GOODMAN GROUP — Interim / Quarterly Report 2017

Nov 6, 2016

Carla updating GMG Quarterly presentation Q1 2016 - Quarterly operational update Q1 FY17 Quarterly Operational Update 6 May 2015

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• • This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071), Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839) and Goodman Logistics (HK) Limited (Company Number 1700359; ARBN 155911142 – A Hong Kong company with limited liability)). 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 Group Financial Report for the year ended 30 June 2016 and Goodman Group’s other announcements released to 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 uses operating earnings per security to present a clear view of the underlying profit from operations. Operating profit comprises profit attributable to Securityholders, adjusted for property and intangible valuations resulting from fair value adjustments, derivative and foreign currency mark to market and other non-cash or non-recurring items. It is used consistently and without bias year on year for comparability
• • This document 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 forward-looking 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. Neither the Group, nor any other person, gives any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking-statements in this document will actually occur.
• • This document does not constitute an offer, invitation, solicitation, recommendation, advice or recommendation with respect to the issue, purchase, or sale of any stapled securities or other financial products in the Group.
• • This document 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.

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Contents

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• Section 1 Quarterly operational highlights

• • Appendices

• Leasing

• Development

• Management platform

• Global platform

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• Section 1 Quarterly Operational Highlights

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Centenary Distribution Centre, Australia
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Quarterly operational highlights

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+ Key operational highlights for the quarter

• $0.9 billion of assets disposed (excluding urban renewal) in the quarter to fund development pipeline

• $1.0 billion of development commencements in the quarter

• $3.5 billion of development work in progress at 30 September 2016

• $34.2 billion total assets under management at 30 September 2016

• 96% occupancy across the Group and Partnerships with positive rental reversions of 3%

+ Asset rotation program progressing given the continued strength of the capital markets but expected to moderate as majority of targeted assets for disposal are realised

• $0.9 billion disposed of in the first quarter (excluding urban renewal sites)

• Asset sales predominantly across Australia, New Zealand, Japan and UK

+ Benefiting from a globally diversified operating platform in gateway cities and is reflected in

• 96% occupancy levels across the Group and Partnerships

• Leased 867,000 sqm which equates to $109 million of property income across the global platform

• Positive rental reversions of 3%

+ Successful debt capital management initiatives providing the Group and Partnerships with financial flexibility for future periods

• GAIP issued US$600m 10 year notes in the 144A market / Reg S market

• GEP issued €650m notes across two tranches for 6 and 10 years in the Euro market

• Partnership gearing continues to reduce improving liquidity and balance sheet strength

• Group gearing trending below 10% as urban renewal sites settle

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Quarterly operational highlights

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+ Urban renewal sales of $280 million contracted with $82 million settled in the quarter

• Continued strategy of ensuring returns are optimised for individual properties

• Potential pipeline of 35,000 units across the Australian portfolio maintained

• Key focus on planning and rezoning of future precincts

• $1 billion of settlements expected within the next 12 months

+ Gateway city strategy remains unchanged on delivering sustainable long term growth

• Australia : strong demand from local and foreign investors continuing with Goodman rotating $0.4 billion of property assets, in the first quarter of FY17 and a further $0.6 billion in October 2017

• New Zealand : customer demand is contributing to the ongoing strength in the $200 million development workbook, 75% precommitted. Asset sales in excess of $200m with portfolio weighting now at 98% in the Auckland market

• Asia: developments and leasing of stabilised properties from a global customer base remains steady, driven by domestic consumption, e-commerce and logistics customers. Strong development contributions from assets reaching completion and preleasing interest in new projects

• Europe : continued outperformance with the development workbook reaching $1.1 billion at September 2016, 94% pre-committed

• – UK : pursuing strategy of disposing the remaining assets in ABPP. Goodman UK Logistics Partnership progressing with selective developments in proven core markets

• North America : secured and identified pipeline of $2.0bn in target markets of Los Angeles/Inland Empire West, New Jersey and Pennsylvania

• Brazil : focused on establishing Partnership platform using balance sheet investments

+ Reaffirm forecast FY2017 full year operating earnings per security of 42.5 cents, up 6% on FY2016

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Total AUM ($bn)

Chart to be updated

Total AUM by geography Chart to be updated

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+ Strategic objective to reposition the global portfolio for long term growth

• • Goodman has sold in excess of $5 billion of assets globally over the last 3 years via a clear and structured program
• • The program has concentrated the ownership of assets in Goodman’s identified gateway cities
• • Key characteristics of gateway cities to Goodman include:

• Proximity to wealthy consumers and high levels of employment

• Modern infrastructure and transport networks, including airports, roads and ports

• Consumers adopting to and using technology enabled services, in particular e-commerce

• Cities that are evolving in terms of urban regeneration, infill opportunities exist

• • As a result modern logistics requirements to service e-commerce and related distribution tend to be strong drivers of space demand
• • All things being equal, assets in our identified gateway cities should be more resilient and provide higher capital returns and income returns
• • As a result of ongoing strong capital pricing, assets not falling within identified gateway cities are being divested
• • Capital from asset sales are providing funding for Goodman’s development business

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+ 79% of assets in Sydney + 98% of assets in Auckland
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	Australia¹				New Zealand²
	Assets under management	A$13.6bn			Assets under management	A$2.4bn
	Stabilised properties	188			Stabilised properties	16
	Investment GLA (sqm)	7.1m			Investment GLA (sqm)	1.0m

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+ 93% of assets in Hong Kong, Shanghai, Beijing, Tokyo and Osaka
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Asia[3] Assets under management A$9.5bn Stabilised properties 52 Investment GLA (sqm) 4.4m

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6%
Hong Kong
East (greater Shanghai)
North (greater Beijing)
15%
79%
98% 51%
12%
9%
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1. As at 30 September 2016 post sale of portfolio to Blackstone in October 2016

2. As at 31 March 2016 3. As at 30 September 2016 for Greater China and as at 31 August 2016 for Japan

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• • 83% of assets in Germany, France, Benelux, South East UK and the Midlands

• 98% of assets in Los Angeles

	Europe¹				America¹
	Assets under management	A$7.3bn			Assets under management	A$1.1bn
	Stabilised properties	142			Stabilised properties	7
	Investment GLA (sqm)	5.1m			Investment GLA (sqm)	0.6m
	6% 14%	8%	42%		98%
		13%

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+ 91% of assets in Sao Paulo & Rio de Janeiro

	Brazil¹
	Assets under management	A$0.3bn
	Stabilised properties	4
	Investment GLA (sqm)	0.3m

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91%
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1. As at 30 September 2016

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• Section 1

Quarterly Operational Highlights

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Centenary Distribution Centre, Australia
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Snapshot

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A$34.2 billion A$29.3 billion A$3.5 billion A$4.9 billion
total assets external assets Development work direct property
under under in progress investment portfolio
management management
+
0.2%¹ No Change¹ 4.8%¹ 1.7%¹
1,850 33 1,130
customers cities people
globally (approx) worldwide
406 18.3 million
properties under sqm of industrial and
management business space
under management
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1. % increases based on 30 June 2016 reported numbers

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• • Property fundamentals in our portfolio remain sound across all markets, reflecting the quality of assets and customers

• Leased 0.9 million sqm across the platform over the quarter equating to $109 million of annual net property income

• Maintained occupancy at 96%

• Retention remains high at 80%

• WALE of 4.7 years

• Positive reversions of 3% per annum on new leasing deals

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Total assets under management

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+ Asset rotation continuing driven by global gateway city strategy

• $0.9 billion completed in the quarter (excluding urban renewal sites) across the Group and Partnerships

• Asset sales predominantly across Australia, New Zealand, Japan and UK

• Asset rotation expected to be consistent with FY2016 levels but moderating into future years as targeted sales are completed

• • Globally, demand and pricing of real estate assets remains strong, however cap rate compression expected to moderate
• • Targeting sites / assets in infill locations or core gateway city markets

Total AUM by type

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Goodman Interlink, Hong Kong

Customer Yusen Logistics Transaction Leasing Type Lettable area 25,551 sqm Contracted GHKLP owner Lease term 36 months + Landmark development immediately adjacent to container Description terminal 9 with access to ports, airport and mainland China

Sale Leasing

Amazon, Pforzheim, GermanyMönchengladbach, Germany Customer Esprit Transaction Leasing Type Lettable area 71,551 sqm Contracted GEP owner Lease term 10.8 years + Located in Regiopark, Mönchengladbach, a significant Description location for textile and fashion logistics in Western Germany

Vatry, FramceNorthampton Commercial Park, United Kingdom Customer Amazon Transaction Leasing Type Lettable area 15,021 sqm Contracted GUKP owner Lease term 10 years + Prime East Midlands location adjacent to the M1, with London Description approximately 50 miles south

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• • Developments continuing to provide the best risk adjusted returns at this point in the cycle in most markets
• • WIP at $3.5 billion across 80 projects in 15 countries with a forecast yield on cost of 7.7%. Predominantly by the e-commerce, retail and third party logistics sectors

• Development WIP of $3.5 billion with 63% pre-committed and 68% pre-sold to Partnerships or third parties

• Development completions of $0.8 billion for the quarter with 90% precommitted and 82% pre-sold to Partnerships or third parties

• Development commencements of $1.0 billion for the quarter with 60% precommitted and 56% pre-sold to Partnerships or third parties

• • Development demand being driven by both structural and cyclical changes

• Growth in consumerism and the continued evolution of e-commerce globally

• Customers seeking efficiencies in their supply chain networks

• Structural undersupply and obsolescence

Development WIP ($bn)

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Work in progress as at 30 September 2016

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Global development business

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METRO, Marl, Germany Estimated end value $250 million Land area 562,438 sqm Lettable area Building A: 83,157 sqm Building B: 152,785 sqm Contracted owner GMG Location Marl / North-Rhine Westphalia, Germany Customer METRO Term 10 years Description + Marl is the most densely populated of the 16 federal states in Germany + Building A will be used for its “B-to-B food and consumer goods retail chain + Building B for its food retailer / supermarket chain distribution	METRO, Marl, Germany Estimated end value $250 million Land area 562,438 sqm Lettable area Building A: 83,157 sqm Building B: 152,785 sqm Contracted owner GMG Location Marl / North-Rhine Westphalia, Germany Customer METRO Term 10 years Description + Marl is the most densely populated of the 16 federal states in Germany + Building A will be used for its “B-to-B food and consumer goods retail chain + Building B for its food retailer / supermarket chain distribution	Amazon, Pforzheim, Germany Vatry, Framce Sale Leasing Estimated end value $100 million Land area 270,416 sqm Lettable area 107,096 sqm Contracted owner GMG Location South east of Amiens Customer Amazon Term 12 years Description + The Hauts de France region is an established major logistics hub + The facility will have standard Amazon specifications such as a significant amount of loading docks, car park areas and a clearance of 10.5m + Completion is expected in August 2017 Estimated end value Over $300 million Land area 64,300 sqm Lettable area 125,040 sqm Contracted owner GJDP Location Greater Tokyo, Japan Description + Stage 2 of a new master planned logistics and business park in Chiba, with Stage 1 completed and fully leased + Excellent connectivity to greater Tokyo and major roads + 4-storey multi-customer logistics facility Amazon, Amiens, France Stage 2 of Goodman Business Park, Chiba, Japan	Amazon, Pforzheim, Germany Vatry, Framce Sale Leasing Estimated end value $100 million Land area 270,416 sqm Lettable area 107,096 sqm Contracted owner GMG Location South east of Amiens Customer Amazon Term 12 years Description + The Hauts de France region is an established major logistics hub + The facility will have standard Amazon specifications such as a significant amount of loading docks, car park areas and a clearance of 10.5m + Completion is expected in August 2017 Estimated end value Over $300 million Land area 64,300 sqm Lettable area 125,040 sqm Contracted owner GJDP Location Greater Tokyo, Japan Description + Stage 2 of a new master planned logistics and business park in Chiba, with Stage 1 completed and fully leased + Excellent connectivity to greater Tokyo and major roads + 4-storey multi-customer logistics facility Amazon, Amiens, France Stage 2 of Goodman Business Park, Chiba, Japan
Estimated end value	$250 million	Estimated end value	$100 million
Land area	562,438 sqm	Amazon, Pforzhei Land area	m, Germany 270,416 sqm
Lettable area	Building A: 83,157 sqm Building B: 152,785 sqm	Lettable area	107,096 sqm
		Contracted owner	GMG
Contracted owner	GMG
		Location	South east of Amiens
Location	Marl / North-Rhine Westphalia, Germany
		Customer	Amazon
Customer	METRO
		Term	12 years
Term	10 years
		Description	+ The Hauts de France region is an established major logistics hub + The facility will have standard Amazon specifications such as a significant amount of loading docks, car park areas and a clearance of 10.5m + Completion is expected in August 2017
Description	+ Marl is the most densely populated of the 16 federal states in Germany + Building A will be used for its “B-to-B food and consumer goods retail chain + Building B for its food retailer / supermarket chain distribution

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• • Major achievements completed during the quarter include two debt capital market transactions

• GAIP inaugural issue of US$600m 10-year-bond in the 144A / Reg S market

• GEP €650m million euro bond issue in two tranches for 6 and 10 years

• • Goodman Japan Core Partnership completed a US$200 million equity raising to fund opportunities, including stage 1 at Goodman Business Park, Chiba
• • On 7 July 2016, unitholders voted in favour of extending the minimum term of the Goodman European Partnership to 2026
• • Process commenced for the establishment of a Brazil Partnership
• • $0.9 billion of asset rotation enhancing the quality of portfolios

Total AUM ($bn)

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• In addition contracts exchanged and terms agreed for sale of $645m portfolio in Australia to Blackstone subsequent to the end of the quarter

• • Asset rotation driven by global gateway city strategy

Total AUM by geography

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+ Appendices
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Centenary Distribution Centre, Australia
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Across the Group and Partnership platform:

• • 0.9 million sqm leased in the quarter representing $109 million of net annual property income
• • Reversions of 3% on new leasing deals
• • Occupancy maintained at 96%

Region	Leasing area (sqm)	Net annual rent (A$m)	Average lease term (years)
Australia	281,394	39.7	4.2
New Zealand	51,779	12.3	5.6
Asia	289,153	40.4	4.5
UK	18,609	3.5	7.8
Europe	226,427	13.6	5.3
Total	867,362	109.5	4.6

1. Leasing for investment properties only and excludes developments for the three months to 30 September 2016

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Q1 FY17 Developments		Completions	Commencements		Work in progress
Value ($m)		833	1,042		3,514
Area (m sqm)		684	838		2,632
Yield (%)		7.8	7.3		7.7
Pre-committed (%)		90	60		63
Weighted Average Lease Term (years)		8.2	9.9		10.4
Development for Third Parties or Partnerships (%)		82	56		68
Australia / New Zealand (%) of WIP		25	6		24
Asia (%) of WIP		44	35		30
Americas (%) of WIP		-	-		13
Europe (%) of WIP		31	60		33
Work in progress	On balance sheet	Partnerships	Total end value	Partnerships	Pre committed
by region	end value	end value	$m	% of total	% of total
	$m	$m
Australia / New Zealand	78	759	837	91	77
Asia	107	956	1,063	90	41
Americas	56	405	461	88	15
Europe	871	282	1,153	24	94
Total	1,112	2,402	3,514	68	63

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	GAIP	GHKLP	GAP	GEP	GCLP	GMT1	GJCP2	GNAP	ABPP
Total assets	$7.1bn	$4.6bn	$3.9bn	$3.8bn	$2.6bn	$2.4bn	$2.1bn	$1.1bn	$0.8bn
GMG co-investment	$1.2bn	$0.7bn	$0.6bn	$0.5bn	$0.5bn	$0.3bn3	$0.2bn	$0.6bn	$0.2bn
GMG co-investment	27.5%	20.0%	19.9%	20.4%	20.0%	20.7%3	17.9%	55%	43.1%
Number of properties	107	12	58	103	29	16	11	7	6
Occupancy	95%	99%	95%	99%	94%	97%	100%	98%	93%
Weighted average lease expiry4	4.9 years	2.4 years	4.7 years	5.1 years	3.8 years	5.7 years	4.0 years	6.3 years	4.7 years

1. As at 31 March 2016 (as disclosed to the New Zealand stock exchange in May 2016) 2. As at 31 August 2016

2. As at 30 September 2015

3. WALE of leased portfolio to next break as at 30 September 2015

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thank+ you