GOODMAN GROUP — Interim / Quarterly Report 2019

May 14, 2019

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GOODMAN GUIDES TO
GROWTH IN DEVELOPMENTS
Q3 FY19 OPERATIONAL UPDATE
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Goodman Group (Goodman or Group) has delivered a strong operating performance for the quarter as customers continue to demand proximity to consumers in urban locations.

This has driven the growing development workbook and consistently strong property fundamentals across the Group’s global portfolio.

“The structural trends of urbanisation, rising consumerism and the ever-increasing need for convenience, continue unabated - driving demand for industrial property in key urban centres.

Customer demand is outstripping supply for urban logistics globally as our customers continue to invest in improving the efficiency of their supply chains. This is leading to consistently high occupancy, steady growth in rents and an increase in development work in progress.

The scale of these projects is growing over time, given the high-value nature of urban sites, and we are continuing to expand our landbank to secure quality locations for our customers for the long-term.”

KEY HIGHLIGHTS

for the nine months to 31 March 2019

• • $44.1 billion total assets under management[1]
• • 3.3% like for like NPI growth in our managed Partnerships[2]
• • 98% occupancy across the Group and Partnerships
• • $3.7 billion of development work in progress
• • $2.4 billion of development commencements with 83% undertaken in Partnerships
• • Reaffirm forecast FY19 operating earnings per security of 51.1 cents, up 9.5% on FY18.

– Greg Goodman, Group CEO

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1. As at 31 March 2019 2. 3.1% including directly held assets

OWN

The location of our portfolio remains a critical factor. It supports our customers’ evolving supply chains as they continue to invest in technology to improve their customer service and provide convenience for the end consumer.

This remains the primary driver for space and is being reflected in the strong underlying real estate fundamentals across our portfolio, with consistently high occupancy and steady growth in rents.

• • Leased 2,643,085 sqm across the platform over the period equating to $359 million of rent p.a
• • Like-for-like NPI growth of 3.3%[1]
• • Quality of the portfolio and the focus on infill markets is being reflected in rental growth and total returns in most markets.
• • Occupancy at 98%
• • WALE of 4.7 years

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LEASING[2]

Region	Leasing area (sqm)	Net annual rent ($M)	Average lease term (years)
Australia / New Zealand	964,946	131.8	4.5
Asia	987,013	176.7	3.3
UK / Continental Europe	691,126	50.1	2.9
Total	2,643,085	358.6	3.7

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Beijing Airport Logistics Centre, Beijing, China

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Goodman Commerce Centre, Eastvale, CaliforniaGoodman Hamburg III Logistics Centre, Hamburg, Germany

1. 3.1% including directly held assets

2. YTD Leasing of stabilised portfolio. Excludes development and acquired leases.

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DEVELOP

Our strategic focus on infill markets where demand is strongest, has seen WIP increase to $3.7 billion at 31 March. With several high-value projects in the pipeline soon to commence, we expect WIP to grow to over $4 billion by June 2019.

We continue to expand our land bank globally in key urban locations. These sites will provide high-quality opportunities for our customers in the future and extend the scale of developments and the pipeline in the medium to long-term.

High demand combined with lack of supply in most of our markets is giving us confidence to commence more projects on a speculative basis, with occupancy on completion remaining consistently strong.

• • Development WIP of $3.7 billion across 69 projects with a forecast yield on cost of 7.1% at 31 March 2019
• • Development commencements of $2.4 billion with 50% pre-committed and 83% developed for Partnerships or third parties[1]
• • Continued capital partnering of development projects with 80% of WIP undertaken within Partnerships or for third parties

Development WIP

• • Development completions of $2.5 billion with 81% leased and 83% developed for Partnerships or third parties.[1]

Work in progress as at 31 March 2019

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Q3 FY19 Developments

Completions

Commencements

Work in progress

Value ($b)		2.5		2.4	3.7
Area (m sqm)		1.4		1.2	2.0
Yield (%)		7.3		6.8	7.1
Pre-committed (%)		81		50	52
Weighted Average Lease Term (years)		8.8		10.6	8.8
Development for Third Parties or Partnerships (%)		83		83	80
Australia / New Zealand (%)	of WIP	27		26	18
Asia (%) of WIP		8		18	33
Americas (%) of WIP		25		28	21
Europe (%) of WIP		40		28	28
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	121	548	669	82	50
Asia	39	1,171	1,210	97	47
Americas	-	783	783	100	37
Europe	566	486	1,052	46	69
Total	726	2,988	3,714	80	52

1. For the nine months to 31 March 2019

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MANAGE

Strong property fundamentals in our markets and solid investment demand are continuing to create a positive environment for Partnership returns.

Given the strong outlook for development completions and portfolio returns, we expect AUM to exceed $45 billion at June 2019 with robust growth over the next few years. Combined with underlying Partnership performance, this should support solid growth in revenue.

• • AUM in Partnerships of $40.8 billion. Growth due to:

• revaluation gains

• development completions and net acquisitions

• exchange rates

• • AUM growth supported by strong development activity and revaluations, generating underlying base management fee revenue
• • Locational factors of the portfolio are contributing to outperformance and will support revenues

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	$8.1bn	$7.1bn	$5.8bn	$4.2bn	$4.1bn	$2.9bn	$2.9bn	$2.5bn	$0.6bn
GMG co- investment	27.9%	20.0%	20.4%	20.0%	19.9%	55.0%	16.5%	21.2%	33.3%
GMG co- investment	$1.5bn	$1.0bn	$0.7bn	$0.6bn	$0.7bn	$1.6bn	$0.3bn	$0.4bn	$0.2bn
Number of properties	100	11	118	33	33	11	13	12	4
Occupancy1	97%	100%	98%	98%	98%	93%	100%	98%	100%
Weighted average lease expiry1	4.8 years	2.9 years	4.8 years	3.5 years	4.2 years	8.3 years	3.3 years	5.5 years	9.2 years

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1. Occupancy and WALE of stabilised portfolio 2. As at 30 September 2018. WALE includes leased developments

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OUTLOOK

Given the quality and location of our portfolio we are seeing consistently high occupancy and steady rental growth.

Development activity is currently strong and growing. Given the high-quality locations of our landbank and increasing scale of development projects, we expect WIP to approach $5 billion in FY20.

Combined with ongoing investment demand, we anticipate strong Partnership returns and growth in AUM beyond $45 billion by June 2019.

The Group is focused on incrementally expanding our land bank through strategic acquisitions in the high barrier to entry markets where our portfolio is concentrated. This type of site procurement takes patient capital and provides us with diversified opportunities for the future.

The Group expects that the portfolio will continue to perform strongly and it reaffirms forecast FY19 operating earnings per security of 51.1 cents, up 9.5% on FY18, and distribution per security of 30 cents, up 7% on FY18.

ABOUT GOODMAN

CONTACT

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

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 Interim Financial Report for the half year ended 31 December 2018, the Financial Report for the year ended 30 June 2018 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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