GOODMAN GROUP — Interim / Quarterly Report 2016

May 2, 2016

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Important notice and disclaimer

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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 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 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 forwardlooking 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“US persondocument” (asdoesdefinednot constitutein Regulationan offerS underto sell,the orUStheSecuritiessolicitationActofofan1933,offerastoamendedbuy, any (Securitiessecurities inAct)the(USUnitedPerson)).StatesSecuritiesor to any 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

• Section 1

• Section 2

• Appendices

Quarterly operational highlights

Brazil platform

• Leasing

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• 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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+ Strong operating performance maintained

• Increased activity levels resulting in upgraded guidance at the half year maintained

• Ongoing demand for prime industrial space across the global portfolio remains robust, reflecting the quality of the portfolio and customers

• Development business remains a key driver of outperformance

+ Development completions of $1 billion in the quarter

• Maintained development workbook of $3.2 billion across 72 projects with a forecast yield on cost of 8.1% and a weighted average lease term of 10.3 years

• North America now a significant contributor with $400 million of commencements year to date

+ Selective asset rotation strategy continuing

• Disposed of $1.8 billion financial year to date (excluding urban renewal sites) across the Group and managed Partnerships

• Asset sales were primarily in Australia, China and European markets

• Further $1 billion under due diligence or contracted for sale in Australia, Japan, China and UK

+ Progressing urban renewal strategy ahead of expectations

• Conditionally contracted for sale $2.1 billion of sites in Sydney

• Settled $425 million as at 31 March 2016

• Settlement of sites will continue over the next three years with a further $700 million expected by December 2016

• Urban renewal pipeline maintained at approximately 35,000 apartments

• Actively pursuing planning on sites for long term urban renewal opportunities

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Quarterly operational highlights

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+ Ability to create long term value is underpinned by a globally diversified platform

• Australia : Yield spreads to low interest rates remaining attractive and therefore demand in industrial assets expected to continue. Urban renewal providing further rotation opportunities and driving development demand from customer relocations

• New Zealand : Strong property fundamentals and stable occupier demand are continuing to support an active development workbook of $265 million. GMT’s portfolio cap rate firmed 50bps to 7.0% as at 31 March 2016

• Greater China : Demand for quality logistics assets persists from e-commerce operators and 3PL’s. Focus remains on selective, quality developments in targeted economic centres. Hong Kong continues to benefit from supply constraints

• Japan : Continued focus on building out Goodman Business Park, Chiba, with the announcement of stage 2 comprising 125,000sqm

• Europe : Maintained strong operational performance across Europe with 98% occupancy. Increased occupier demand for new developments maintaining WIP at 590,000sqm, 90% of which is pre-committed

• UK : Strong property capital markets are leading capital partners to a “develop to hold” strategy consistent with other regions

• North America : Investment and development pipeline is in excess of US$3 billion. Development commencements of $400 million year to date FY2016

• Brazi l: Secured 100% of operating platform. Focus will remain on the target markets of Sào Paulo and Rio de Janeiro

+ Completed the refinancing of A$2.9 billion of debt facilities across the Group and managed Partnerships

• Includes $769 million of Group revolving bank facilities which were extended to 2021

+ Reaffirm upwardly revised forecast FY2016 full year operating earnings per security of 40.0 cents, up 7.5% on FY2015

• Forecast full year distribution increased to 24.0 cents, up 8% on FY2015

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Snapshot

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A$33.2 billion A$28.1 billion A$3.2 billion A$5.1 billion
total assets external assets Development work direct property
under under in progress investment portfolio
management management
+
9.3%¹ 11.5%¹ 3.2%¹ 1.1%¹
1,750 32 1,116
customers cities people
globally (approx) worldwide
427 18 million
properties under sqm of industrial and
management business space
under management
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1. % increases based on 30 June 2015 reported numbers

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Quarterly operational highlights - Own

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• • Property fundamentals remain sound, reflecting the quality of the assets and customers

• Leased 2.3 million sqm across the platform over the nine months equating to $239 million of annual net property income

• Maintained occupancy at 96%

• Retention remains high at 76%

• WALE of 5.1 years

• Positive reversions of 3.5% per annum on new leasing deals

+ Asset rotation active across all markets

• $1.8 billion completed to date (excluding urban renewal sites) across the Group and Partnerships

• Improving quality of portfolio and quality of income being generated

• • Globally, demand and pricing of real estate assets remains strong due to the current low interest rate environment

Total assets under management

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• Further revaluation gains expected in the second half results

• GMT’s cap rates firmed 50bps to 7.0% as at 31 March 2016

• Further revaluation gains expected from urban renewal sites

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Quarterly operational highlights - Own

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Sale Leasing
Goodman Business Park, Chiba, Japan Northampton Commercial Park, UK Goodman Qingpu Centre, China
Transaction Type 65% leased on completion Amazon, Pforzheim, Germany Transaction Type 65% leased on completion Vatry, Framce Transaction Type 97% leased on completion
Total Lettable area 116,642 sqm Total Lettable area 43,292 sqm Total Lettable area 110,000 sqm
Contracted Contracted
owner GJDP owner GUKP Contracted GCLP
owner
+ New master planned logistics and + Prime East Midlands location
business park in Chiba adjacent to the M1, with London + 3-storey, multi customer distribution
+ Phase 1 of a multi stage approximately 50 miles south facility
development + Two units of 304,000 sq ft and + Strategically located in a state-level
Description + Excellent connectivity to greater Description 162,000 sq ft respectively (43,292 Description development zone
Tokyo and major roads sqm in total) built on 21.5 acres + Easy access to Shanghai and major
+ 4-storey multi-customer logistics + 10 year lease term signed over the cities in Jiangsu province
facility larger unit and will serve as an + 2-10 year lease terms
+ 5-7 year lease terms online fulfilment centre
Customer Japanese 3PL, major pharmaceutical Customer Clipper Logistics Customer JD.com, Shanghai Kuichin Industry,
retailer Kintetsu World Express
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Quarterly operational highlights - Develop

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• • Development workbook of $3.2 billion across 72 projects with a forecast yield on cost of 8.1%

Development WIP ($bn)

• Active development workbook across all regions

• North America growing to 12% of development WIP and will trend higher

• • Development commencements of $2.3 billion for the nine months with 61% pre-committed

• $400 million of development commencements in North America

• • Disciplined risk management practices applied to a growing development workbook

• Low gearing and asset rotation

• Capital partnering of development projects

• Constant monitoring of supply and demand

• Board oversight on overall development volume and exposure

Work in progress as at 31 March 2016

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Quarterly operational highlights - Develop

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Sale Leasing
Oakdale Industrial Estate, Eastern Creek, Australia Goodman Kunshan North Park, Kunhsan, China Landshut, Germany
Estimated end Estimated end Estimated end
value $91 m (site 3) value $37 m value $60 m
Land area 93,490 sqm Land area 73,980 sqm Land area 91,995 sqm
Lettable area 52,055 sqm Lettable area 40,267 sqm Lettable area 48,563 sqm
Amazon, Pforzheim, Germany Vatry, Framce
Contracted Contracted Contracted
owner BGAI owner GCLP owner GMG
Location Eastern Creek, Australia Location Kunshan, China Location Landshut, Germany
Customer DSV & Major pharmaceutical company Customer GAP Customer BMW
Term 10 + 5 years Term 10 years Term 15 years
+ Located in the industrial area of
+ The estate currently consists of 6 + Located in Kunshan, key logistics
Landshut, adjacent to the BMW plant
DHL facilities. 2 are currently under area in Greater Shanghai North East of Munich
construction with completion + GKPN will be developed across 2
+ The warehouse will provide logistics
expected in May 2016 phases, into 4 single storey
+ 3 warehouses to be developed on warehouses services to the plant
Description Site 3; Description + GAP have pre-committed to 100% of Description + The warehouse will have a direct
connection to the plant by means of
- DSV pre-committed to 8,275 sqm phase one; 40,267 sqm
an underground passage way for
- Major pharmaceutical company + Right of first refusal over Phase 2 – cars/trucks which will be used solely
agreed terms to 36,870 sqm 40,000 sqm by BMW
- 6,910 sqm spec
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Quarterly operational highlights - Manage

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• • Growth in external AUM to $28 billion driven by

• Growing development work book and revaluations

• • $1.5 billion of asset rotation (excluding urban renewal) enhancing the quality of portfolios

• Primary funding source of developments

• Further $1 billion under due diligence or contracted for sale

• • Major achievements completed during the third quarter include

• Partnership extension of 5 years for GADP with CPPIB

• First close of GJCP equity raising of $230 million

External AUM ($bn)

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External AUM by geography

• • $2.2 billion of debt refinancing in the managed Partnerships

• Average debt expiry of 4.6 years on new facilities

• Includes $245 million USPP, issuing 10,12 and 15 year tranches

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• Section 2 Brazil platform

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Centenary Distribution Centre, Australia
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Brazil platform

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100% OWNERSHIP OF OPERATING PLATFORM

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North
Northeast
Mid-west
Southeast
• Betim
• Rio de Janeiro
• São Paulo
South
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• • Goodman Group and WTorre split respective interests in the assets of the joint venture

• Goodman has 100% ownership of the operating and management platform

• 100% ownership of the 276,000 sqm of stabilised assets in Rio de Janeiro and Sao Paulo

• 100% ownership of the 62,000 sqm development pre-lease with large US retailer in Betim

• • The local management team will be retained by Goodman

• Proven capability over three years giving comfort about the prospects for future deal execution

STRATEGY

• • The strategy will remain unchanged

• Create and grow a platform with capital partners consistent with the global model and continue to focus on;

  • Selective development of new logistics facilities in key São Paulo and Rio de Janeiro markets, representing 72% of Brazil’s warehouse absorption

  • Targeted acquisition of well located stabilised properties or value add opportunities

  • Original capital commitment of R$340 million remains unchanged

• • Despite the Brazilian economy currently experiencing significant headwinds, Goodman remains committed to Brazil

• The fundamental premise that it is a tight and undersupplied market for modern warehouses

• Growing middle class population

• Structural changes, such as e-commerce are also occurring in Brazil

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Brazil platform

	Location		GLA sqm	Customer					Betim
	Duque de Caxias – Rio de Janeiro		73,768	2016 Olympic
					Committee
	Campo Grande– Rio	de Janeiro	145,392¹		Via Varejo
	Itupeva – São Paulo		84,497	Annixter, Bosch
	Betim – Minas Gerais		62,783	Major	US retailer
	Total		366,440
					Campo Grande				Duque de Caxias
		Itupeva

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1. Including expansion land

2. Appendices

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Centenary Distribution Centre, Australia
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Leasing¹

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Across the Group and Partnership platform:

• • 2.3 million sqm of leases during 9 months to 31 March 2016
• • Positive lease reversions of 3.5% per annum on new leasing deals
• • Occupancy maintained at 96%

Region	Leasing area (sqm)	Net annual rent (A$m)	Average lease term (years)
Australia	495,361	72.6	4.7
New Zealand	71,066	8.5	4.3
Greater China	655,793	79.3	3.8
Japan	12,086	2.0	5.0
UK	30,049	13.2	8.6
Europe	996,720	63.2	3.6
Total	2,261,075	238.8	4.6

1. Leasing for investment properties only and excludes developments for the 9 months to 31 March 2016

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Development

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Q3 FY16 Developments		Completions	Commencements	Commencements	Work in progress
Value ($m)		2,174		2,325	3,239
Area (m sqm)		1.9		2.0	2.3
Yield (%)		9.0		8.0	8.1
Pre-committed (%)		82		61	62
Weighted Average Lease Term (years)		9.0		8.8	10.3
Development for Third Parties or Partnerships (%)		77		63	74
Australia / New Zealand (%) of WIP		24		25	30
Asia (%) of WIP		23		21	26
Americas (%) of WIP		16		20	13
Europe (%) of WIP		37		34	30
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	123	861	984	88	76
Asia	148	694	842	82	53
Americas	-	430	430	100	14
Europe	585	398	983	41	78
Total	856	2,383	3,239	74	62

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Management platform

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	GAIP	GHKLP	GAP	GEP	GCLP	GMT1	GJCP2	ABPP	ABPP
Total assets	$6.5bn	$4.4bn	$3.8bn	$3.8bn	$2.6bn	$2.1bn	$1.7bn	$1.1bn
GMG co-investment	27.5%	20.0%	19.9%	20.4%	20.0%	20.8%3	20.0%3	43.1%
GMG co-investment	$1.2bn	$0.7bn	$0.6bn	$0.4bn	$0.5bn	$0.3bn3	$0.2bn3	$0.3bn
Number of properties	116	13	58	102	30	16	13	7
Occupancy	96%	99%	96%	98%	90%	96%	100%	92%
Weighted average lease expiry4	4.9 years	2.3 years	4.5 years	5.0 years	4.0 years	5.2 years	4.2 years	6.8 years
1. As at 30 September 20 ~~2~~ ~~As at 29 February 201~~	15 (as disclosed to th ~~6~~	e New Zealand stock	exchange on 11 Nove	mber 2015.

1. As at 30 September 2015 (as disclosed to the New Zealand stock exchange on 11 November 2015. ~~2. As at 29 February 2016~~ 3. As at 31 March 2016

2. WALE of leased portfolio to next break

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Global platform

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thank+ you

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