GOODMAN GROUP — Investor Presentation 2015

May 5, 2015

GMG Quarterly presentation 6 May 2015

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 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

• Section 2 Urban renewal

• Appendices

• Leasing - Development

• Management platform - Global platform

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• Section 1

Quarterly Operational Highlights

Centenary Distribution Centre, Australia

Quarterly operational highlights

• • Benefiting from globally diversified operating, development and property platform
• • Strong operating performance continuing into the second half of financial year 2015

• Activity levels providing certainty around FY2015 earnings and transparency into the growth outlook for 2016

• Strength in performance reflected in 96% overall occupancy levels across the Group and Partnerships

• • Asset rotation improving portfolio quality and recycling capital into new development activities driving higher returns

• Disposed of $1.4 billion financial year to date (excluding urban renewal sites) across the Group and Partnerships

• Despite asset sales program, AUM growing off the back of completed developments, rising valuations and currency movements

• • Development volumes and demand delivering short term growth

• Development workbook of $3 billion across 71 projects with a forecast yield on cost of 8.8%

• Active development book in all markets providing the best risk adjusted returns at this point of the property cycle

• • Capital partners supporting the global platform and fully integrated business model

• Focus on maximising property returns within a contemporary governance structure

• Capital partners continue to support the development workbook with 92% of all development completions pre-sold to Partnerships or third parties

• In New Zealand a NZ$500 million strategic Partnership between GMT and GIC is now complete

• Total assets under management (AUM) increased to $30 billion

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Banfield Distribution Centre, Laverton Vic, Australia - disposal

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Oakland, California, USA - disposal

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Quarterly operational highlights

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• • Urban renewal progressing in line with strategy with $0.7 billion of sites conditionally contracted

• Urban renewal precincts continuing to evolve. Currently 35,000 apartments in Sydney and Melbourne which is expected to increase meaningfully over time

• • Asset revaluations for the full year estimated to be $0.7 billion (includes $0.3 billion recognised in the first half). Urban renewal remains significant, contributing over 50%
• • Globally diversified platform providing opportunities

• Australia: demand from local and foreign investors remains high with Goodman recycling $320 million of property assets, year to date

• New Zealand: robust domestic economy driving a $300 million development workbook, 74% of which is pre-committed

• Greater China: leasing demand strong for both developments and stabilised properties from existing global customer base. Ability to provide recurring solutions

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Artist impression of Datacom, Viaduct Quarter, Auckland, New Zealand - development

• Japan: strong development contributions from completing developments while development pipeline being restocked

• Europe: maintained strong operational performance across the property portfolio, 96% occupancy, 83% retention, and greater than 500,000sqm development workbook

• UK: property capital markets ahead of the 2008 peak with Goodman disposing of $415 million year to date across the Partnerships and balance sheet. Selective speculative developments on the back of strong capital markets

• North America: active on all fronts, developments, leasing, planning, acquisitions and disposals. Strong leasing enquiry on current 220,000sqm development workbook

• Brazil: focused on pre-committed developments. Development work in progress of 275,000sqm in Sao Paulo and Rio de Janeiro

• • Reaffirm forecast FY2015 full year operating earnings per security of 37.2 cents, up 7% on FY2014

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Artist impression of Hanan Distribution Centre, Wuhan, China – 170,000sqn development

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Snapshot

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A$30.3 billion A$25.4 billion A$3.0 billion A$4.9 billion
total assets external assets Development work direct property
under under in progress investment portfolio
management management
+
13.3%¹ 13.4%¹ 15.4%¹ 12.7%¹
1,800 32 1,091
customers cities people
globally (approx) worldwide
433 19.5 million
properties under sqm of industrial and
management business space
under management
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1. % increases based on 30 June 2014 reported numbers

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Quarterly operational highlights - Own

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• • Total assets under management (AUM) increased to $30 billion

• Leased 2.5million sqm across the platform over the 9 months equating to $284 million of annual net property income

Total assets under management

• Occupancy maintained at 96%

• Retention rate of 75% and WALE of 4.3 years

• Positive reversions of 4.4% on new leasing deals

• • Leasing demand holding up which is reflected in the 96% overall occupancy

• Supply constrained Hong Kong market continues to deliver strong rental growth

• Asset recycling improving portfolio quality reflected in the 98% occupancy of ABPP

• • Asset recycling remains a key focus given strength of capital markets

• Improving quality of portfolio and quality of income being generated

• Disposed of $1.4 billion across the Group and Partnerships, in the financial year to date

• Asset sales currently being undertaken in excess of A$500 million

• • Globally demand and pricing of real estate assets remains strong on the back of the current low interest rate environment

Total AUM by type

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Quarterly operational highlights - Develop

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• • Globally diverse development workbook with globally diverse customers

Development WIP ($bn)

• • At this point in the cycle, development continuing to provide the best risk adjusted returns

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CAGR = 15%
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• • WIP at $3.0 billion across 71 projects in 10 countries with a forecast yield on cost of 8.8%
• • Development commencements of $1.9 billion for the 9 months to March 2015 with 70% pre-committed and 59% pre-sold to Partnerships or third parties
• • Development completions of $1.8 billion for the 9 months to March 2015 with 89% pre-committed and 92% pre-sold to Partnerships or third parties
• • Development demand being driven by both structural and cyclical changes

• Customers seeking efficiencies in their supply chain networks

• Supply constraints in the UK, US and Japan driving targeted speculative developments

• E-commerce globally including data centres

• Global platform providing cross border collaboration for customers

• • North America focus remains on developing existing landbank with an end value of $2 billion for long term investment
• • Development business providing opportunities to capital partners not available in the open market

Work in progress as at 31 March 2015

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Quarterly operational highlights - Manage

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• • Total assets under management increased to $30 billion
• • External assets under management of $25.4 billion

Total AUM ($bn)

• Development completions, revaluations and currency movements continue to be a key driver of AUM growth

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CAGR = 11%
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• • Partnerships remain active in terms of operational activity and structural initiatives

• Raised $1.7 billion of new third party equity financial year to date

• Completed $NZ500 million strategic Partnership between GIC and GMT

• • $3.8 billion of debt refinancing completed year to date across Partnerships

• Average 4.6 year terms increasing debt expiry

• Benefiting in overall margin reductions

• Partnerships continue to transition into the unsecured debt capital markets including the NZ$120 million USPP issued by GMT

• • Key focus remains on maximising Partnership returns

• Capital partners aligned to asset recycling strategy which is improving portfolio quality which in turn is improving quality of income generated

• Alignment is achieved through the contemporary fund management approach and independent governance structures

Total AUM by geography

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• Section 2

Urban Renewal

Centenary Distribution Centre, Australia

Australian urban renewal pipeline

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• • Deliberate strategy of ensuring returns are optimised for individual properties
• • $0.7 billion of sites conditionally contracted in Sydney
• • Proceeds from sales to be realised over the next 2 years

• Currently the Group’s lowest cost of capital and ensures it is self funded

• Long term capital for future opportunities for the Group and Partnerships

+ Urban renewal evolving in both Sydney and Melbourne

• Government policy continues to support medium to high density development in precincts with established infrastructure

• Goodman working collaboratively with planning authorities to maximise outcomes

• Additional precincts to emerge, both short and long term

• Current pipeline remains in excess of 35,000 apartments

• • Goodman benefiting from the relocation of customers resulting from the change in use of industrial sites

• New projects for Toll and Recall resulting from relocation from rezoned sites

• Customer relocation requirements to be executed by Goodman and a key factor in timing

• • Asset revaluations for the full year estimated to be $0.7 billion (includes $0.3 billion recognised in the first half)

• Urban renewal remains significant, contributing over 50%

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Australian urban renewal pipeline

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Entity	State	Suburb	Site Area (ha)	Potential GFA (sqm)	Approx # of apartments
Zoned residential sites
GMG	NSW	Erskineville	6.9	156,200	1,763¹
Partnership	NSW	Epping	1.3	65,000	809¹
GMG	NSW	Alexandria	2.1	52,500	622
Projects actively undergoing planning approval and consultation
GMG	NSW	Sydney Olympic Park	27.0	540,000	6,500
GMG / Partnership	VIC	Port Melbourne	28.9	576,000	8,000
Partnership	NSW	Entity State Suburb Property Site Area Potential GFA Approx No of Apartments Timing for Approvals ha sqm # Year GAIF NSW Epping Cambridge Business Park 1.3 65,000 770 2014 GMG NSW Homebush IBC Corporate Centre; Hombush Corporate Centre, Homebush BayIndustrial Estate 27.0 540,000 4,025 2014 GAIF VIC Fishermans Bend Citylink Business Park 1.1 81,000 1,350 2014 GTA VIC Fishermans Bend Port Melbourne Industrial Estate 13.8 309,600 4,128 2015 GMG VIC Fishermans Bend Port + Business Park A, B; Port Central Business Park, 14.0 315,000 4,439 2015 Short Term Macquarie Park	3.0	137,000	1,900
GTA NSW Macquarie Park Macquarie Views 1.9 64,855 770 2016 GMG NSW Alexandria Euston Business Park 2.1 52,500 622 2020 GMG NSW Erskineville Mitchell Industrial Estate 6.9 156,218 1,763 2016 GTA NSW Rosebery Harcourt Business Park 2.0 35,000 415 2015 GAIF NSW Rosebery Dunning Depot 2.0 34,615 410 2015 GMG VIC Clayton Clayton Business Park 31.0 532,478 6,870 2016 GTA NSW NSW Everglades Campus 1.1 31,770 376 2020 104.1 2,218,035 25,938 Medium Term Projects with medium term planning development outcomes
GMG	VIC	Clayton	31.0	532,500	6,870
Projects with longer term planning outcomes
GMG / Partnership	NSW	Various	35.8	713,500	8,661
			136.0	2,772,700	35,125

1. Revaluations either partially or fully reflected in GMG’s stated NTA of $3.15 as at 31 December 2014

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+ Appendices
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Centenary Distribution Centre, Australia
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Leasing¹

Across the Group and Funds platform:

• • Positive lease reversions of 4.4% on new leasing deals
• • Occupancy maintained at 96% with weighted average lease expiry of 4.3 years

	Region	Leasing area (sqm)	Net annual rent (A$m)	Average lease term (years)
Australia		898,034	112.6	4.4
New Zealand		112,225	18.1	6.2
Hong Kong		148,516	39.4	3.2
China		471,465	40.9	4.7
Japan		45,373	12.4	10.0
UK		141,848	15.5	6.6
Europe		733,833	45.1	3.0
Total		2,551,294	284.0	4.3

1. Leasing for investment properties only and excludes developments for the 9 months to 31 March 2015

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Development

Q3 FY15 Developments		Completions	Commencements		Work in progress
Value ($m)		1,760	1,881		3,013
Area (m sqm)		1.4	1.5		2.3
Yield (%)		8.8	8.7		8.8
Pre-committed (%)		89	70		62
Weighted Average Lease Term (years)		8.9	10.2		9.6
Development for Third Parties or Partnerships (%)		92	59		71
Australia / New Zealand (%) of WIP		28	30		27
Asia (%) of WIP		39	27		36
Americas (%) of WIP		-	15		18
Europe (%) of WIP		33	28		19
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	230	583	813	72	80
Asia	207	888	1,095	81	47
Americas	-	526	526	100	40
Europe	446	133	579	23	85
Total	883	2,130	3,013	71	62

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Management platform

	GAIF	GHKLF	GTA	GELF	**GMT1 **	GCLH	GJCF2	EPF	ABPP	ABPP
Total assets	$6.2bn	$3.8bn	$3.6bn	$3.4bn	$2.1bn	$1.8bn	$1.3bn	$1.2bn	$1.1bn
GMG co-investment	27.5%	20.0%	19.9%	20.4%	17.8%3	20.0%	22.7%	37.5%	43.1%
GMG co-investment	$1.0bn	$0.6bn	$0.5bn	$0.4bn	$0.2bn3	$0.3bn	$0.2bn	$0.3bn	$0.3bn
Number of properties	117	14	58	109	163	22	12	19	7
Occupancy	95%	99%	95%	98%	97%	95%	100%	100%	98%
Weighted average lease expiry4	5.7 years	2.5 years	4.1 years	4.8 years	5.5 years	4.1 years	3.8 years	7.0 years	5.7 years

1. As at 30 September 2014 (as disclosed to the New Zealand stock exchange on 12 November 2014) 2. As at 28 February 2015

2. As at 31 March 2015 4. WALE of leased portfolio to next break as at 31 March 2015

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Global platform

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Map to be updated
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thank+ you

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