 OF QUALITY
Slide 4: Sustainable growth, quality assets, prudent capital management
sustainable growth ＋ asset recycling funding new development and investment activity ＋ $624 million of asset sales and more than $535 million of new development projects ($410 million additional spend) have transformed the portfolio over the last five years ＋ de-leveraging is providing balance sheet
Slide 5: Financial Summary
la — Savill Link Cod THE MARK OF QUALITY
Slide 6: Financial highlights
ie S1 smenuenTs 22tsaar*11 OPERATING Len ! 1.08 Cul { BEFORE TAX a
Slide 7: Portfolio income movement
＋ income from new acquisitions and $160 developments has more than +0.1 offset the impact of asset $155 +3.2 - 3.8 disposals ＋ underlying portfolio income up +5.6 $3.3 million, a 2.8% increase on $150 - 6.1 2016 +3.5 13.0 ＋ significant lease surrender in 2016 $145 +1.5 not matched in 2017 9.3 $140 1
Slide 8: Cash earnings and distributions
＋ improving trend with distributions 31 March 31 March fully cash covered in 2017 $million 2017 2016 ＋ reduction in capitalised borrowing Operating earnings before tax 121.7 117.0 costs reflects lower land weighting Tax on operating earnings (15.7) (18.9) and interest costs Operating earnings after
Slide 9: Improving financial metrics
improving financial metrics ＋ loan to value ratio of 30.6% on a look through basis ＋ conservative level of debt, well below the 50% maximum allowed under the Trust’s debt covenants ＋ debt currently 60% hedged to reduce interest rate volatility ＋ interest cover ratio expected to be greater than 3.0x
Slide 10: Joint Lead Managers Co-Managers
Joint Lead Managers Co-Managers
Slide 11: Debt maturity profile post issuance
post issuance ＋ weighted average debt term to expiry of 5.4 years (from 4.5 years) ＋ around 72% of drawn debt from non-bank funding (from 58%) ＋ GMT will have around $300 million of headroom within its bank facility ＋ bank funding retained for operational flexibility 300 250 200 100 150 100 25 150 1
Slide 12: Big Chill – Highbrook Business Park
Big Chill – Highbrook Business Park
Slide 13: New development projects, property portfolio
~ 89700 ~NEW DEVELOPMENT PROJEGTS PROPERTY PORTFOLIO ie ‘i > Thee -O—y 0 ! " 5 08 i) OPS PORTFOLIO OCCUPANCY WEIGHTED AVERAGE OR REVISED TERMS . LEASE TERM + +
Slide 14: Auckland market
＋ greatest population and commercial heart of the country ＋ geographically constrained, largest property market ＋ economy is growing faster than other main centres ＋ new airport, port, rail and road infrastructure projects ＋ demographic forecasts show differential growth over the next 30 years
Slide 15: Portfolio occupancy and lease expiry profile
portfolio occupancy ＋ a positive economic environment 100% and strong property fundamentals are supporting greater levels of 98% 98% customer demand 97% 96% 96% 97% ＋ average occupancy of 96% in 96% FY17, 98% as at 31 March 2017 94% ＋ 100% industrial occupancy and 92% greater than 80% industrial ret
Slide 16: Asset diversity and portfolio metrics
＋ greater investment in Auckland Asset Diversity 2017 Asset Diversity 2013 industrial via development and strategic acquisitions Development Land Office Park Office Park 7.0% 15.6% ＋ sales success reducing office 28.0% weighting Industrial ＋ development land just 7% of 60.0% portfolio value Developm
Slide 17: Industrial cap rate compression
＋ relative cap rate compression makes it the best performing investment class over the last 10 10 years ＋ growing logistics sector 9 ＋ lower maintenance and refurbishment costs 8 7 6 5 4 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Industrial Prime Shopping Cen
Slide 18: Investment sales market and capital recycling
＋ greater investment from offshore investors has increased sales volumes and asset prices over the last three years $6 ＋ GMT has recycled over $620 million of capital through its sales programme since 2012 $5 ＋ GMT’s capital allocations to Christchurch and the Auckland $4 suburban office market have
Slide 19: Asset disposals
＋ Millennium and Yellow HQ sale largest disposal transaction for $million Location Sale Price Settlement GMT ($m) ＋ contributes $13.3 million of fair Millennium and Yellow HQ Properties Greenlane, Auckland 210.0 Mar 17 value gains to valuation result and 15-23 Show Place & Southpark Industrial Estat
Slide 20: E-commerce trends and property impacts
global trends ＋ e-commerce sales estimated to total US$2.0 trillion in 2016, approx. 9% of total retail sales ＋ forecast to double over the next 5 years to US$4.0 trillion ＋ growth resulting from more devices, better infrastructure and greater market penetration of e-retailers property impacts ＋ gro
Slide 21: Acquisition conditional on landowner consent
Acquisition remains conditional on freehold landowner consent but is expected to settle in June 2017 . Including amortised items, passing yield is 8.8%.
Slide 22: Quality partnership with GIC
quality partnership ＋ GIC, the sovereign wealth fund of Singapore, invested in November 2014 ＋ investment objectives closely aligned with GMT ＋ provides capacity to grow in key market without the need for additional equity ＋ GMT now re-invested at the same level but with much more diverse portfolio
Slide 23: Property valuations
＋ second consecutive year of fair Property Valuation ($m) Cap rate (%) Change ($m) Change (%) value gains of more than 5% ＋ weighted average cap rate firmed Highbrook Business Park 986.9 5.9 92.9 10.4% 45bps to 6.50% 858.0 6.7 46.2 5.7% Auckland Industrial ＋ investment portfolio recorded a Suburban
Slide 24: Goodman Office — Highbrook Business Park
Goodman Office — Highbrook Business Park
Slide 25: Development projects
development projects $ ＋ around 75% of the portfolio (total project cost including land value) developed since 2004 160 148.7 ＋ in the last three years $216 million 140 of projects have been announced 120 108.8 at Highbrook, c.60% of the total 100 98.2 97.0 development volume 80 82.6 ＋ 15,650 sqm ($
Slide 26: Highbrook share of portfolio value
＋ at almost 50% of the Trust’s portfolio value, Highbrook is a significant driver of its financial performance ＋ 6 developments, with a total project cost of $66 million were announced in 2017
Slide 27: Highbrook today and remaining development
Highbrook today ＋ more than 75% complete with over 380,000 sqm of rentable area either completed or under active development ＋ total value of more than $1.1 billion and weighted average cap rate of 5.9% ＋ recorded an overall revaluation gain of $71.4 million or 6.8% in 2017 ＋ 99% occupancy, 5.7 year
Slide 28: Coda and Big Chill completions
Coda, Savill Link Big Chill Supersite, Highbrook Business Park COMPLETION VALUE NLA COMPLETION VALUE NLA December 2016 $22.6m 4,980sqm November 2016 $38.4m 7,866sqm
Slide 29: Orora and EDL Fasteners completions
Orora, M20 Business Park EDL Fasteners, Highbrook Business Park COMPLETION VALUE NLA COMPLETION VALUE NLA May 2016 $25.2m 11,288sqm January 2017 $12.5m 4,664sqm
Slide 30: Building 5 and Exeed completions
Building 5, Highbrook Business Park Exeed, Highbrook Business Park COMPLETION VALUE NLA COMPLETION VALUE NLA November 2016 $16.4m 3,467sqm March 2017 $8.1m 2,796sqm
Slide 31: Highbrook Crossing — Highbrook Business Park
Highbrook Crossing — Highbrook Business Park
Slide 32: Summary and outlook
high quality business ＋ portfolio being improved and refined through ongoing development activity ＋ GMT now predominantly Auckland industrial focused ＋ sustainable growth with asset recycling funding new investments ＋ greater balance sheet capacity and improved financial metrics, quality of earnings
Slide 33: Plaza — VXV Precinct
Plaza — VXV Precinct — THE MARK 33 OF QUALITY
Slide 34: Appendices
Big Chill — Highbrook Business Park
Slide 35: Financial summary
APPENDIX 0 YEAR FINANCIAL SUMMARY 35 $ million PROFIT OR LOSS Net property income Share of operating earnings before tax from joint ventures Net interest costs Administrative expenses Operating earnings before other income / (expenses) and income tax Movernent in fair value of investment property (L
Slide 36: Profit or loss
APPENDIX PROFIT OR LOSS 36 S milion Note 2017 2016 Property income 14 165.6 166.0 Property expenses (314) 22) Net property income 194.2 133.8 Share of operating earnings before tax ‘rom joint venture 24 a4 63 Interest Interest income 34 67 20 Interest cost 34 (23.7) 225) Net interest cost (180) 20.5
Slide 37: Balance sheet
APPENDIX BALANGE SHEET 37 S milion Note 2017 2016 Non-current assets Stabillisad properties 18 2,025.7 1,998.2 Developments 17 48.9 63.8 Land 18 174.7 213.8 Construction loan recelvable 440 215 Investment in oint venture 22 70.7 63.2 Derivative financial instruments 52 18.9 33.8 Other investments 12
Slide 38: Loan to value ratio
APPENDIX LOAN 10 VALUE RATIO 38 The loan to value ratio (‘LVR’) is a non-GAAP metric used to measure the strength of GMT’s Balance Sheet. The LVR calculation is set out in the table below. The GMT look through LVR incorporates GMT's 51% share of WPHL and is the measure utilised by management when co
Slide 39: Percentage hedged
% hedged 100% 90% 80% 70% 60% 60% 50% 40% 30% 20% 10% 0% Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Period
Slide 40: Major leases by customer
Property Customer NLA Term (sqm) (years) Viaduct Corporate Centre Auckland Transport 8,943 9 Viaduct Corporate Centre VLL 8,014 12 Westney Fliway 16,883 10 Viaduct Corporate Centre Auckland Transport 4,802 9 Savill Link Toll Logistics 14,585 6 Savill Link Toll Logistics 14,208 6 Westney Industry Par
Slide 41: Top ten customers
Top ten customers split by subsidiary companies (% of portfolio income) New Zealand Post Group DHL Fletcher Building Steel & Tube Fonterra Coda Toll Group New Zealand Air New Zealand Officemax Big Chill Distribution 0% 1% 2% 3% 4% 5%
Slide 42: Rent reviews and industry exposure
Rent reviews by next review type Industry exposure portfolio income (%) Utilities Food and 1.4% agriculture CPI 8.3% 26% Market Review Other 28% Transportation and 5.6% warehousing 28.5% Consumer services and supplies 17.4% Commercial Fixed Manufacturing services and 46% 22.6% supplies 16.3%