GOODMAN GROUP — Interim / Quarterly Report 2009

Feb 24, 2009

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Goodman maintains sound capital position and delivers operating profit of $216.2 million

Date 24 February 2009 Release Immediate

Business and results summary for the half year ended 31 December 2008

• • Operating income[1] after tax of $216.2 million.
• • Operating earnings per security (EPS) of 11.1 cents.
• • Distribution per security (DPS) of 9.65 cents.
• • Statutory accounting loss of $465.9 million – reflecting property and equity investment revaluations and non-operating items.
• • Successfully raised new equity of $956 million and completed $378 million of asset sales – of which, $210 million settled in the first half and a further $168 million to be settled in the second half.
• • Capital expenditure commitments significantly lower with development work in progress reduced to $1.5 billion down from $3.1 billion. Goodman Group is directly responsible for 11%, with the remainder for third parties and our funds.
• • Executed cost rationalisation strategy and restructured our Asian operations.
• • Sound financial position maintained with available liquidity of $842 million as at 31 December 2008, headline gearing[2] at 41.2% and an interest cover ratio[3] of 3.4 times – well within the Group’s debt covenant limits. Progressing positively on refinancing.
• • The Group’s managed funds had $1.3 billion of available liquidity at 31 December 2008, with $124 million of maturing debt facilities across all funds globally in the 2009 calendar year.
• • Third party assets under management (AUM)[4] growth of 20% to $17.1 billion.

Goodman Group today announces an operating profit of $216.2 million for the half year ended 31 December 2008 or a 74% decrease compared with the same period last year. Operating earnings per security were 11.1 cents and distribution per security was 9.65 cents in line with the most recent earnings guidance issued in October 2008.

1. Operating income of $216.2 million is before unrealised gains and losses from investment property revaluations, mark to market of derivatives and other non-cash items and one off profits included in the statutory profit.

2. Adjusted for cash balance.

3. Operating EBITDA/Gross interest.

4. Adjusted for the sale of the Goodman Property Investors and Singapore businesses.

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

Goodman Group Chief Executive Officer, Mr Greg Goodman said, “The property industry continues to face a challenging operating environment. This result reflects our proactive and decisive approach to addressing the challenges in these difficult times, whilst remaining focused on our core business and doing the fundamentals well.

“To this end, we completed a range of initiatives during the first half to maintain our balance sheet and liquidity, and build our strategic long-term presence in Asia. We also completed a review of our operations and announced a number of initiatives post balance date to improve efficiencies and reduce costs. This is expected to achieve 20% annualised cost savings across our business which will begin to flow through in the second half.

“All of this has placed the Group in the best possible position to manage through this cycle and achieve our long-term objectives. We will continue to monitor market conditions and are prepared to take all necessary steps to respond to the current challenges and retain the confidence of all our stakeholders.

“Whilst we are undertaking less activity in our development business, we are currently reviewing all projects to focus on doing only the best developments at the best margins. This means we have halved the size of our development work book.”

Operational highlights include:

Investments

• • Total investment portfolio increased by $0.4 billion to $6.0 billion.
• • Direct property fundamentals continue to be solid:

  • Australian portfolio occupancy has been retained at 98%.

  • Leasing demand remains strong with over 96,000 sqm of existing spaced leased in Australia.

  • Rental growth of 3.8% in Australia has been achieved.

• The Group’s cornerstone investments in its managed funds increased by $0.6 billion to $3.2 billion, predominantly as the result of the Arlington Business Park Partnership (ABPP) asset for equity swap undertaken at the end of the period. We remain committed to our ongoing strategy of investing in our managed funds, however, where appropriate we will continue to sell down our cornerstone investments to target levels of approximately 20%.

• • Underlying asset performance remained at sound levels, with occupancy up 1% to 96% overall. However, in light of current conditions, a first half net valuation loss was recorded in relation to our overall portfolio. The key movements consist of a $487 million write-down in asset values, and a $171 million fall in the value of our listed investments.

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

Management

• • Third party AUM increased by $2.8 billion or 20% to $17.1 billion (including the effect of foreign exchange movements), while total AUM has grown by $2.7 billion or 15% to $21.3 billion.
• • The fund platform continues to perform well through the active management of all funds, achieving average occupancy levels of 96% and a weighted average lease expiry of 6.9 years. The management services income overall performance in the first half was impacted by lower development volumes and lack of performance fees earned. This is consistent with the most recent forecast.
• • Significant transactions completed during the half include: ABPP completing a $764 million capital raising in the form of an asset for equity swap to strengthen its long-term position; and Macquarie Goodman Hong Kong Logistics Fund acquiring a 50% interest in the Interlink and Seaview development projects from the Group and Macquarie Group.
• • The Group strengthened its fund platform in Asia with the establishment of two Japanese wholesale funds in conjunction with J-REP and Macquarie Group.
• • Our managed funds successfully refinanced $1,413 million of existing debt and raised $261 million of new debt and $216 million of third party equity capital, excluding asset for equity swaps. As a result of these activities, the funds across our entire platform continue to be well capitalised with an average gearing of 42.8% and $1.3 billion of capital capacity ($0.5 billion in undrawn equity and $0.8 billion in debt). Debt maturities in the managed funds for the 2009 calendar year total $124 million.
• • As at 31 December 2008, the funds had a weighted average debt maturity of 4.9 years.

Developments

• • Developments contributed 6% of operating EBIT, reflecting the reduction in development activity announced as part of capital management initiatives in October 2008.
• • 48 new developments to the value of $1.5 billion were completed during the half.
• • The development pipeline has reduced by 52% to $1.5 billion since June 2008. This has been achieved through reviewing $0.6 billion of previously committed projects. We also have significantly lower new commitments in keeping with the capital management and allocation strategy.
• • 89% of projects currently being developed are in our managed funds.
• • A conservative approach continues to be applied with regard to the amount of speculative development undertaken. Customer precommitments represent 89% of the total value of new projects.
• • The Group’s development business remains an integral part of our own+develop+manage operating model and we remain committed to the long-term contribution from these activities. We have down-sized our development focus to reflect the current conditions, however we will continue to undertake select projects that offer attractive opportunities.

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

Capital management

• • The Group announced capital management initiatives in October 2008 to further improve its financial position and ensure it is well positioned in the current environment, which raised new equity capital of $956 million from institutional and retail investors.
• • A number of asset sales to the value of $210 million were also completed in line with the announced initiatives, with a further $168 million to be settled in the second half.
• • As at 31 December 2008, the Group had available liquidity of $842 million to meet its ongoing capital expenditure requirements. The Group is responsible for development capital expenditure commitments of $95 million for the second half of the 2009 financial year, reflecting lower development activity. The Group is also progressing well on the refinance of the $460 million Tranche A of the Syndicated Multi-Currency Facility due in May 2009.
• • Gearing has increased to 41.2% from 39.9%, partially reflecting the timing in realising some asset sales and the impact of revaluations. Interest cover remains high at 3.4 times comfortably over debt covenants.
• • A $420 million non-cash mark to market valuation loss has been recorded against the Group’s derivative positions. The bulk of this was interest rate related. Importantly the mark to market deficit does not impact on gearing covenants.
• • The Group’s weighted average term to maturity across all debt facilities is 3.5 years.

Management team changes

The Group has undertaken a review of its senior management team structure following the resignation of David van Aanholt in November 2008, and today we announce the following changes:

• • Anthony Rozic, previously Group Chief Financial Officer, has been appointed to the newly created position of Group Chief Operating Officer.
• • Nick Vrondas, previously Executive – Group Corporate Finance, has been appointed to the role of Group Chief Financial Officer, replacing Mr Rozic.

“These management team changes will take immediate effect. They reflect the calibre and strength of our people and better align the management structure with the requirements of our business,” Mr Goodman said.

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

Outlook

Despite the challenging market conditions, Goodman is committed to the execution of its longterm strategy of owning, developing and managing industrial property and business space.

Goodman has been actively repositioning our business to reflect the challenging environment. We have significantly reduced operating costs, reengineered our development business and have a strong focus on our capital management and allocation strategy.

This means Goodman is well placed to deliver on its strategy and consolidate its position in the market.

As a result, we maintain our 19.3 cents EPS target for the full year.

For further information, please contact Goodman:

Gregory Goodman Nick Vrondas Group Chief Executive Officer Group Chief Financial Officer Tel +61 2 9230 7400 Tel +61 2 9230 7400

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