GOODMAN GROUP — Interim / Quarterly Report 2020

Nov 11, 2019

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GOODMAN DELIVERING ON FOCUSED
STRATEGY
Q1 FY20 OPERATIONAL UPDATE
12 NOVEMBER 2019
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Goodman Group (Goodman or Group) has produced a strong first quarter as it continues to deploy capital through development in key urban locations.

The refinement and concentration of our real estate in these markets ensures our customers have access to high-quality facilities close to consumers.

“Structural changes continue to positively impact the industrial property sector. As consumers’ demands increase, our customers are responding by consistently seeking to create more efficient logistics networks.

KEY HIGHLIGHTS

for the three months to 30 September 2019

• • $48.2 billion total assets under management
• • 3.3% Partnership like for like NPI growth

Locations close to consumers, coupled with technology advancements, are helping to increase productivity and efficiency in the supply chain to help fulfil consumer expectations.

While the overall consumer market is subdued, online sales continue to grow, reaching 14.1%* of total global retail sales as at June 2019. The online share of the market has almost doubled over the last five years with estimates that it will grow to 22% by 2023.”

• • 98% occupancy across the Group and Partnerships
• • $4.2 billion of development work in progress
• • $0.9 billion of development commencements with 77% undertaken in Partnerships
• • Reaffirm forecast FY20 operating earnings per security of 56.3 cents, up 9% on FY19.

Greg Goodman, Group CEO

*Source: eMarketer

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1. Boston Consulting Group

OWN

The deliberate concentration of Goodman’s portfolio in key infill markets is continuing to produce positive results for the Group with rental growth and high occupancy levels in these supply-constrained markets.

• • Leased 686,132 sqm across the platform over the quarter equating to $93.5 million of rent p.a.
• • Partnership like-for-like NPI growth of 3.3%
• • Competing demand from e-commerce, data centres and urban renewal continues to put pressure on land use
• • Occupancy maintained at 98%
• • WALE of 4.7 years

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LEASING¹ - 12 months rolling

Region	Leasing area (sqm)	Net annual rent ($M)	Average lease term (years)
Australia / New Zealand	1,166,781	165.3	5.1
Asia	1,324,948	244.2	3.8
UK / Continental Europe	844,794	62.1	3.4
Total	3,336,522	471.6	4.2

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Goodman Business Park, Tokyo, Japan

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1. Leasing of stabilised portfolio, transactions for the 12 month period 1 Oct 2018 to 30 Sep 2019. Excludes development and acquired leases.

DEVELOP

We have continued to expand our development activity, growing work in progress (WIP) to $4.2 billion as demand continues to exceed supply in our markets.

The development pipeline remains strong. Our land acquisition strategy supporting this is a continuous process that has seen further additions.

Redevelopment of existing stabilised assets is also occurring in a number of markets. We believe that this activity will contribute to the future development pipeline, adding value to our existing land holdings.

• • Development WIP of $4.2 billion across 55 projects with a forecast yield on cost of 6.5%
• • Continued capital partnering of development projects with 81% of WIP undertaken within Partnerships

Development WIP

Q1 FY20 Developments

Completions

• • Development commencements of $0.9 billion with 70% pre-committed and 77% developed for Partnerships or third parties
• • Development completions of $0.8 billion with 85% pre-committed and 87% developed for Partnerships or third parties.

Work in progress as at 30 September 2019

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Commencements

Work in progress

Value ($b)	0.8	0.9	4.2
Area (m sqm)	0.5	0.5	1.7
Yield (%)	6.6	6.5	6.5
Pre-committed (%)	85	70	60
Weighted Average Lease Term (years)	11.7	15.5	11.6
Development for Third Parties or Partnerships (%)	87	77	81
Australia / New Zealand (%)	12	62	28
Asia (%)	8	25	39
Americas (%)	26	-	16
Europe (%)	54	13	17

Work in progress	On balance	Partnerships	Total end value	Partnerships	Pre committed
by region	sheet	end value	$m	% of total	% of total
	end value	$m
	$m
Australia / New Zealand	264	887	1,151	77	76
Asia	-	1,646	1,646	100	60
Americas	-	668	668	100	16
Europe	536	186	722	26	78
Total	800	3,387	4,187	81	60

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MANAGE

The positive performance of the Partnerships has continued. AUM is increasing through our demand-driven development workbook, strong underlying rental growth, continued high occupancy and tightening cap rates in most markets.

The capital position of the Partnerships remains robust with significant liquidity and low leverage. Overall demand for industrial real estate continues to support sector pricing.

• • AUM in Partnerships increased by $2 billion to $44.9 billion driven by:

• Strong revaluation gains

• Development completions and net acquisitions

• • Rental growth and cap rate compression is driving valuations
• • Strong performance of Partnerships to support ongoing performance fees

• Exchange rates

Assets Under Management

Total AUM by geography

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	GAIP	GHKLP	GEP	GCLP	GAP	GNAP	GJCP	GMT2	GUKP
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Total assets	$8.3bn	$8.1bn	$6.2bn	$4.8bn	$4.2bn	$4.1bn	$3.1bn	$2.6bn	$0.6bn
GMG co- investment	28.4%	20.1%	20.4%	20.0%	19.9%	55.0%	16.5%	21.4%	33.3%
GMG co- investment	$1.6bn	$1.2bn	$0.7bn	$0.7bn	$0.8bn	$2.2bn	$0.3bn	$0.4bn	$0.2bn
Number of properties	99	11	118	35	34	12	13	10	5
Occupancy1	96%	99%	99%	97%	99%	95%	100%	98%	100%
Weighted average lease expiry1	4.6 years	3.3 years	4.7 years	3.4 years	4.3 years	8.0 years	2.9 years	5.2 years	9.2 years

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1. Occupancy and WALE of stabilised portfolio 2. GMT: Results are for the financial year ended 31 March 2019 as reported to the New Zealand stock exchange

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Recent transactions

Market Mt Wellington, Sth Auckland, New Zealand Investment type Acquisition of brownfield development site (with holding income) Strategy / Status Strategically located industrial asset in a central Auckland infill location Currently leased to a grocery operator Long-term redevelopment site Location Access to population of 830,000 with purchasing power of $27 billion within a 20 minute drive time Site area 5.76 ha

Market Glendale, San Fernando Valley, Los Angeles, USA Investment type[Infill value-add and development site ] acquisition One of the largest contiguous industrial land parcels in North LA Strategy / Refurbish buildings 1-2 and develop Status adjoining land sites Strong enquiry from multiple customers for last mile / online fulfillment Prime infill location with direct access to Location the I-5 freeway, a major freeway that is integral to the supply chain of LA Site area 37 acres

One of the largest contiguous industrial land parcels in North LA Refurbish buildings 1-2 and develop adjoining land sites Strong enquiry from multiple customers for last mile / online fulfillment

Prime infill location with direct access to the I-5 freeway, a major freeway that is integral to the supply chain of LA

37 acres

Market Investment type Strategy / Status Location Site area

Smithfield, Inner West market, Sydney, Australia

Brownfield re-development of an existing stabilised asset

Demolish existing facility and develop a new multi-unit estate

Proposed design encompasses a mix of small to medium style warehouses of between 3,000 sqm to 7,000 sqm

Located within the established Smithfield industrial precinct which is approximately 24 kms west of Sydney’s CBD

~80,000 sqm

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OUTLOOK

The industry continues to see significant change with our customers re-evaluating supply chains and investing in their facilities for the long term.

Our global footprint will continue to evolve with our customers’ needs to concentrate our assets in infill and urban locations. Our assets service major cities and are in close proximity to consumers and retailers alike. This provides opportunities for our customers across multiple global markets with space for our customers to service their customers efficiently.

Our portfolio is benefitting from:

• • the growth in customer demand

• scarcity of land and available space in most of the markets in which we operate

• competition from alternate uses

This is creating a positive environment for our business, manifesting in strong rental growth, high occupancy and encouraging us to increase the volume of development. Structural trends should continue to attract capital investment to the sector, and the underlying strength of the asset class in our locations is likely to drive capital values. We believe this will support strong overall returns.

The Group has had a strong start to FY20 and it reaffirms forecast FY20 operating earnings per security of 56.3 cents, up 9% on FY19.

ABOUT GOODMAN

CONTACT

Goodman Group is an integrated property group with Media operations throughout Australia, New Zealand, Asia, Europe, Michelle Chaperon the United Kingdom, North America and Brazil. Goodman Head of Group Corporate Communications Group, comprised of the stapled entities Goodman Limited, + 612 9230 7400 Goodman Industrial Trust and Goodman Logistics (HK) Limited, is the largest industrial property group listed on the Investors Australian Securities Exchange and one of the largest listed James Inwood specialist investment managers of industrial property and Head of Group Stakeholder Relations business space globally. +612 9230 7400 Goodman’s global property expertise, integrated own+develop+manage customer service offering and Phillip Henderson significant investment management platform ensures it creates Group Director, Investor Relations innovative property solutions that meet the individual +612 9230 7400 requirements of its customers, while seeking to deliver longterm returns for investors. For more information: www.goodman.com

Michelle Chaperon Head of Group Corporate Communications + 612 9230 7400

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 2019 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 profit and operating EPS to present a clear view of the underlying profit from operations. Operating profit comprises profit attributable to Securityholders adjusted for profit on disposal of investment properties, net property valuations gains, non-property impairment losses, net gains/losses from the fair value movements on derivative financial instruments and unrealised fair value and foreign exchange movements on interest bearing liabilities and other non-cash adjustments or non-recurring items e.g. the share based payments expense associated with Goodman’s Long Term Incentive Plan (LTIP). The calculation of fair value requires estimates and assumptions which are continually evaluated and are based on historical experience and expectations of future events that are believed to be reasonable in the circumstances.

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.

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