GOODMAN GROUP — Capital/Financing Update 2005

Mar 6, 2005

ASX Release - Macquarie Goodman Group ("Macquarie Goodman")

Macquarie Goodman restructures its New Zealand business

	Date: 7 March 2005 Release: Immediate

Macquarie Goodman today announced a proposal for the restructure of the assets of the New Zealand business, which if successful, would result in Macquarie Goodman Property Trust ("MGP") becoming the largest listed industrial property trust and the second largest listed property trust on New Zealand Exchange ("NZX") by free float market capitalisation.

The transaction comprises three main components being:

• the acquisition by the trustee of MGP of certain interests in properties currently held by Macquarie Goodman for \$282.6 million (the "Acquisition"). Macquarie Goodman will receive \$208.3 million in cash and \$74.3 million of additional units in MGP as consideration for the Acquisition;
• a restructure of the management fee paid by MGP, including a reduction in the base fee and the introduction of a performance fee; and
• an Institutional Placement and a pro-rata non-renounceable Priority Entitlement Offer to raise a minimum of \$140.2 million to partly fund the acquisition, which has been fully underwritten by Macquarie Equities New Zealand.

Macquarie Goodman's Chief Executive Officer Gregory Goodman said, "This transaction represents the next stage in the repositioning of MGP, which commenced in December 2003 when we acquired the manager of the trust. We remain committed to providing products for our customers in New Zealand and look forward to pursuing these opportunities with our partner MGP."

The Acauisition

The Acquisition is structured as follows:

• the Acquisition by the trustee of MGP of a 100% interest in the completed stabilised properties currently held under the Co-ownership Agreement with Macquarie
• Goodman for \$210.3 million, delivering an average yield of 9.3%, thereby
• consolidating 100% of the completed stabilised properties into MGP;
• the Acquisition by the trustee of MGP of a 100% interest in the commenced $\bullet$ development properties which are expected to be completed in the next nine months for \$66.4 million, delivering a weighted average market capitalisation rate of 8.9%; and
• the Acquisition by the trustee of MGP of a 50% interest in the development land at Central Park Corporate Centre, Greenlane and The Gate Industry Park, Penrose both of which are located in Auckland, for \$5.9 million.

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Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69.000.123.071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

The Acquisition simplifies the property ownership structure of MGP and enhances the partnership of Macquarie Goodman and MGP as they jointly progress their co-owned developments, which include Central Park Corporate Centre in Greenlane, The Gate Industry Park in Penrose, Savill Link in Otahuhu and Westney Industry Park in Mangere, It is proposed that as future development commitments are secured, Auckland. Macquarie Goodman's 50% interest will be on-sold to MGP.

The commenced development properties reflect a number of projects that are currently under construction, either 100% in Macquarie Goodman's own right or on a 50/50 basis with MGP. To the extent that the properties are being developed on an uncommitted basis, Macquarie Goodman will provide a rental quarantee to MGP at market rentals for Further details regarding the completed stabilised properties, up to two vears. commenced development properties and development land are outlined in Schedule 1.

Certain pre-emptive rights will exist for both Macquarie Goodman and MGP in respect of the co-owned properties. These rights are proposed to ensure that the value of each party's interest in the co-owned properties is maintained. Further information regarding the pre-emptive rights is outlined in Schedule 2.

Macquarie Goodman will retain its 75% interest in Highbrook Business Park, East Tamaki, Auckland together with a 100% in Millennium Centre, Stage 2, Greenlane, Auckland. However, both properties will provide future investment opportunities for MGP when further developed and provided they meet MGP's investment criteria.

Transaction Benefits to MGP Unitholders

The transaction is consistent with MGP's strategy of investing in high quality industrial and business space assets and is expected to deliver a number of benefits to its Unitholders including:

• a projected increase in the annual gross distribution from NZ9.45 cents to NZ9.80 cents per unit $(4.3.7%)$ for the financial year ending 31 March 2006;
• a projected increase in pro forma net tangible assets from NZ\$1.02 to NZ\$1.04 per unit:
• MGP is expected to become the second largest listed property group with anticipated inclusion in NZSX50 market index, thereby increasing investor awareness of MGP and enhancing trading liquidity in its units;
• simplified property ownership structure: and
• improved alignment of the interests of MGP Unitholders and Macquarie Goodman via the introduction of a performance fee. a sign

The Chairman of Macquarie Goodman's New Zealand business, Hon Jim McLay said, "This is an exciting stage in the continued growth of MGP and positions the trust well to pursue further acquisition and development opportunities with the support of Macquarie Goodman. The transaction provides immediate earnings and NTA accretion to MGP Unitholders and further enhances MGP's position as the leading listed industrial property trust in New Zealand."

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Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69.000.123.071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Telephone (02) 9230 7400 Eacsimile (02) 9230 7444 info@macquariegoodman.com.au www.macquariegoodman.com

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Transaction Benefits to Macquarie Goodman Securityholders

The restructure of the New Zealand operations provides a number of key benefits to Securityholders of Macquarie Goodman including:

• expansion of MGP to the leading listed industrial property trust and the second $\bullet$ largest listed property trust on NZX;
• increased size and scale to allow MGP to undertake further expansion opportunities:
• increased distributions on its existing investment in MGP and anticipated increase in value of its investment: and
• realisation of approximately \$12 million in profit to be recognised over the years ending 30 June 2005 and 2006 (subject to development completions).

As part of the Acquisition, Macquarie Goodman will receive \$74.3 million as part consideration in units at the higher of NZ\$1.09 per unit or the book-build price. Further, Macquarie Goodman will sub-underwrite a \$13.9 million portion of the Retail Entitlement Offer. Macquarie Goodman has also committed to take its pro rata entitlement under the Priority Entitlement Offer. On completion of the transaction. Macquarie Goodman will increase its holding in MGP from 17.3% to a strategic stake of between 29.5% and 33.5%.

Management Fee Restructure

Macquarie Goodman is proposing a reduction in its base fee from the current 0.70% to 0.50% per annum of the book value of MGP's assets less than NZ\$500 million and 0.40% per annum on assets greater than NZ\$500 million. Following the Acquisition, MGP's average base fee will be approximately 0.48% which is one of the lowest fees charged by the managers of MGP's listed peers in New Zealand.

Macquarie Goodman is also proposing the introduction of a performance fee (calculated half yearly), whereby Macquarie Goodman is entitled to a fee of 10% of MGP's performance in excess of the rolling average annual return of companies and trusts listed on NZX that have a principal focus on investment in real property (excluding MGP) over a five year period.

The performance fee for any six month period will be capped at 5% per annum of the out-performance in that period and any under or over-performance will be carried forward and taken into account in the calculation of the performance fee in future periods. The performance fee will generally be paid to Macquarie Goodman in units.

The revised fee structure further aligns the interests of Macquarie Goodman with MGP Unitholders as the fee payable to Macquarie Goodman will be proportional to the returns received by MGP Unitholders. Unless Macquarie Goodman delivers returns to MGP Unitholders in excess of MGP's listed peers, the fees payable to Macquarie Goodman will be substantially lower under the revised structure.

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Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69.000.123.071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Macquarie Goodman

Approvals

Whilst approval from Macquarie Goodman Securityholders is not required, the Acquisition, Institutional Placement and fee structure are subject to MGP Unitholder approval. An MGP Unitholder meeting has been scheduled for 23 March 2005 to consider the resolutions. A notice of meeting with full details of the transaction and required resolutions together with an appraisal report from the Independent Expert, Deloitte Corporate Finance, will be sent to MGP Unitholders today.

The Independent Expert has concluded that the Acquisition and the fee restructure are fair to the non-associated MGP Unitholders.

If approved, settlement of the Acquisition is anticipated by no later than 1 April 2005.

"The transaction will consolidate MGP's assets into a simplified property ownership structure and create an entity that has the scale and resources to be self supporting, exploit further growth opportunities and thus be more attractive to local New Zealand investors," Mr Goodman concluded.

All values are expressed in Australian currency unless otherwise stated.

For further information, please contact:

Gregory Goodman Chief Executive Officer Macquarie Goodman Group Tel: +61 2 9230 7400

Jayne Gerrie Corporate Communications Manager Macquarie Goodman Group Tel: +61 2 9230 7406

Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69.000.123.071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Macquarie Goodman

Schedule 1 - Acquisition Details

Completed System okonamas	ATA III DEL	THE REAL PROPERTY METHEMENT	TERRETARY PRODUCT ETCHWA	TABE $1.78333333333333333333333333333333333333$	00000000000000000000000000000000000000
Fletcher Head Office	-50	$-33.4$	9.00	$\cdots$ 4.0	- 100
Central Park Corporate Centre	- 50	30.5	9.50 to 9.75	3.0	-97
The Gate Industry Park (inc Recall and Norman Ellison)	- 50	30.4	8.75	6.4	100
Millennium Centre	- 50	$-22.1$	$9.25$ to $9.50$	3.8	-100
Penrose Industrial Estate	- 50	$\sim$ 16.3 $\,$	$9.25 \text{ to } 9.50$	. $6.1$	- 100
HP House	- 50	$-12.1$	8.75	. 2.9	.100
HSBC Centre	50.	$\sim$ 10.3 $\,$	- 9.00	$-5.2$	$-100$
IBM Centre	- 50	$\sim$ 10.1 $\,$	$-8.75$ to $9.00$	a. 3.0	91
Auckland Distribution Centre	-50	- 9.5	12.00 to 12.25	$\sim 0.9$	100
Vector House and Contact in the State	- 50	- 8.5	8.50	5.9	- 100
BTI House	$\cdots$ 50	i Circuit. Naskiĝoj 8.4	$-8.50$ to $8.75$	$-3.3$	100
Kodak Building	. 50 .	. 4.3	9.50	- 4.5	$-93$
Ricoh Building	- 50 .	. 4.2	9.50	.3.9	100
Nestlé Building March 1999	$\cdots \cdots 50$	$\cdots$ 4.2	10.00 to 10.25	$\cdots \cdots 2.1$	. 100
Windsor Court	50	3.5	8.75	2.5	97
EDS Building	50	2.7	9.75 to 10.00	2.7	100
Completed stabilised properties		210.4	9.26	4 1
Commonest development iki iliki iliki	ng ma IIZOI.	ARTIFICATION BARBARATA	Management REGION	MARS MADES	REPORT GTERRINGS IWA 1
Central Park Corporate Centre (Building 8)	100	$-18.3$	8.75	$\ldots$ 4.9	39
Westney Industry Park (Linfox)	- 50	-13.5	9.25	- 8.0
The Gate Industry Park (Units)	100.	12.1	$8.50 \text{ to } 8.75$	2.0	-100
Central Park Corporate Park (Car Park)	100	8.6	9.25	- 1.9	-88
Savill Link (Toll)	- 50	7.2	8.75 to 9.00	$=6.0$
Savill Link (Nylex)	50	$-3.9$	8.25	10.0
The Gate Industry Park (Building C3)	100	2.8	8.75 to 9.00	2.0	100
Commenced developments	WARD AND MANAGERIES	1999 (1999)	8.88	WWW.WWW.5.2	WWW.WWW.33
Development land	Acquired (%)	Acquisition Price (\$M)	Valuation Cap Rate (%)	WALE (Years)	Rental Guarantee (%)
Central Park Corporate Centre	-50	- 3.9
The Gate Industry Park	-50	$-1.9$
Development land		5.9
Total Acquisition		282.6	9.17	43	þ

${13}$ These sites are currently under development and MGP will bear the costs of completing the development. The value given in this table is the independent valuation and that valuation is for the site completed in accordance with current development plans. $\frac{1}{\sqrt{2}}\sum_{i=1}^{n-1}\frac{1}{i}$ $\alpha$ , $\alpha$ , $\beta$ $\sim 10^4$ alah salah

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Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69 000 123 071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

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Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Telephone (02) 9230 7400 Facsimile (02) 9230 7444 info@macquariegoodman.com.au www.macquariegoodman.com

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Schedule 2 - Pre-emptive Rights on Co-owned Assets

There are a number of circumstances in which either of Macquarie Goodman or MGP may part with their interest in the co-owned properties.

These are summarised as follows:

Default

If either party is in default under the Co-Ownership Agreement, the non-defaulting party can require that the party in default sell its interest to the non-defaulting party at market value. In the alternative, the non-defaulting party can require that all of the Co-owned Properties are sold to a third party provided that the terms of such a sale are considered reasonable by the Co-owners' property manager and unless agreed, at a price which is not less than 90% of the market value of the properties.

Dispute

If the parties are in dispute in respect of a material issue, then the parties can offer their interest in all the Co-owned Properties to the other party at market value. Failing agreement, the entire Co-owned Property shall be offered for sale to a third party.

Change of Control

If MGNZ is removed as manager of MGP or if more than 50% of Macquarie Goodman comes under control of a person or group of associated persons, then MGP may acquire at an arms-length market price, Macquarie Goodman's interest in the Co-owned Properties. If MGP does not exercise this right, then Macquarie Goodman may purchase all of MGP's interest in the Co-owned Properties and the balance of the land where part of that land only is a Co-owned Property.

Sale for Convenience

If Macquarie Goodman wishes to sell its interest in one or more Co-owned Properties, it must offer its interest in all the Co-owned Properties to MGP at market value or if MGP does not wish to purchase them, then to a third party. MGP is able to dispose of interests in individual Co-owned Properties at market value but must sell the entire land in which the Co-owned Property is located. This must be offered first to Macquarie Goodman and if Macquarie Goodman does not wish to purchase it can be offered to a third party. TOTAL

In each case the "market value" will be assessed on an arms-length basis and if the parties cannot agree on such a market value it will be assessed by an independent valuer.

Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69.000.123.071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001