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GOODMAN GROUP Annual Report 2010

Aug 18, 2010

64998_rns_2010-08-18_fd4a658c-06e6-4a99-ab24-03b665878f46.pdf

Annual Report

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Goodman Group Results for the year ended 30 June 2010+

19 August 2010

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Important notice and disclaimer

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    • 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)). This document is a presentation of general background information about the Group’s activities current at the date of the presentation. It is information in a summary form and does not purport to be complete. It is to be read in conjunction with the Goodman Limited Annual Financial Report lodged with the Australian Securities and Investments Commission and Australian Securities Exchange (ASX) and Goodman Group’s other announcements released to the ASX (available at www.asx.com.au). It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with professional advice, when deciding if an investment is appropriate.
    • This presentation is not an offer or invitation for subscription or purchase of securities or other financial products. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to any “US person” (as defined in Regulation S under the US Securities Act of 1933, as amended (Securities Act) (US Person)). Securities may not be offered or sold in the United States or to US Persons absent registration or an exemption from registration. The stapled securities of Goodman Group have not been, and will not be, registered under the Securities Act or the securities laws of any state or jurisdiction of the United States.
    • This announcement contains certain "forward-looking statements". The words "anticipate", "believe", "expect", "project", "forecast", "estimate", "likely", "intend", "should", "could", "may", "target", "plan" and other similar expressions are intended to identify forwardlooking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Due care and attention has been used in the preparation of forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Group, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements.

2

Contents

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  • Section 1 Introduction + Section 2 Results overview + Section 3 Operational performance + Section 4 Outlook and summary

+ Appendices

  • Results analysis

  • Investment

  • Development

  • Management

  • Capital management

3

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Section 1+ Introduction

Interlink Industrial Estate, Interlink Industrial Estate, AustraliaAustralia

4

Introduction

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+ Fully diluted operating EPS of 5.25 cents[1] , with operational momentum continuing into FY11

    • Operating profit after tax of $310.0 million
    • Statutory accounting loss of $562.6 million – reflecting property and equity investment revaluations and other non-operating items, approx. 90% incurred in the first half
    • Mix of earnings maintained with 82% derived from stabilised investments
    • Distribution per security of 3.4 cents

+ Strong balance sheet and liquidity position

    • Balance sheet gearing of 24.9%
    • Operating and investing cash flow positive for the year
    • ICR enhanced to 3.8x
    • $1.7 billion of liquidity currently, with all debt maturities covered to 1H FY2013
    • Positioned to deliver FY11 operating profit after tax of $370 to $380 million (19% to 23% increase in operating profit after tax), equating to fully diluted operating EPS of 5.3 to 5.5 cents[2] in a stabilising but low growth environment
    • FY11 earnings to be driven by growth in “active business” recovering towards normalised levels

  • 5.25 cents is on a fully diluted basis adjusted for the CIC hybrid securities and options. This equates to 5.6 cents on an undiluted basis 2. Diluted for CIC hybrid securities and options

5

Key achievements

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+ Investment earnings contributed 82% of operating EBIT
+ Occupancy up 1% on a like for like basis to 93% from December 09 – direct portfolio occupancy at 95%
Own + Retention at 75% and WALE of 5.5 years
+ Net operating income flat at property level
+ Leased 2 million sqm across the Group and managed funds platform
+ Delivered $0.4 billion of developments match funded to third party capital and commenced $1.2 billion – WIP at $1.3
billion
Develop + 27% of WIP is on balance sheet
+ Consumed $204 million of the Group and managed funds’ land bank
+ $10 billion development pipeline has been prudently reactivated
+ Retained global operating platform and leading market position demonstrating investor demand for Goodman product
Manage + Launched four new investment vehicles in the UK, Europe, China and Australia, with a $1.1 billion equity commitment
+ Raised $320 million of equity for Goodman Australia Industrial Fund
+ Introduction of North American investors (CPPIB and CBRE Realty Trust) into our managed funds
+ Extended $4.0 billion of Group and managed fund debt facilities
+ Established new debt facilities of $1.4 billion with an average term of 3.9 years for the Group and managed funds
Corporate + Reduced the Group’s gearing from 47.9% to 24.9%
+ Introduced new capital partners

6

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Section 2+
Results overview
McPhersons Distribution Centre,
Australia
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7

Results overview

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+ Underlying fundamentals remain sound despite subdued global markets

  • 7% ROA in investment, stable occupancy and rents

  • Services margin stable, AUM reduction due primarily to FX and valuation shift

  • Development volume at cyclical low, with $411 million completed over the full year

FY2010
Operating earnings ($M) 310
Operating earnings per security (cents)1 5.6
Operating earnings per security (fully diluted) (cents)1, 2 5.25
Distribution per security (cents) 3.4
Payout ratio (%) 61%
  • Rate of property valuation decline abated and FX impacts have been absorbed

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As at
30 Jun 2010
External assets under management ($B) 12.6
Total assets on balance sheet ($B) 7.6
NTA ($)3 $0.47
Gearing (balance sheet)4 24.9%
Available liquidity ($B) 1.5
WACR (look through) 7.9%

  1. Operating earnings and EPS excludes unrealised gains on property revaluations, AIFRS and other non-cash adjustments and calculated based on weighted average securities of 5,558.6 million

  2. Calculated based on weighted fully diluted average securities of 6,638.7 million and excludes treasury (ESAP) securities

  3. Undiluted for CIC Hybrid securities and CIC options

  4. Calculated as net debt less cash / total assets less cash

8

FY2010 results – profit and loss

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+ Full year operating profit of $310.0 million

  • Statutory loss of $562.6 million primarily incurred in the first half – includes unrealised property valuation movements, derivative mark to market, and non-operating items such as debt restructure costs

  • Operating performance in line with guidance

  • Lower than expected net capital outlay impacted on investment earnings (also results in lower interest and gearing)

  • 10% movement in A$ offset by hedges

    • Represents operating EPS of 5.6 cents per security (5.25 cents fully diluted) and DPS of 3.4 cents per security
    • ICR increased to 3.8x

30 June 2010 income statement

FY2009 FY2010
$M $M
Investment (look through) 533.5 448.5
Management 63.9 53.7
Development 90.0 41.7
Unallocated operating expenses (23.6) (33.2)
Operating EBITDA (look through) 663.8 510.7
Operating EBIT (look through) 654.9 502.2
Look through interest and tax adjustment1 (154.8) (119.3)
Operating EBIT 500.1 382.9
Net borrowing costs (91.3) (19.6)
Tax benefit/(expense) 23.3 (1.0)
Operating PAT (pre minorities) 432.1 362.3
Minorities2 (24.0) (52.3)
Operating PAT (post minorities) 408.1 310.0
Weighted average securities (undiluted) (million) 2,341.1 5,558.6
Operating EPS (cps) 17.4 5.6
Non operating items3
Valuation movements4 (1,395.4) (669.4)
Derivative mark to market (62.3) (75.4)
Non-operating and non-cash items (70.4) (127.8)
Statutory profit/(loss) (1,120.0) (562.6)

  1. Reflects adjustment to GMG proportionate share of Fund interest and tax

  2. Includes Goodman PLUS and CIC hybrid securities

  3. Refer Appendix 1 slide 27

  4. Includes impairments

9

FY10 results – balance sheet

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    • Revaluations have resulted in $0.6 billion reduction in aggregate assets since 30 June 2009

  • Look-through portfolio weighted average cap rate of 7.9% post revaluations

  • Property valuations stabilised in 2HFY10

    • Net cash flow has been better than anticipated, operating and investing cash flow positive for the year

  • Development capital requirements funded by third parties, direct property sales, GMT unit sale and Macquarie options exercised

    • FX movements have also resulted in $0.08 billion reduction net asset value but improved gearing by 2.4%
    • Derivatives still in mark to market liability position ($0.2 billion at Group and $0.3 billion look through)

  • Majority of which relates to interest rate hedges that will be spread over the life of the instruments in the profit and loss

    • $1.7 billion of available liquidity covering maturities to 1HFY13. Improvement since capital raising

30 June 2010 balance sheet

30 Jun 2009 30 Jun 2010
$M $M
Stabilised assets 2,820 2,310
Fund cornerstones1 2,733 2,372
Development holdings 1,318 1,245
Intangibles 1,125 929
Cash 242 515
Other assets 345 227
Total assets 8,583 7,598
Interest bearing liabilities (4,240) (2.276)
Other liabilities (565) (600)
Total liabilities (4,805) (2,876)
Minorities (319) (798)
Net assets (post minorities) 3,459 3,924
Net asset value (per security) 1.26 0.62
Net tangible assets (per security)2 0.85 0.47
Net tangible assets (per security) - diluted n/a 0.46
Balance sheet gearing3 47.9 24.9
  1. Includes Goodman’s investments in its managed funds and its other investments

+ Resulted in the following key metrics:

  1. Undiluted for CIC Hybrid securities and CIC options

  2. Calculated as net debt less cash / total assets less cash

  3. Gearing of 24.9% (39% look through)

  4. NTA of $0.47 per security[2]

10

Property valuations

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    • Property valuations stabilising in 2H FY2010, driven by improved liquidity
    • Stabilised investment property and land values down approx. 9%

  • WACR of 7.9%, unchanged from June 2009

  • Reduced short term market rent growth assumptions to flat – was 2 to 3%

30 June 2010 property valuations (look through)

WACR
movement
Book value Movement Movement Movement WACR since June
(GMG 1H 2010 2H 2010 FY2010 2009
exposure)
$M $M $M $M % %
Australia 4,126 (245) (17) (262) 8.2 +0.2
New Zealand 223 (3) (3) (6) 8.6 -0.1
Hong Kong 534 4 7 11 6.9 -0.2
China 125 2 (3) (1) 9.2 -
Japan 171 (10) (17) (27) 6.1 +0.6
UK 1,680 (126) (1) (127) 7.8 -0.3
Continental Europe 1,002 (125) (21) (146) 7.9 +0.3
Total / Average 7,861 (503) (55) (558) 7.9 -

11

Intangibles, derivatives and currency

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+ Intangible impairment of $26 million relates to European Business Parks and Logistics

  • New capital initiatives and improving demand trends support the value of intangibles

  • Growth underpinned by the $10 billion development pipeline under Goodman control

  • Opportunity for growth in funds management as markets stabilise

    • Positive FX and interest rate movements have resulted in better gearing and positive mark to market movement but remain a drag on NTA of 3 cps

  • Costs of “out of the money” interest rate hedges will be spread over the life of the derivatives and have been factored into forecasts

    • No near term liquidity events from maturing cross currency swaps with maturities between 2011 to 2015

Intangibles – segment carrying values

Adjusted for
acquisitions,
Book value impairments Book value
30 June 2009 and FX 30 Jun 2010
$M $M $M
Continental Europe 728 (158) 570
UK business parks 224 (31) 193
UK logistics 122 (17) 105
New Zealand 5 - 5
Hong Kong 25 (1) 24
China 21 11 32
Total 1,125 (196) 929

FY2010 derivative movements

FY2010 net movement FY2010 net movement FY2010 net movement Net asset/(liability) as at Net asset/(liability) as at Net asset/(liability) as at
from FY20091 30 Jun 2010
$M $M
GMG Funds Total GMG Funds Total
Interest rate hedges (Group) 5.0 (5.8) (0.8) (157.1) (114.5) (271.6)
Cross currency swaps 6.9 - 6.9 (10.0) - (10.0)
Forward exchange contracts (2.6) - (2.6) 7.1 - 7.1
Total 9.3 (5.8) 3.5 (160.0) (114.5) (274.5)
  1. Of the net movement, -$80.5 million is reflected in the income statement

12

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Section 3+
Operational
performance
M7 Business Hub,
Australia
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13

Investment

    • Focus on high quality properties
    • Overall cash flows remain stable

  • Occupancy at 93%

  • Minimal arrears - remained flat over 12 months

  • Retention at 75%

  • Fixed rental growth offset by longer let up time and lower market rental growth

  • Like on like rental growth flat

    • Customer confidence returning as leasing volumes increase with some expansion evident

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Investment ($m) FY09 FY10
Direct 207.8 176.4
Cornerstones 325.7 272.1
Look through EBITDA 533.5 448.5
Key metrics1 FY09 FY10
WACR (%) 7.9 7.9
WALE (yrs) 5.8 5.5
Customer retention (%) 76 75
Occupancy (%) 94 93
    • Global platform creating opportunities with marked increase in cross border enquiry
    • Investments (direct or in managed funds) to grow organically through $10 billion development pipeline

+ Earnings impacted by:

  • Foreign exchange movements ($15 million)

  • Lower than expected capital outlay and sales ($20 million)

  • Offset by lower interest expense

  • Key metrics shown in the above table relate to Goodman and managed fund properties

14

Development

    • Development business re-activated in FY2010 Q2

  • WIP increased from $0.6 billion to $1.3 billion

    • Development commencements matched to third party equity (excluding Interlink):

  • Continued momentum with increased enquiry levels

  • $1.2 billion of new commitments at 9.4% yield on cost

  • Focus on preleased, prefunded projects

  • Interlink strategy to optimise risk/return

  • Expansion into China with Langfang MOU

  • Continued to establish new funds with global partners to ensure matching principle for development capital

    • Development pipeline in excess of $10 billion

+ Earnings impacted by:

  • Foreign currency movements ($7 million)

  • Greater than expected percentage derived from fee-for-service activities, resulting in lower balance sheet utilisation and lower interest

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Development ($m) FY09 FY10
Revenue 118.0 72.7
EBITDA 89.8 41.7
Key metrics FY09 FY10
Commitments ($m) 533 1,182
Number of developments 22 23
Balance sheet development (%) 15 29
Pre-commitment (%) 94 66
Yield (%) 8.2 9.4
Work in progress (end value) $B
Opening (June 2009) 0.6
FX (0.1)
Completions (0.4)
Commitments 1.2
Closing (June 2010) 1.3

15

Development

    • Commencements increasing following prudent reactivation of developments after recapitalisation
    • Enquiry increasing for new A grade facilities, however with longer lead times
    • Low point in cycle was $175 million in 2H09

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16

Development

    • Group and managed funds controlled land inventory can produce > $10 billion (~7 billion sqm) of product
    • WIP of $1.3 billion consumed 0.5 billion sqm (7%) of controlled land inventory held by the Group and managed funds
    • 3% identified as non-core and will be sold over the short term
    • Active enquiry and positive planning outcomes being pursued on remaining land bank

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Andover – UK
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Kmart – Melbourne [1]
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Hammersmith – UK
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17

  1. Artist’s impression

Management

    • $12.6 billion of external Assets Under Management (AUM), down 4% on constant currency basis

  • ($0.6) billion movement in unrealised revaluations

  • ($1.1) billion movement in currency

    • Growth in AUM expected moving forward

  • A$1.3 billion in uncalled equity

  • A$0.8 billion in undrawn debt lines

    • EBITDA ahead of guidance

  • MER >50 bps of AUM / margin stable

+ Earnings impacted by:

  • Foreign currency movements ($7 million)

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Management ($m) FY2009 FY2010
Base fees 81.2 59.6
Performance fees 5.2 10.2
Property service fees 45.5 55.8
Revenue 131.9 125.6
EBITDA 63.9 53.7
Key metrics FY2009 FY2010
Number of funds 8 11
Third Party AUM (end of period) ($bn) 14.3 12.6
Change from
Third party AUM (FY2010) $bn FY2009 (%)
pre FX
Australia 4.3 (5%)
Asia 2.4 5%
Europe 2.3 (9%)
UK 2.3 (7%)
New Zealand 1.3 -

18

Management - AUM

+ Major new initiatives during the year

  • Completed $320 million equity raising in GAIF

  • Launched US$300 million logistics fund in China (GCLH) with CPPIB

  • Launched $400 million development fund in Australia (GADF) with CPPIB

  • Established $1.3 billion relationship with CBRERT in UK (£400 million) and Europe (€400 million) through two new co-investment vehicles

  • Reduced cornerstone holding in GMT by 11%, releasing NZ$88 million

  • Completed NZ$150 million bond issue in GMT

  • Completed refinance of $1.9 billion of debt facilities in GAIF

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    • AUM stable excluding valuation and FX movements showing the stability of investors

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19

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Section 4+
Outlook and
summary
Westney Industry Park,
New Zealand
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20

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Outlook and summary

+ Actively manage occupancy and retention rates above peers and competitors
Own
+ Long term cornerstone interest target of 20%
+ Prudent rollout of the Group’s $10 billion development pipeline
Develop + Focus on mitigating take-out and funding risk via pre-sales, development JVs and turnkey projects
+ Commitment to reducing existing land bank with replenishment in core land constrained markets
+ Exploit active asset management expertise to drive returns
Manage + Expand relationships with major investment partners into new and existing markets
+ Continue to adopt best corporate governance practices and further enhance transparency
+ Expect continuation of subdued market conditions and low growth environment
+ Specialist manager, proven capability and leading operating platform building momentum for FY11
Summary + Maintain efficient capital structure and strong financial position
+ FY11 earnings guidance at 5.3 cents to 5.5 cents per security1, equates to $370 - $380 million operating profit after tax
(19 - 23% growth), to be driven by growth in “active business”
+ Distribution policy to pay the higher of 60% of operating EPS and taxable income

21

  1. Fully diluted for CIC hybrid securities and options

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A ndix 1+
ppe
Results analysis
Homebush Corporate Park,
Australia
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22

Profit and loss

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23

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Profit and loss (cont)

GMG results Year ended Year ended Increase /
30 Jun 2009 30 Jun 2010 (decrease)
$M $M $M
Property investment1 378.7 329.2 (49.5)
Management services 131.9 108.3 (23.6)
Development 118.2 72.7 (45.5)
Operating revenue net of property expenses 628.8 510.2 (118.6)
Unrealised losses on investment properties (1,165.7) (524.0) 641.7
Non-operatingincome (21.9) (63.3) (41.4)
Total income (558.8) (77.1) 481.7
Expenses from operations (177.2) (132.7) 44.5
Impairment losses (229.7) (145.4) 84.3
Net interest expense (153.6) (154.1) (0.5)
Income tax (expense) / credit – current 23.3 (1.0) (24.3)
Minorityinterests (24.0) (52.3) (28.3)
Profit after tax attributable to Securityholders (1,120.0) (562.6) 557.4
Add net loss from fair value adjustments on investment properties 527.0 210.0 (317.0)
Add unrealised loss/(gain) included in share of net results of equity accounted investments 638.7 314.0 (324.7)
Add impairment loss on investments 229.7 145.4 (84.3)
Straight-lining of rent and amortisation of lease incentives (3.3) (1.2) 2.1
Employee LTIP (38.1) 5.4 43.5
Other non-operating items2 111.8 64.5 (47.3)
Unrealised (gains)/losses on fair value of derivatives 62.3 75.4 13.1
Non-operatingborrowingcosts - 59.1 59.1
Operating profit available for distribution 408.1 310.0 (98.1)
Operating basic earnings per security (cents) 17.4 5.6 (11.8)
Operating basic earnings per security (cents) – diluted - 5.25 -
Distributionper security (cents) 9.65 3.40 (6.25)
Weighted average number of securities – EPS3 (million) 2,341.1 5,558.6 3,217.5
Weighted average number of securities – EPS3 (million)– diluted - 6,638.7 -

  1. Excludes straight-lining of rent and amortisation of lease incentives (non-operating item)

  2. Refer to slide 27 for further information for FY2010

  3. Excludes weighted average number of treasury (ESAP) securities on issue

24

Profit and loss (cont)

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+ Total income by business segment for year ended 30 June 2010

Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1
$M
$M
$M
$M
$M
$M
Gross property income
Net loss from fair value adjustments on investment properties
Net gain on disposal of investment properties
Net gain on disposal of controlled entities
Income from sales of inventories
Share of net results of equity accounted investments
Net (loss)/gain on disposal of equity investments
Fund management income
Property services income
Development management income
Distributions from investments		 237.4
(210.0)
2.6
12.3
51.3
(236.8)
(15.0)
76.2
55.8
147.2
26.7		 236.2
126.1
26.7		 0.5
69.3
55.8		 2.6
12.2
51.3
0.2
6.9
147.2		 1.2
(210.0)
0.1
(363.6)2
(15.0)
Total income 147.7 389.0 125.6 220.4 (587.3)
Development and property expenses and inventory cost of sales
Operating expenses
Impairment losses		 (207.5)
(150.0)
(145.4)		 (59.8) (71.9) (147.7)
(31.0)		 (41.7) (5.4)
(145.4)
EBIT (355.2) 329.2 53.7 41.7 (41.7) (738.1)
Look through NPI adjustment (Goodman share of interest and tax) 119.3
Look through operating EBIT 448.5 53.7 41.7 (41.7)

  1. For reconciliation of non-operating and non-cash items refer to slide 27

  2. Includes share of property valuation loss of $308.9 million, share of unrealised derivative loss $5.1 million, share of associate and JVEs losses on disposal of investment properties $19.0 million, share of associate debt and other restructuring cost $20.3 million, share of JVEs impairment losses $4.5 million and share of other non-cash items in associates $5.8 million

25

Profit and loss (cont)

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Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1		 Category
Total
Investment
Management
Development
Unallocated
Non-operating
items1
$M
$M
$M
$M
$M
$M
EBIT – per statutory accounts (355.2) 329.2 53.7 41.7 (41.7) (738.1)
Net loss from fair value adjustments on investment properties
Share of net loss from fair value adjustments on investment
properties and fair value adjustments on interest rate swaps
in associates and JVEs
Impairment losses
Straight-lining of rent and amortisation of lease incentives
Share based payment expense
Other non-operating items1		 210.0
314.0
145.4
(1.2)
5.4
64.5		 210.0
314.0
145.4
(1.2)
5.4
64.5
Operating EBIT 382.9 329.2 53.7 41.7 (41.7) -
Net financing costs (statutory)
Add: fair value adjustments on derivative instruments
Add: debt restructuring costs
Net financing costs (operating)
Income tax expense
Minorities		 (154.1)
75.4
59.1
(19.6)
(1.0)
(52.3)
Operating profit available for distribution 310.0
Total distribution paid 212.9
  1. For reconciliation of non-operating items refer to slide 27

26

Reconciliation non-operating items

Non-operating items in statutory profit & loss Notes 30 Jun 2010
$M $M
Property valuation
Net loss from fair value adjustments on investment properties (210.0)
Share of net loss from fair value adjustments on investment properties in associates (275.3)
Share of net loss from fair value adjustments on investmentproperties injoint ventures (33.6)
Subtotal (518.9)
Impairment losses
Impairment – inventories (8.9)
Impairment – receivables (43.9)
Impairment – other financial assets (66.4)
Impairment – intangible assets (26.2)
Subtotal (145.4)
Mark to market derivatives and debt restructuring
Fair value adjustments on derivative instruments – GMG (75.4)
Fair value adjustments on derivative instruments – associates and joint ventures (5.1)
Debt restructuring – GMG (59.1)
Debt restructuring– Funds(GAIF and ABPP) 1 (19.7)
Subtotal (159.3)
Profits/(losses) on disposal of investment properties by associates and joint ventures
Australia (GAIF) 1 (0.7)
New Zealand (GMT and HDL) 1 0.1
Asia (GHKLF and MGJ) 1 1.2
United Kingdom (ABPP) 1 (15.3)
Continental Europe(GELF) 1 (4.3)
Subtotal (19.0)
Other non-cash / non-operating items
Impairment and restructuring costs incurred in MGJ (Japan) 1 (5.1)
Non cash items impacting distributable income in associates and joint ventures 1 (5.8)
Straight-lining rental income 1.2
Share based payment expense (5.4)
Capital losses not distributed(loss on disposal of GMT units) 1 (14.9)
Subtotal (30.0)
TOTAL (872.6)

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  1. Total $64.5m other non-operating items (refer to slide 26)

27

Financial position

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+ Headline gearing of 24.9%

As at 30 June 2010
Asia Pacific
$M
Europe
$M
Total
$M		 As at 30 June 2010
Asia Pacific
$M
Europe
$M
Total
$M
Investment properties
2,189.1
608.3		 2,797.4
Investments in funds
1,679.6
669.5		 2,349.1
Other segment assets1
486.9
1,416.6		 1,903.5
Cash 515.1
Other assets 33.1
Total assets 7,598.2
Interest bearing liabilities 2,276.6
Other liabilities 599.9
Total liabilities 2,876.5
Net assets/(liabilities) 4,721.7
Gearing2 24.9%
NTA (per security)3 $0.47

  1. Other segment assets include intangibles of $929 million

  2. Gearing calculation based on debt (net of cash) over total assets (net of cash)

  1. Calculated based on 6,369.7 million securities on issue less 36.3 million Treasury securities

28

Capital allocation

+ Total property investment portfolio $4.7 billion

  • reduction in directly owned assets $0.5 billion

  • decrease of $0.4 billion cornerstone investment[1]

  • $0.6 billion devaluation of direct property and proportionate share of Fund owned properties

+ Group owned development assets down $0.1 billion to $1.2 billion

  • impact of the capital management initiatives to reduce net outflow cash flow to development

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Direct assets2 Cornerstone Total investments Development Assets
investments1 (on GMG B/S)2
$M $M $M $M
Asia Pacific 1,885.5 1,702.2 3,587.7 629.8
Europe 424.9 669.6 1,094.5 615.1
Total 2,310.4 2,371.8 4,682.2 1,244.9

  1. Includes equity accounted investments, investment in IIF and joint ventures and shareholder loan receivables

  2. Includes property receivables and inventories

29

Gearing bridge

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    • 30 June 2009 to 30 June 2010[1]

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  1. Cumulative movement to gearing

30

Net tangible assets

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+ Movement in net tangible assets for the year ended 30 June 2010

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
Valuation of investments properties in associates
Valuation of investments (includes IIF)
Impairment of intangibles, inventory and other assets
Movements in equity
Equity issues (net of issue costs and effect of ESAP and additional securities)
Other
Movement in reserves (and other AIFRS adjustments)
Pari Passu distribution ranking
Change in fair value of derivatives
Foreign exchange
Attributable to minority interests (includes Goodman PLUS and CIC Hybrid)		 (210.0)
(314.0)
35.5
(145.4)
(633.9)
(0.10)
1,343.6
(0.57)
(32.4)
(0.01)
(21.1)
(0.00)
54.3
0.01
(193.4)
(0.03)
427.0
0.07
Total equity as at 30 June 2010 4,721.7
0.75
Less Minorities
Less Intangibles		 (798.1)
(0.13)
(929.4)
(0.15)
Net tangible assets at 30 June 20101 2,994.2
0.47
Net tangible assets at 30 June 2010 – diluted2 3,572.7
0.46

  1. Calculated on 6,333.4 million securities being closing securities on issue of 6,369.7 million less 36.3 million securities related to ESAP

  2. Diluted for CIC options and CIC hybrid, calculation based on fully diluted securities of 7,751.4 million

31

Net tangible asset bridge

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  • For year ended 30 June 2010

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  1. Calculated on 6,333.4 million securities being closing securities on issue of 6,369.7 million less 36.3 million securities related to ESAP and excludes minority interest

32

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A ndix 2+ ppe Investment

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Wyatt Distribution Centre,
Australia
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33

Leasing

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    • Flat like for like property rent growth
    • Minimal rental arrears and tenant defaults
    • ~2 million sqm leased in year
    • Global platform creating opportunities with marked increase in cross border enquiry
    • Minimal new supply keeping vacancy levels low
Division Leasing area (sqm) Net annual rent (A$m) Average lease term Occupancy at 30 June 2010
Australia – Direct 357,011 39.7 3.5 97
Australia – GAIF 542,246 67.6 5.5 96
UK Logistics - Direct 26,360 2.8 11.6 911
UK – ABPP 31,525 9.5 6.1 88
Europe – GELF 398,593 27.7 6.6 96
Europe - Direct 21,706 2.4 4.8 53
Hong Kong – GHKLF 327,918 35.7 3.4 94
China - GCLF 78,898 27.5 4.2 99
New Zealand – GMT 165,214 17.8 6.8 95
Europe - GEBPF 33,737 6.8 4.7 62
Total 1,983,208 237.5 5.1
  1. Excludes one property that is currently under option for sale to owner occupier, occupancy would decrease to 83% if this property was included

34

Customers

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Top 20 global customers (look through)[1]

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  1. Includes customers of Goodman Group direct portfolio and its managed funds and is based on net rental income

35

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Direct portfolio detail – Australia

Portfolio snapshot

Key metrics[1]

Total assets A$1.9 billion
Customers 223
Number of properties 31
Occupancy 97%
Weighted average cap rate 8.2%
    • 31 properties with a total value of $1.9 billion located across key Australian markets

    • Leasing deals remain strong across the portfolio:

    • 357,011 sqm ($40 million net annual rental) of existing space leased

    • customer retention 73% (rolling 12 months)

    • average portfolio valuation cap rate of 8.2%

    • 97% occupancy and a weighted average lease expiry of

  • 4.2 years

Long-dated WALE of 4.2 years (by net income)[1]

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Top 10 customers make up 32% of portfolio income[1]

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  1. As at 30 June 2010

36

Direct portfolio detail – UK

Portfolio snapshot

Key metrics[1]

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    • Leasing activity of 26,360 sqm
    • Strong enquiry on remaining vacant area
    • WALE of 5.3 years
    • Cap rates stabilised - with current WACR of 8.0%
Total assets A$0.4 billion
Customers 18
Number of properties 12
Occupancy 91.4%1
Weighted average cap rate 8.0%
  1. Excludes one property that is currently under option for sale to owner occupier, including the property occupancy would decrease to 83%

WALE of 5.3 years (by net income)[1]

Top 10 customers make up 88% of portfolio income[1]

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  1. As at 30 June 2010

37

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A endix 3+ pp Development Interlink, Hong Kong

38

Developments

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FY2010 Developments Completions Commitments Work in Progress
Value ($M) 411 1,182 1,265
Area (m sqm) 0.5 0.6 0.6
Yield (%) 8.5 9.4 9.5
Pre-committed (%) 99 66 69
Weighted Average Lease Term (years) 7.6 8.1 8.9
Development for Third Parties or Funds (%) 100 71 73
Asia Pacific (%) 45 68 67
UK/Europe (%) 55 32 33

+ Excluding Interlink Development

  • Commitment: pre-committed and development for third parties or funds would increase to 95%

  • Work in Progress: pre-committed would increase to 96% and development for third parties or funds would increase to 97%

Work In Progress On Balance Sheet Third Party Funds Total End Value Third Party Funds
By Region End Value End Value % of total
$M $M $M
Asia Pacific 332 522 854 61
Europe 7 404 411 98
Total 339 926 1,265 73

39

Developments

    • Continued to establish Funds to match development capital requirement for development pipeline

  • Development pipeline in excess of $10 billion

  • Forecast GLA over 6.9 million sqm

  • Development timeframe in excess of 10 years

  • Based on currency as at 30 June 2010

  • Allocated as Asia Pacific 40% and Europe 60%

+ GMG development future cash commitments increased due to Interlink

$M
Gross GMG cost to complete 379
Lesspre-sold1cost to complete (243)
Net GMG cost to complete 136
Net GMG managed funds cost to complete 220

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  1. Presold projects are reimbursed by instalments throughout the project or at Practical Completion of the project

40

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A ndix 4+
ppe
Management
Amazon,
Germany
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41

Management platform

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+ Asia Pacific

Goodman Managed Funds Asia Pacific Goodman Managed Funds Asia Pacific Goodman Managed Funds Asia Pacific Goodman Managed Funds Asia Pacific Goodman Managed Funds Asia Pacific Goodman Managed Funds Asia Pacific
GAIF GHKLF GMT1 GCLH MGJLF GADF4
Total assets (A$) $4.4bn $1.6bn $1.2bn $0.2bn $0.7bn $66.3m
GMG co-investment (%) 43.8% 24.2% 16.8%2 20.0% n/a 20%
GMG co-investment (A$) $1.1bn $0.2bn $0.1bn2 $0.04bn n/a $13.3m
Number of properties 107 15 21 4 15 1
Occupancy 96% 94% 96% 99% 91% 100%
Weighted average lease expiry 6.4 yrs 2.7 yrs 5.8 yrs 3.8 yrs 6.8 yrs 15.0 yrs
Gearing 38.6% 29.1% 37.0% 13.0% 72.3% n/a
Weighted average debt expiry 2.5 yrs 3.2 yrs 2.1 yrs2 2.7 yrs 2.9 yrs n/a
WACR 8.3% 6.9% 8.6% 9.2% 5.8% 8.0%
WACR at covenant3 12.0% 11.5% Not disclosed 13.1% n/a n/a
Cap rate expansion to breach 400 bps 460 bps Not disclosed 390 bps n/a n/a

  1. As at 31 March 2010 (as disclosed to the New Zealand Stock Exchange in May 2010)

  2. As at 30 June 2010

  3. Based on Fund gearing covenants that are currently most capable of triggering an event of default in each respective Fund

  4. GADF was launched in May 2010, figures stated are based on the seed property being acquired at practical completion (post June 2010)

42

Management platform

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+ Europe

Goodman Managed Funds Europe Goodman Managed Funds Europe Goodman Managed Funds Europe Goodman Managed Funds Europe Goodman Managed Funds Europe
ABPP GELF GEBPF CBRERT UK CBRERT CE
Total assets (A$) $2.3bn $1.9bn $0.4bn $0.04bn $0.04bn
GMG co-investment (%) 35.7% 38.3% 15.5% 20.0% 20.0%
GMG co-investment (A$) $0.3bn $0.3bn $0.03bn $0.01bn $0.01bn
Number of properties 28 83 6 2 2
Occupancy 89% 96% 62% 100% 100%
Weighted average lease expiry 8.2 yrs 5.1 yrs 2.7 yrs 6.7 yrs 4.2 yrs
Gearing 52.2% 53.4% 59.0% n/a n/a
Weighted average debt expiry 3.1 yrs 2.5 yrs 1.6 yrs n/a n/a
WACR 7.6% 7.9% 8.0% n/a n/a
WACR at covenant1 10.9% 9.1% n/a n/a n/a
Cap rate expansion to breach 330 bps 120 bps n/a n/a n/a
  1. Based on Fund gearing covenants that are currently most capable of triggering an event of default in each respective Fund

43

Goodman Australia Industrial Fund

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Key events

    • Successfully closed a fully subscribed A$200 million equity raising to existing unit holders
    • 12 month mandatory DRP approved by investors from 1 July 2009, preserving approx A$120 million of equity
    • Major debt refinance completed across A$1.9 billion of facilities, providing improved debt maturity profile and additional financial covenant headroom
    • Leasing activity totalling 542,502 sqm during FY2010
    • Disposal of 6 properties during the year totalling A$63.7 million

Key metrics[1]

Total assets A$4.4 billion
Interest bearing liabilities A$1.7 billion
Gearing2 38.6%
Customers 357
Number of properties 107
Occupancy 96%
Weighted average lease expiry 6.4 years
Weighted average cap rate 8.3%
GMG co-investment (%) 43.8%
GMG co-investment ($) A$1.1 billion

Debt maturity profile[1]

Covenant compliance[1,3]

    • Gearing covenant[4,5]

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Actual Headroom
Covenant
20% 25% 30% 35% 40% 45% 50% 55% 60% 65%
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    • Fund ICR covenant[6]

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Actual
Covenant Headroom
1.25x 1.50x 1.75x 2.00x
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  1. As at 30 June 2010

  2. Calculated as debt/total assets, adjusted for the equity receivable balance

  3. Based on Fund covenants that are currently most capable of triggering an event of default in the Fund, excluding 4 small single-asset non-recourse facilities

  4. Covenant reverts to 52.5% in September 2010 and to 50% in FY2012

  5. 30 June 2010 position adjusted for committed but undrawn equity and committed capital expenditure

  6. 12 month forward looking

44

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Goodman Hong Kong Logistics Fund

Key events

Key metrics[1]

    • Commencement of Interlink development
Total assets A$1.6 billion
Interest bearing liabilities A$0.4 billion
Gearing2 29.1%
Customers 163
Number of properties 15
Occupancy 94%
Weighted average lease expiry 2.7 years
Weighted average cap rate3 6.9%
GMG co-investment (%) 24.2%
GMG co-investment ($) A$0.2 billion
    • Approximately 327,000 sqm leased during FY2010
    • Completed 3 property disposals during the year, all in excess of book value
    • Gearing reduced from 30.2% as at 31 December 2009 to 29.1% as at 30 June 2010
    • Available liquidity of A$337 million from undrawn debt facilities and equity
    • Completed extension of A$0.2 billion (HK$1.6 billion) of existing finance facilities from September 2012 to September 2014 extending the weighted average debt expiry to 3.2 years

Debt maturity profile[1]

Covenant compliance[1]

    • LVR covenant[4]

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Actual Headroom
Covenant
20% 25% 30% 35% 40% 45% 50% 55%
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+ ICR covenant

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Actual
Covenant Headroom
1.00x 1.50x 2.00x 2.50x 3.00x 3.50x
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  1. As at 30 June 2010

  2. Calculated a net debt/total assets less cash

  3. Stabilised portfolio only

  4. As at 30 June 2010, adjusted for cash on balance sheet and contracted asset sales

45

Goodman Property Trust

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Key events

+ Strong balance sheet

  • Completed a 5 year, NZ$150 million senior secured bond issue, rated BBB+ by S&P

  • NZ$53 million of asset sales completed

  • NZ$175 million of bank debt refinanced

    • New development pre-commitment to Kmart at M20 Business Park for 13,400 sqm of warehouse and office space
    • Over 114,300 sqm of lettable space leased to new and existing customers in 12 months to 31 March 2010
    • Average rental growth of 2.8% achieved on rental reviews completed in 12 months to 31 March 2010
    • GMT recorded a total return of 32.3% for 12 months to 31 March 2010, outperforming benchmark index return of 12.8% and earning a NZ$3.5 million performance fee for the Manager
    • Goodman Group reduced its cornerstone holding in Goodman Property Trust (GMT) to 17% with the completed sale of NZ$88 million in GMT units to institutional investors
    • Borrowings are significantly below covenants.

Key metrics[1]

Total assets A$1.2 billion
Interest bearing liabilities A$0.4 billion
Gearing2 37.0%
Customers 217
Number of properties 21
Occupancy 96%
Weighted average lease expiry 5.8 years
Weighted average cap rate 8.6%
GMG co-investment (%)3 16.8%
GMG co-investment ($)3 A$0.1 billion

Debt maturity profile[1]

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  1. As at 31 March 2010 (as disclosed to the New Zealand stock exchange in May 2010)

  2. Calculated as net debt/property assets

  3. As at 30 June 2010

46

Goodman China Logistics Holding

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Key events

    • Goodman China Logistics Holding (GCLH) is a 80/20 joint venture between CPPIB and Goodman. Established in September 2009, GCLH invests in high quality stabilised logistics assets across China’s first tier cities
    • Established a US$57 million finance facility with first drawdown made in March 2010
    • Strong focus on leasing and asset management initiatives, with approximately 79,000 sqm leases to new and existing customers achieving 99% occupancy

Covenant compliance[1]

    • LVR covenant[4]

Key metrics[1]

Total assets A$0.2 billion
Interest bearing liabilities A$0.04 billion
Gearing2 13.0%
Customers 13
Number of properties 4
Occupancy 99%
Weighted average lease expiry 3.8 years
Weighted average cap rate3 9.2%
GMG co-investment (%) 20%
GMG co-investment ($)4 A$0.04 billion

Debt maturity profile[1]

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Actual Headroom
Covenant
20% 30% 40% 50% 60%
+ ICR covenant
Actual
Covenant Headroom
0.50x 1.50x 2.50x 3.50x 4.50x 5.50x 6.50x 7.50x
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  1. As at 30 June 2010

  2. Calculated a net debt/total assets less cash (LVR under bank facility is 35.0% as at 30 June 2010)

  3. Stabilised portfolio only

  4. Includes shareholder loan

47

Macquarie Goodman Japan Logistics Fund

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Key events

    • Macquarie Goodman Japan Logistics Fund (MGJLF) was established in 2008 as a core plus fund
    • MGJLF invests in high quality logistics assets in the major logistics markets of Japan
    • Goodman holds no direct interest in MGJLF – interest is held through the Group’s listed investment in J-REP Co. Ltd
    • The only vacancies now remaining in the initial portfolio are in the Fukuoka properties
    • 12 of the 14 completed assets are 100% occupied

Covenant compliance

Key metrics[1]

Total assets (based on latest external valuations)2 A$0.7 billion
Interest bearing liabilities A$0.5 billion
Gearing3 72.3%
Customers 19
Number of properties 15
Occupancy4 91.2%
Weighted average lease expiry5 6.8 years
Weighted average cap rate (based on latest external valuations) 5.8%
GMG co-investment (%) n/a
GMG co-investment ($m) n/a

Debt maturity profile[1]

    • Interest cover ratio is the only trigger of an ‘event of default’ in the Fund’s debt facility (requires failure 3 consecutive times) – comfortably covers at last review
    • Interest cost 100% hedged for term of debt facility

  • Based on combined MGJLF and Japan Wholesale Fund vehicles as at 30 June 2010

  • Book value (as reported in the MGJLF Q1 2010 report) is ¥56.0 billion as at 30 June 2010

  • Calculated as net debt / total property assets

  • Based on contracted leases as at 30 June 2010

  • WALE of leased portfolio to next break

48

Goodman Australia Development Fund

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Key events

    • Launched in May 2010, Goodman Australia Development Fund (GADF) is a 80/20 joint venture between CPPIB and Goodman
    • GADF will be established and seeded with the acquisition of Goodman’s Kmart development in Melbourne for a total consideration of $66.3 million
    • Initial equity commitment of $250 million
    • Target gross asset value of approximately $400 million
    • GADF will have second right of offer in relation to development opportunities secured by Goodman

Key metrics[1]

Total assets $66.3 million
Interest bearing liabilities n/a
Gearing2 n/a
Customers 1
Number of properties 1
Occupancy 100%
Weighted average lease expiry 15.0 years
Weighted average cap rate 8.0%
GMG co-investment (%) 20.0%
GMG co-investment ($) $13.3 million

  1. Figures stated are based on the seed property being acquired at practical completion (post June 2010)

  2. Calculated a net debt /total assets less cash

49

Arlington Business Parks Partnership (UK)

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Key events

    • Continued focus on leasing and asset management initiatives, with over 31,600 sqm of existing space leased within the last 12 months providing A$8.5 million (£6.0 million) of income
    • 75% retention achieved for the rolling 12 months
    • Portfolio vacancy improving to 11.5% from 13.4% at December 2009
    • Portfolio WACR improving to 7.6% from 8.0% at December 2009

Covenant compliance[1]

+ Gearing covenant

Key metrics[1]

Total assets A$2.3 billion
Interest bearing liabilities A$1.2 billion
Gearing2 52.2%
Customers 140
Number of properties3 28
Occupancy 89%
Weighted average lease expiry4 8.2 years
Weighted average cap rate 7.6%
GMG co-investment (%) 35.7%
GMG co-investment ($) A$0.3 billion

Debt maturity profile[1 ]

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Actual Headroom
Covenant
20% 30% 40% 50% 60% 70% 80%
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    • Fund ICR covenant[5]

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Actual
Covenant Headroom
0.75x 1.00x 1.25x 1.50x
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  1. As at 30 June 2010

  2. Calculated as net debt/total assets less cash

  3. Comprise 23 active business parks and 5 standalone properties

  4. WALE of leased portfolio to next break as at 30 June 2010

  5. Based on Fund covenants that are currently most capable of triggering an event of default

50

Goodman European Logistics Fund

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Key events

    • Secured 1 year extension of Fund debt facility to December 2012 and relaxation of debt financing covenants
    • Practical completion achieved for four properties:

  • Belleville, France

  • Belgioioso II, Italy

  • Nauen III, Germany

  • Üllõ, Hungary

    • Sale of 3 properties for A$77.2 million (€54.4 million) at an average cap rate of 7.5%

Key metrics[1]

Total assets A$1.9 billion
Interest bearing liabilities A$1.0 billion
Gearing2 53.4%
Customers 66
Number of properties 83
Occupancy 96%
Weighted average lease expiry 5.1 years
Weighted average cap rate 7.9%
GMG co-investment (%) 38.3%
GMG co-investment (A$) A$0.3 billion
    • Leasing of approximately 398,000 sqm during FY2010 with average term of 5.7 years to first break

Debt maturity profile[1]

Covenant compliance[1]

    • Loan to Value covenant²

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----- Start of picture text -----

Actual Headroom
Covenant
50% 55% 60% 65% 70%
+ ICR covenant³
Covenant Headroom
0.75x 1.00x 1.25x 1.50x 1.75x 2.00x
1. As at 30 June 2010
----- End of picture text -----

  1. Calculated as net debt/total assets less cash

  2. 12 month forward looking

51

Goodman European Business Parks Fund

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Key events

    • A$48.5 million (€34.2 million) facility extended for two years from January 2010
    • Sale of Paris asset for A$39.7 million (€28 million) in March 2010 reducing gearing to 59%
    • Over 34,700 sqm leased and renewed during FY2010, achieving retention of 84%
    • Approximately 11,000 sqm development completed March 2010 in Marseille, France

Covenant compliance

    • 4 assets-specific funding facilities

Key metrics[1]

Total assets A$0.4 billion
Interest bearing liabilities A$0.3 billion
Gearing2 59%
Customers 125
Number of business parks 6
Occupancy 62%
Weighted average lease expiry3 2.7 years
Weighted average cap rate 8.0%
GMG co-investment (%) 15.5%
GMG co-investment ($) A$0.03 billion

Debt maturity profile[1]

    • All facilities in compliance with covenants
    • Asset sales will improve Fund liquidity and gearing

  • Calculated as net debt (excluding shareholder loans) /total assets less cash

  • WALE of leased portfolio to next break as at 30 June 2010

  • As at 30 June 2010

52

CBRERT/GMG UK Co-investment Vehicle

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Key events

    • Launched in June 2010, the CBRERT/GMG UK co-investment vehicle is a 80/20 joint venture between CB Richard Ellis Realty Trust and Goodman
    • The co-investment vehicle will invest in pre-committed logistics development opportunities sourced through Goodman
    • Target total investment of A$696 million (£400 million) over an initial investment term of three years
    • The initial portfolio comprise two assets acquired from Goodman for a total consideration of A$39.0 million (£22.4 million)

Key metrics[1]

Total assets $39.0 million
Interest bearing liabilities n/a
Gearing n/a
Customers 2
Number of properties 2
Occupancy 100%
Weighted average lease expiry 6.7 years
Weighted average cap rate n/a
GMG co-investment (%) 20.0%
GMG co-investment ($) $7.8 million
    • The co-investment vehicle will have first right of refusal over UK logistics properties developed by Goodman in the UK
    • No debt facilities are currently in place

  • As at 30 June 2010

53

CBRERT/GMG European Co-investment Vehicle

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Key events

    • Launched in June 2010, the CBRERT/GMG UK co-investment vehicle is a 80/20 joint venture between CB Richard Ellis Realty Trust and Goodman
    • The co-investment vehicle will invest in pre-committed logistics development opportunities sourced through Goodman.
    • Target total investment of A$575 million (€400 million) over an initial investment term of three years focusing on the core Western European markets of Germany, France and Benelux
    • The initial portfolio comprise three assets acquired from Goodman for a total consideration of A$64.9 million (€45.1 million)

Key metrics[1]

Total assets $64.9 million
Interest bearing liabilities n/a
Gearing n/a
Customers 2
Number of properties 2
Occupancy 100%
Weighted average lease expiry 4.2 years
Weighted average cap rate n/a
GMG co-investment (%) 20.0%
GMG co-investment ($) $13.0 million

  • two acquired at establishment and the third acquired upon completion

    • The co-investment vehicle will have second right of refusal over developments undertaken by Goodman
    • No debt facilities are currently in place

  • As at 30 June 2010

54

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A ndix 5+ ppe Capital management Anagni Industrial Estate, Italy

55

Group financial covenants

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    • 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
Gearing ratio Net liabilities1 as a percentage of net tangible assets is not
more than 60% (reducing to 55% from 30 June 2011)		 60% 32.7% 27.3%
Interest cover ratio EBITDA to interest expense at least 2.0x 2.0X 3.8X 1.8X
Secured debt as a percentage of total tangible assets is
Priority debt not more than 5% (however specific permitted uses where 5% 0.4% 4.6%
ratio is either 2.5% or up to 7.5% over the short term)
Net unsecured debt (total unsecured debt less
Unencumbered real
property assets		 unrestricted cash) to be not more than 100% of the
amount of unencumbered real property assets (all
unencumbered direct assets including stabilised assets,		 100% 63.1% 36.9%
development WIP and land bank)
Unencumbered assets Unsecured debt as a percentage of unencumbered assets
is not more than 66.6%		 66.7% 33.3% 33.4%
  1. Net liabilities = total liabilities less cash and excludes trade payables, mark to market derivatives, deferred tax liabilities and provisions for security holder distributions

56

Group liquidity position

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    • Cash and available lines of credit of $1,681.3 million

  • $515.1 million available cash

  • $1,166.2 million available lines

    • Headline gearing significantly reduced to 24.9% during FY2010
    • Average debt maturity profile of 3.3 years
    • Successfully completed $454.0 million of new bank facilities maturing over 3 and 5 years

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57

Currency mix

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58

Financial risk management

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+ Financial risk management in line with Group board policy

  • interest risk management:

  • 83% hedged over next 12 months

  • Weighted average hedge maturity of 4.4 years

  • Weighted average hedge rate of 5.89%[1] vs spot[2] 2.28% 

  •  - Current “all in” net WACD 4.16%[3]

  • FX rates 100% hedged on KNOWN net cash flows for 3 years at rates of:

    • HKD (hedge 4.9888, spot 7.0326)

    • NZD (hedge 1.1774, spot 1.2711)

  • Includes the 10 year EMTN £250 million at 9.75% fixed rate and the AUD fixed rate receiver leg from the cross currency swaps

  • Spot refers 5 year swap market rate as at 18 August 2010

  • Includes the AUD receiver leg from the cross currency swaps

59

Financial risk management

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Interest rate

    • Interest rates are hedged to 83% over next 12 months
    • Weighted average hedge rate of 5.89%[1] vs spot[3] 2.28%

  • NZD – (hedge 8.05%, spot 4.40%)

  • JPY – (hedge 1.56%, spot 0.54%)

  • HKD – (hedge 2.81%, spot 1.53%)

  • GBP – (hedge 8.28%[2] , spot 2.14%)

  • Euro – (hedge 3.76%, spot 1.88%)

    • Weighted average maturity of 4.4 years

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    • “All in” net WACD of 4.16%[4]

  • Includes the 10 year EMTN £250 million at 9.75% fixed rate and the AUD fixed rate receiver leg from the cross currency swaps

  • Includes the 10 year EMTN £250 million at 9.75% fixed rate

  • Spot refers 5 year swap market rate as at 18 August 2010

  • Includes the AUD receiver leg from the cross currency swaps

60

Financial risk management

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Interest rate hedging profile

Euro payable
GBP payable
HKD payable
NZD payable
JPY payable
As at June €M
Fixed
rate
%
£M
Fixed1
rate
%
HK$M
Fixed
rate
%
NZ$M
Fixed rate
%
¥M
Fixed
rate
%
2011 (415.1)
3.78%
(459.1)
7.61%
(1,831.1)
3.04%
(135.3)
7.77%
(7,000.0)
1.54%
2012 (384.1)
3.54%
(425.0)
8.20%
(1,750.0)
2.90%
(110.0)
8.79%
(6,639.3)
1.54%
2013 (305.0)
3.63%
(425.0)
8.20%
(1,406.3)
2.76%
(110.0)
8.79%
(1,000.0)
1.68%
2014 (191.1)
3.89%
(425.0)
8.20%
(760.0)
2.27%
(110.0)
8.79%
(939.7)
1.68%
2015 (50.0)
4.50%
(437.6)
7.96%
(122.1)
1.98%
(69.5)
7.30%
-
-
2016 (50.0)
4.50%
(388.7)
8.23%
-
-
(50.0)
5.75%
-
-
2017 (33.3)
4.50%
(307.2)
9.03%
-
-
(16.2)
5.75%
-
-
2018 -
-
(266.0)
9.50%
-
-
-
-
-
-
2019 -
-
(11.0)
9.78%
-
-
-
-
-
-
  1. Includes the 10 year EMTN £250 million at 9.75% fixed rate

61

Financial risk management

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Currency hedging profile

Amount Amount
Maturing in Hedge rate payable Hedge rate payable
year ending June
HK$M NZ$M
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 currency denominated balance sheet hedging maturity profile

Currency Maturity Weighted average exchange Amount receivable1 Amount payable1
rate
€M 2015 0.6705 A$179.0M €120M
NZ$M 2012 1.2590 A$81.0M NZ$102M
NZ$M 2013 1.2200 A$69.7M NZ$85M
HK$M 2011 5.8350 A$85.7M HK$500M
HK$M 2012 6.7145 A$148.9M HK$1000M
HK$M 2014 6.8510 A$51.1M HK$350M
HK$M 2015 7.1000 A$56.3M HK$400M
  1. Floating rates apply for the payable and receivable legs for the cross currency swaps except for the NZ$102M cross currency where the receivable is at a fixed rate

62

Exchange rates

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    • Statement of Financial Position – exchange rates as at 30 June 2010

– AUDGBP – 0.5666 (30 June 2009 : 0.4872) – AUDEUR – 0.7050 (30 June 2009 : 0.5751) – AUDHKD – 6.5923 (30 June 2009 : 6.2586) – AUDSGD – 1.1831 (30 June 2009 : 1.1699) – AUDNZD – 1.2321 (30 June 2009 : 1.2428) – AUDUSD – 0.8523 (30 June 2009 : 0.8114) – AUDJPY – 76.720 (30 June 2009 : 77.760)

  • Statement of Financial Performance – average exchange rates for the 12 months to 30 June 2010

– AUDGBP – 0.5588 (30 June 2009 : 0.4625) – AUDEUR – 0.6359 (30 June 2009 : 0.5416) – AUDHKD – 6.8469 (30 June 2009 : 5.8048) – AUDSGD – 1.2404 (30 June 2009 : 1.0916) – AUDNZD – 1.2554 (30 June 2009 : 1.2289) – AUDUSD – 0.8822 (30 June 2009 : 0.7473) – AUDJPY – 80.7539 (30 June 2009 : 74.2058)

63

Thank you+

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