GOODMAN GROUP — Audit Report / Information 2009

Oct 5, 2009

==> picture [83 x 73] intentionally omitted <==

==> picture [180 x 34] intentionally omitted <==

Goodman notes Moody's rating action

Date 6 October 2009 Release Immediate

Please refer to the attached release by Moody’s.

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

About Goodman : Goodman owns, develops and manages industrial property and business space globally. It is the largest industrial property group listed on the Australian Securities Exchange and one of the largest in the world, with offices across Asia Pacific, UK and Europe. At the core of the Group’s success is its integrated customer service model, which reflects the organisation’s commitment to creating long-term customer relationships.

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@goodman.com | www.goodman.com Goodman Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621

==> picture [97 x 28] intentionally omitted <==

Rating Action: Moody's confirms Goodman's Baa3 senior ratings; outlook stable

Global Credit Research - 06 Oct 2009

Approximately A$2.4 billion in debt securities affected

Sydney, October 06, 2009 -- Moody's Investors Service has today confirmed Goodman Group's ("Goodman") Baa3 issuer and senior unsecured rating, and downgraded the rating on Goodman's "PLUS" hybrid to Ba2. The outlook on all ratings is stable.

This concludes the review which initially commenced in March 2009 due to concerns about the group's high leverage. Today's rating action follows the conclusion of Goodman's recapitalization which included capital raising and debt extension at the headstock and managed funds.

Goodman's Baa3 ratings reflect its portfolio of directly owned, high quality and well-diversified industrial property assets," Chong says, adding, "The ratings also consider Goodman's much improved leverage, liquidity and covenant positions which are expected to provide adequate cushion for reasonable downside risks in the operating environment".

However, the rating recognizes that -- in comparison with other rated Australian real estate investment trusts -- the larger proportion of the group's earnings are derived from less-stable property management fees, development profits and equity returns from partly owned and managed property funds. Moody's considers to these cashflows to be less predictable and more cyclical than those from directly owned property. The property development business can also be a large user of capital and more exposed to rapid market shifts. As a result, Moody's considers Goodman's business risk to be greater than that of a more traditional real estate investment trust.

The group's pro-forma look-through Net Debt/EBITDA ratio of around 7.5 times remain weak for the Baa3 rating, although Moody's notes that financial metrics at headstock level -- including Net Debt/EBITDA of 5.0 times -- are more appropriate for the rating. Moody's considers both measures of the credit quality of the group given its track record of providing capital to the partly owned funds at times of need.

"The ratings includes an expectation that Goodman will de-lever its look-through balance sheet - over the next 12-18 months - to achieve Net Debt/EBITDA of 6 times on a look-through basis," Chong says, adding, "The group intends to sell down its stakes in funds to 20-30% range, and if implemented, lookthrough leverage would decline."

"Moody's recognises the group's recent track record of managing its capital structure in this regard through capital raising and asset sales," Chong says.

The downgrade of the hybrid rating to Ba2 reflects the weakened position of the instrument in Goodman's capital structure. In this regard, the deterioration in the group senior unsecured rating has increased the expected risk of loss on the hybrids.

The stable outlook on the ratings reflects an expectation that Goodman's leverage position will gradually improve as it executes its strategy, and that the operating environment is showing signs of stabilisation in Australia. It also reflects plans by the company to continue to extend its debt maturity profile and maintain solid balance sheet liquidity. This is particularly important given the cyclicality of some parts of its business.

Positive rating momentum is unlikely in the near term given our expectation of the group's look-through and head-stock leverage level. Over the longer-term, the group's ratings could be considered for an upgrade if look-through Net Debt/EBITDA ratio falls below 4.5 times (3.0-3.5 times at the headstock level), and fixed charge coverage rising above 3.5 times on a sustainable basis. When considering these metrics, Moody's would exclude any profit from asset recycling. In addition, Moody's would look for Goodman to maintain a long debt maturity profile consistent with its asset structure.

On the other hand, downward rating pressure could eventuate if Moody's considers it unlikely that Goodman would improve its look-through Net Debt/EBITDA to below 6 times (or headstock to below 4.0-

4.5 times) and fixed charge coverage to higher than 2.5 times over the next 12-18 months. A material deterioration in the group's liquidity position (through a material reduction in available liquidity or build-up of short-term debt maturities), or evidence of meaningful increase in development risk or financial support for its managed funds, could lead to rating pressures.

The last rating action on Goodman was on August 6, 2009 when Goodman's ratings were maintained on review for possible downgrade following the announcement of its recapitalization plan.

The principal methodology used in rating Goodman was the Rating Methodology for REITs and Other Commercial Property Firms, which can be found at www.moodys.com in the Rating Methodologies subdirectory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

The Goodman Group, based in Australia, is an internally managed, integrated property group, with ownership of a substantial portfolio of Australian industrial property assets. In addition, the group has a number of strategic investments in various industrial property funds globally. It also derives earnings streams from providing funds management and property management services together with property development activities.

Sydney Clement K. Chong Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service Pty Ltd JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100

Sydney Terry Fanous Senior Vice President Corporate Finance Group Moody's Investors Service Pty Ltd JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100

==> picture [97 x 28] intentionally omitted <==

CREDIT RATINGS ARE MIS'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

© Copyright 2009, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed

by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling.

MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy."