GOODMAN GROUP — Annual Report 2011

Aug 17, 2011

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Goodman delivers $384 million full year operating profit, up 24% on FY2010

Date 18 August 2011 Release Immediate

Goodman Group (‘Goodman’ or ‘Group’) today announced its results for the full year ended 30 June 2011. Key financial and operational highlights for the period are:

Financial highlights

• • Operating profit after tax[1] of $384 million, a 24% increase on same period last year
• • Fully diluted operating earnings per security (EPS) of 5.66 cents[2] , up 8% on FY2010
• • Distribution per security (DPS) of 3.5 cents, up 3% on FY2010
• • Statutory accounting profit of $392 million
• • Strong financial position with balance sheet gearing reduced to 23% and interest coverage ratio (ICR) of 4.5x
• • Net tangible assets ratio (NTA) of $0.49 per security[3]
• • Group’s liquidity at $1.3 billion, with weighted average debt maturity of 5.6 years
• • Forecast FY2012 operating profit after tax of $460 million, equating to fully diluted operating EPS of 6.0 cents

Operational highlights

• • Solid property fundamentals across core investment portfolio, with occupancy increasing to 96% and a weighted average lease expiry of 5.3 years
• • $1.8 billion of new committed third party equity raised
• • $1.4 billion of development commitments across 42 projects, substantially precommitted and matched to third party capital, with work in progress at $1.8 billion and a significant development pipeline

1 Operating income is before unrealised gains and losses from investment property revaluations, mark to market of derivatives and other non-cash items and one off gains included in the statutory accounting profit.

2 5.66 cents is on a fully diluted basis for the CIC hybrid securities. This equates to 5.77 cents on an undiluted basis.

3 $0.49 is on a fully diluted basis for the CIC hybrid securities.

Level 10, 60 Castlereagh Street, Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | info-au@goodman.com | www.goodman.com Goodman Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621 as responsible entity of Goodman Industrial Trust ARSN 091213 839

Goodman’s Group Chief Executive Officer, Mr Greg Goodman said, “Our business has delivered on all fronts in FY2011, capitalising on the strong platform we have established and the significant operating momentum evident across all of our markets during the year. Accordingly, we are pleased to announce a 24% increase in operating profit after tax compared with the same period last year, which is slightly above the top end of the FY2011 earnings guidance range previously provided.”

Goodman’s result has been predominantly driven by the growth in its development and management activities which have contributed 36% to operating EBIT, and are expected to contribute 40% to 50% over the short-term. The Group also experienced robust underlying property fundamentals across all of its business activities and continues to benefit from the diversity of its international operating platform and the quality of its global investor and customer relationships.

“With the shift to a less competitive operating environment, the Group has effectively leveraged its proven capability and flexibility, extensive infrastructure and access to third party capital during the year to pursue opportunities and meet the significant customer demand around the world. In this regard, we completed a number of initiatives in a prudent manner, including the $2.5 billion acquisition and privatisation of IIF; the sale of the Group’s 50% interest in Interlink; while increasing our development work in progress to $1.8 billion across the Group and our managed funds. The increased activity in our development book has come from all of our core markets, with demand particularly strong from Australia, Europe and Greater China. Importantly, we have achieved this without compromising our sound financial position, which has been maintained and has seen gearing further reduce to 23% at year end.” Mr Goodman added.

Strategy

Goodman is well positioned in the current environment as a specialist provider of prime quality industrial and business space. In a sector which is characterised by reduced competition and limited access to capital, the Group has a distinct competitive advantage, proven expertise and the operational capability to deliver on its business strategy.

For FY2012, the Group is focused on the following key areas:

• Maintaining a high quality, diversified industrial property portfolio as its stable source of earnings;

• Enhancing value through its active asset management expertise;

• The prudent and low risk rollout of the Group’s $10 billion development pipeline;

• Expanding relationships with major investment partners;

• Maintaining an efficient capital structure and strong financial position;

• Vigilant management of operating costs in line with the current economic climate; and

• Continuing best corporate governance practices with high transparency as the Group expands its relationships with major investment partners.

“We have worked hard to establish a solid platform for growth and are in a strong competitive position heading into FY2012 and future years. Our extensive operating platform gives us the

Level 10, 60 Castlereagh Street, Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | info-au@goodman.com | www.goodman.com Goodman Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621 as responsible entity of Goodman Industrial Trust ARSN 091 213 839

ability to assess a broad range of initiatives around the world and we will continue to explore high quality opportunities with our capital partners, particularly in Asia and Europe. There is substantial momentum in Goodman’s development and management businesses, and the prudent rollout of our development pipeline remains a key focus. We will fund development activity with third party capital to mitigate risk and seek to maximise development returns by leveraging higher and better use opportunities. The quality of Goodman’s development work book is expected to provide opportunities to organically grow our investment portfolio and we will look to opportunistically recycle assets and redeploy capital in other parts of our business.” Mr Goodman said.

Operations

The Group’s operations achieved an operating EBIT of $470.6 million, or 23% increase compared with the same period last year, predominantly driven by the growing contribution from its development and management businesses. The earnings composition was in line with the Group’s expectations, with 64% contributed from Investments, 24% from developments and 12% from management services. Operational highlights include the following:

Investments

Underlying property fundamentals strengthened over the full year. Overall occupancy increased to 96%, up from 93% at 30 June 2010, with a weighted average lease expiry across the investment portfolio of 5.3 years and continued low arrears.

Mr Goodman commented: “We continue to see strong demand from our customers for prime logistics space in our core markets, predominantly driven by a lack of supply. This reflects the robust underlying property fundamentals we have experienced during the year, resulting in substantial leasing activity, with approximately 1.9 million sqm of space leased, higher occupancy levels, and rental reversion of 2.3% across all new leases.”

The Group’s property investment portfolio recorded a small valuation gain for the full year of $51 million, with valuation indices stabilising across all markets as liquidity has returned.

Developments

Developments contributed $121.6 million or 24% to the Group’s operating EBIT, reflecting the growth in development activity across the business.

The Group had $1.4 billion of new development commitments over the year across 42 projects. An overall leasing pre-commitment of 82% was achieved on new projects with an average lease term in excess of 10 years, reflecting the significant customer demand that exists across all of Goodman’s key markets of operation. Consistent with our low risk approach, 91% of current development commitments are for our managed funds or third parties.

As at 30 June 2011, the Group’s work in progress was $1.8 billion, generating a yield on cost of 8.7%.

“Development enquiry remains healthy and demand for our product continues to be strong, particularly from Europe, and we remain focused on increasing our competitive position in China. Importantly, we are committed to prudently growing our development business and will increasingly benefit from the flexibility of having a diverse international operating platform and

Level 10, 60 Castlereagh Street, Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | info-au@goodman.com | www.goodman.com Goodman Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621 as responsible entity of Goodman Industrial Trust ARSN 091 213 839

access to third party capital, enabling us to selectively undertake development projects across all our markets.” Mr Goodman said.

Management

Third party assets under management (AUM) increased to $14.4 billion over the year, an increase of 22% on a constant currency basis. Management earnings represented 12% of operating EBIT and were in line with expectations.

A number of major initiatives were completed across the Group’s managed fund platform during the year, ensuring it is well positioned to participate in new growth opportunities. New third party equity of $1.8 billion was raised in FY2011, which reflects funding for the acquisition of ING Industrial Fund, and equity raisings undertaken by Goodman European Logistics Fund and Goodman Property Trust in New Zealand. Goodman Australia Industrial Fund completed $1.5 billion of refinancing activities during the year, and following the assignment of a ‘BBB’ corporate credit rating by Standard and Poor’s, issued its inaugural A$175 million medium term note with a five year term.

“The strength and quality of our capital partner relationships and our ability to access third party capital is a real point of differentiation for Goodman and was demonstrated during the year with the IIF acquisition by a Goodman-led consortium of global investors. Separately, the Group’s sale of its 50% interest in Interlink to CPPIB reinforces this and highlights the investor demand for prime industrial assets. Based on the momentum across our managed fund platform, our forecast is for Goodman’s total assets under management to grow strongly to in excess of $20 billion over the short-term.” Mr Goodman said.

Capital Management

The Group is committed to maintaining a sound financial position and has further strengthened its balance sheet during the year. Significantly, while Goodman’s full year operating profit increased by 24%, gearing has reduced to 23% from 25% for the same period last year. Interest cover is at 4.5 times, well above banking covenants.

Available liquidity is currently $1.3 billion and the Group has a weighted average debt maturity profile of 5.6 years. Debt maturities are fully covered to FY2015.

During the period, the Group and managed funds established $4.8 billion of new debt facilities, with an average term of 5.1 years. The Group continued to deliver on its stated strategy of diversifying its debt funding sources, raising $0.9 billion in the debt capital markets, which now represents 69% of the Group’s debt allocation.

Outlook

The growing contribution from the active components of Goodman’s business, being its development and management activities, coupled with the strength of its Asian and European businesses will ensure the Group is well positioned to achieve solid earnings growth in FY2012. Accordingly, Goodman is forecasting a full year operating profit after tax of $460 million, equating to a fully diluted operating EPS of 6.0 cents.

Level 10, 60 Castlereagh Street, Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | info-au@goodman.com | www.goodman.com Goodman Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621 as responsible entity of Goodman Industrial Trust ARSN 091 213 839

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For further information, please contact Goodman: Gregory Goodman Group Chief Executive Officer Tel +61 2 9230 7400

About Goodman

Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, Europe and the United Kingdom. Goodman Group, comprised of the stapled entities Goodman Limited and Goodman Industrial Trust, is the largest industrial property group listed on the Australian Securities Exchange and one of the largest listed specialist fund managers of industrial property and business space globally.

Goodman’s global property expertise, integrated own+develop+manage customer service offering and significant fund management platform ensures it creates innovative property solutions that meet the individual requirements of its customers, while seeking to deliver longterm returns for investors.

For more information please visit www.goodman.com

Level 10, 60 Castlereagh Street, Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | info-au@goodman.com | www.goodman.com Goodman Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621 as responsible entity of Goodman Industrial Trust ARSN 091 213 839