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GOODMAN GROUP Investor Presentation 2016

Jun 15, 2016

64998_rns_2016-06-15_5a70cdd9-8acb-4273-8689-2a213e1fc426.pdf

Investor Presentation

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Goodman operational and strategy update

Date 16 June 2016 Release Immediate

Goodman Group (Goodman or Group) will host a strategy and operational update for investors and analysts today, which will provide updates from each of the Group’s operating regions. The attached presentation forms an integral part of the briefing. It highlights how Goodman is benefitting from the ongoing investor and customer demand for quality industrial property, by focusing on long-term, through-the-cycle planning; asset rotation to enhance portfolio and income quality; and securing land and infill sites in prime logistics locations.

Key points from the presentation include:

    • Global expertise and a long-term strategic focus has positioned Goodman as a leader in its sector.
    • Early recognition and understanding of the structural changes transforming the industrial property sector globally, including capitalising on the significant opportunities provided by the rapid growth in ecommerce.
    • Targeted site selection in and around key gateway cities globally is driving the long-term value of the Group’s assets. This is demonstrated by the higher and better use opportunities emerging through its urban renewal activities and being realised through growth in net tangible assets.
    • Targeted asset rotation remains a focus in the short term, taking advantage of ongoing strong capital pricing and providing funding for Goodman’s development business.
    • Development is providing the best risk adjusted returns at this point in the cycle with a focus on maintaining consistent volumes and more development being undertaken in the Partnerships.
    • Assets under management will grow organically over the medium term, predominantly through development completions, with $10 billion of undrawn debt and equity available for potential counter cyclical investment opportunities.
    • Gearing reducing toward 10%, reflecting the Group’s lower capital requirements as a result of proceeds from urban renewal transactions and asset sales in the Partnerships.
    • Development and management activities remain key drivers of sustainable growth, balanced by maintaining a sound financial position and gearing levels.

Goodman reaffirms its upwardly revised FY2016 full year operating earning per security of 40.0 cents, up 7.5% on FY2015. Its operating platform and strategy have ensured that the Group is in a competitively and financially strong position for the future, with the ability to deliver sustainable earnings per security growth.

Goodman Group

Goodman Limited | ABN 69 000 123 071 Goodman Funds Management Limited | ABN 48 067 796 641 | AFSL Number 223621 as responsible entity of Goodman Industrial Trust | ARSN 091213 839 Level 17, 60 Castlereagh Street, Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444

Goodman Logistics (HK) Limited | Company No. 1700359 | ARBN 155 911 149 | a Hong Kong company with limited liability Suite 901, Three Pacific Place, 1 Queen’s Road East, Hong Kong | Tel +852 2249 3100 | Fax +852 2525 2070

[email protected] | www.goodman.com

  • Ends -

For further information, please contact; Greg Goodman Group Chief Executive Officer Tel: + 612 9230 7400

About Goodman

Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, Europe, the United Kingdom, North America and Brazil. Goodman Group, comprised of the stapled entities Goodman Limited and Goodman Industrial Trust, 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 business space globally.

Goodman’s global property expertise, integrated own+develop+manage customer service offering and significant investment management platform ensures it creates innovative property solutions that meet the individual requirements of its customers, while seeking to deliver sustainable long-term returns for its Partners.

For more information: www.goodman.com

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Goodman Group Investor Update Operational and Strategy Update11 June 2015 16 June 2016

Important notice and disclaimer

    • 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.

2

Contents

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  • Section 1 Group overview + Section 2 Regional updates

    • Section 3
    • Section 4
    • Section 5

Funds management

Customer service model

  • Airgate Business Park

Section 1+ Group overview

Nick Vrondas, Group CFO

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Group overview

    • “Lower for Longer” - Low inflation and low growth environment across the majority of global platform + Significant liquidity in capital markets driven by government stimulus packages and low interest rate environment, albeit increasing credit margins

Consistent themes and messaging

    • Demand for “yield assets” is continuing to drive capital values in the short term + Development and management activities remain key drivers of growth
    • At this point in the cycle, development provides the best risk adjusted returns

Development provides the best “riskadjusted” returns

    • Development focused on core markets in “gateway cities” with targeted land replenishment in those markets
    • Consistent development volumes with more developments in Partnerships freeing up capital and producing a higher ROA
    • Current 57% active (development / management) versus 43% passive (investment) earnings mix to widen

AUM growth

    • AUM to grow organically, driven by development completions and partly revaluations + Currently A$10bn in undrawn debt and equity
    • Significant investment capacity if counter cyclical markets emerge – material increase in AUM which will re-balance earnings toward investment and management

Capital investment focused on North America

    • Further capital rotation across the global platform + Most geographies to remain capital neutral + Largest inflow assumed from the UK and Australia with investment into North America + Capital limits progressively being placed on the level of Partnership co-investment by GMG in our larger established Partnerships in Australia, Europe and Japan
    • Capital pricing to remain strong in the short term

Asset rotation

    • Asset rotation across the management platform to enhance quality of all portfolios + Occurring primarily in next 12 months as nearing the end of targeted sales + Reduction in direct development holdings in exchange for co-investment in Partnerships

5

Group overview

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+ Urban renewal sales ahead of original targets and cash realisation has accelerated
A$2.1bn of urban + Anticipated to transact further sites in the short term
renewal transacted + Potential pipeline of 35,000 units across the Australian portfolio maintained
+ Key focus on planning and rezoning of future precincts
+ Urban renewal proceeds and asset sales in the Partnerships reduce GMG capital needs
Capital management +
+		 Suspend the DRP from June 2016
Headline gearing trending to 10% given operational leverage
+ Capital management initiatives remain available to derive medium to longer-term growth targets
Sustainable eps
growth		 +
+		 Reaffirming upwardly revised forecast FY2016 full year operating earnings per security of 40.0 cents, up
7.5% on FY2015
Group’s resources and capital plan are calibrated to continue to target 6% growth
+ Support Goodman as development pipeline provides access to “off market” projects rather than acquiring
from market
Capital Partners +
+		 Competitive base management fees providing access to a dedicated full time management team
Lead the sector in contemporary governance structures “majority investor board representation”
+ Active management at all levels: property, debt and equity
+ Structural decisions based on optimising alignment of interests

6

Section 2+ Regional updates

Centenary Distribution Centre, Australia

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Australia – Jason Little, General Manager

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9%
1%
1%
75%
14%
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Economic backdrop

Snapshot¹
Assets under management A$13.9bn
Stabilised properties 205
Investment GLA (sqm) 6.9m
Occupancy 96%
Development WIP A$719m
Pre-committed development 79%
Managed Partnerships 4
People 299
    • Forecast GDP growth of 2.6% p.a. on average between 2017-2020
    • Low interest rate and inflation environment expected to continue in the medium term
    • Key driver of industrial demand is consumption expenditure - consumption goods imports are expected to underpin total import levels

Market fundamentals

    • The leasing market is reflecting positive supply / demand fundamentals, with new supply in CY15 25% below the long term average
    • A slight uptick in demand expected to be balanced by a modest increase in supply for FY17
    • Leasing decisions continue to be around driving cost and operational efficiencies

  • As at 31 March 2016

    • E-commerce continues to be a key driver of demand, primarily through 3PLs

Source: RBA, ABS, Deloitte Access Economics, JLL

Key operating statistics

FY13 FY14 FY15 Q3
FY16
Development
WIP (m sqm)		 0.4 0.3 0.3 0.5
Leasing (m sqm) 1.1 1.2 1.4 0.5
WALE (years) 5.0 5.1 5.0 4.7
Occupancy (%) 97 96 96 96
Number of
properties		 197 202 204 205

Top ten customers (by NPI)

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Australian industrial supply

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Source: JLL
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8

Australia – Jason Little, General Manager

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Development
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Leasing
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Port Botany Industrial Estate, Banksmeadow

Southgate Industrial Estate, Banksmeadow

Customer Toll and Jewel Fine Foods
Lettable area 37,630 sqm (plus 4,835 sqm hard stand area)
Site area 66,211 sqm
Contracted owner GAIP
Customer Linfox
Lettable area 44,479 sqm
Site area 95,900 sqm
Contracted owner GAP
    • Linfox provide third party logistics for Kellogg’s from this property
    • The property accommodates the warehousing for Kellogg’s manufacturing plant that is located opposite
    • Due to the location and 24hr road

  • Description connectivity, it gives Kellogg’s flexibility with distribution of their products

    • BTS facility leased to Toll for 15 years to satisfy their Priority parcel delivery business
    • Facility leased to Jewel Fine Foods for 12

  • Description years + Practical completion expected in July 2016

    • An extension of the logistics contract was entered into and resulted in the lease term being extended for a further ten years

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Urban renewal
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Carter Street Precinct, Homebush

Current zoning IN2 Industrial
Proposed zoning R4 high density residential + B2 town centre
(retail and commercial)
6,500 lots, FSR of 2:1
Site area 27.0 ha
Ownership GMG
Description + Three staged estate forms part of
Goodman's holding within the Carter Street
precinct
+ In December 2012, the NSW Department
of Planning endorsed Carter Street as a
future Urban Activation Precinct. This is
due to the site’s proximity to Sydney
Olympic Park and its associated amenity
+ The three estates were conditionally
contracted for sale for a total consideration
of A$1.1bn. Of this, A$0.3bn has settled

9

- New Zealand John Dakin, CEO

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Economic backdrop

    • The domestic economy is adjusting to the continued decline in export dairy prices, which has been partly offset by a fall in the exchange rate
    • Other export sectors remain strong and tourism is booming, with immigration also at record highs
    • Economic growth of around 2-3% p.a. annum is now anticipated over the short to medium term
    • The reserve bank cut the official cash rate 25bps to 2.25% in March 2016
    • Resulting low interest rates are fuelling investment demand with record prices being paid for commercial property assets

Market fundamentals

    • Steady economic growth over the last 12 months has continued to drive the Auckland industrial market with overall vacancy falling 20bps to just 2.7%
    • Strong occupier demand is also supporting new development activity with 150,000 sqm of net absorption in the Auckland industrial market in FY16
96%
4%		 Snapshot¹
Assets under management A$2.4bn
Stabilised properties 16
Investment GLA (sqm) 1.1m
Occupancy 96%
Development WIP A$265m
Pre-committed development 67%
Managed Partnerships 2
People 64 
  1. As at 31 March 2016
    • Auckland’s suburban office market contrasts with the industrial market. New supply has not been absorbed and rising vacancy is putting downward pressure on market rentals

  • Source: Stats NZ

Key operating statistics

FY13 FY14 FY15 Q3
FY16
Development
WIP (m sqm)		 0.1 0.1 0.1 0.1
Leasing (m sqm) 0.14 0.16 0.09 0.07
WALE (years) 5.2 5.5 5.3 5.6
Occupancy (%) 94 98 96 96
Number of
properties		 22 19 16 16

Top ten customers (by NPI)

New Zealand industrial supply

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Source: JLL, CBRE

10

- New Zealand John Dakin, CEO

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Value Add
Tamaki Estate, Panmure, Auckland
Asset type Auckland Industrial
Lettable area 20,400 sqm
Site area 5.8 hectares
Ownership GMT
+ Acquired for NZ$30.3 million, 6% yield after
leasing initiatives
+ Secondary quality industrial facilities
+ Strategically located in Auckland's South
Description East, adjoining rail and new road
infrastructure
+ Zoned for high density mixed use under
proposed Auckland Unitary Plan
+ Further master planning is expected to
unlock significant value for GMT
Asset type
Auckland Industrial
Lettable area
20,400 sqm
Site area
5.8 hectares
Ownership
GMT
Description
+ Acquired for NZ$30.3 million, 6% yield after
leasing initiatives
+ Secondary quality industrial facilities
+ Strategically located in Auckland's South
East, adjoining rail and new road
infrastructure
+ Zoned for high density mixed use under
proposed Auckland Unitary Plan
+ Further master planning is expected to
unlock significant value for GMT
Value Add
Tamaki Estate, Panmure, Auckland		 Asset type
Auckland Industrial
Lettable area
10,415 sqm
Site area
107 hectares (entire estate)
Ownership
GMT
Description
+ Two adjoining warehouse developments at
Highbrook Business Park
+ Undertaken on an uncommitted basis, the
two developments were leased to
customers, Synnex and GWA CAROMA
prior to completion in March 2016
+ Valued at NZ$23.5 million, the
developments achieved a fair value gain of
18.7% on a blended cap rate of 5.66%
Development
Highbrook Business Park, Auckland		 Asset type
VXV20 - Auckland Office
Lettable area
14,085 sqm
Site Area
4,218 sqm
Ownership
Wynyard Precinct Holdings Joint Venture
Description
+ Heads of agreement signed with Auckland
Transport following expiry of Vodafone
tenancy in 2017
+ Deal remains subject to finalisation and
certain approvals but is expected to be for a
9 year term
+ Auckland Transport is responsible for the
regions transport services (excl. state
highways). From roads and footpaths, to
cycling, parking and public transport
Leasing
Viaduct Precinct, Auckland
11

11

- Japan Paul McGarry, CEO

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Economic backdrop

    • Forecast GDP growth of 0.4% p.a. from 2016-2020
    • Negative interest environment is expected to continue for the near-to medium term
    • Key drivers for industrial demand will continue to be structural modernisation to improve efficiency and increasing e-commerce activities

Market fundamentals

    • Continuing severe shortages of labor
    • Land prices and construction costs continuing to rise, whilst rents remain flat, placing pressure on development margins
    • Strong investment demand for high quality stabilised logistics properties mainly from domestic institutional buyers seeking yield in a negative interest rate environment

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40%
8%
45%
7%
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Snapshot¹
Assets under management A$1.7bn
Stabilised properties 18
Investment GLA (sqm) 0.6m
Occupancy 100%
Development WIP A$381m
Pre-committed development 56%
Managed Partnerships 2
People 54
  1. As at 31 March 2016

Source: IMF as of April 2016

Key operating statistics

FY13 FY14 FY15 Q3
FY16
Development
WIP (m sqm)		 0.2 0.2 0.1 0.2
Leasing (m sqm) 0.06 0.07 0.06 0.01
WALE (years) 2.5 3.5 4.3 4.1
Occupancy (%) 99 100 100 100
Number of
properties		 13 17 17 18

Top ten customers (by NPI)

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Greater Tokyo and Osaka industrial supply

12

Source: CBRE

- Japan Paul McGarry, CEO

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Stabilised
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Development Goodman Business Park, Stage 2, Chiba

Goodman Business Park, Stage 1, Chiba

Asset type Multi-tenant industrial
Lettable area 116,000 sqm
Site area 59,000 sqm
Contracted owner Goodman Japan Development
Partnership
Description +
New master planned logistics and
business park in Chiba
+
Phase 1 of a multi stage
development
+
Excellent connectivity to greater
Tokyo and major roads
+
4-storey multi-customer logistics
facility
+
5-7 year lease terms
+
100% leased
Asset type Multi-tenant industrial
Lettable area 125,000 sqm
Site area 64,000 sqm
Contracted owner Goodman Japan Development
Partnership
Description + Planned completion in early 2018
+ 125,000 sqm of modern, multi-
customer logistics space
+ 4-stories with truck berths on all floors
accessed by separate up and down
ramps
+ Exceptional high level of finish and
employee amenity
+ Super high voltage electricity available

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Development Goodman Akamatsudai, Kobe

Asset type Built to suit
Lettable area 51,000 sqm
Site area 59,000 sqm
Contracted owner Goodman Japan Development
Partnership
Description + Planned completion in mid-2017
+ 100% pre leased to Japanese third
party logistics provider
+ 4-stories, steel frame
+ Location provides good access to
Osaka and Kobe
+ Located within the Kobe Research
Park Akamatsudai with 24/7 operation
flexibility

13

- Greater China Phil Pearce, Managing Director

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Hong Kong economic backdrop

    • Hong Kong GDP is forecast to grow between 1-2% p.a. in 2016, down from 2.4% p.a. in 2015
    • Declining tourist arrivals continue to negatively impact retail sales, especially sales of luxury goods
    • Stimulus package of HK$38.8 billion in short-term relief measures, together with other initiatives announced by the government is expected to support the economy
    • Continued high employment rate continues to provide support to local consumption

Market fundamentals

    • Reduction in industrial stock and limited supply of warehouse space continue to provide favourable supply fundamentals
    • Hong Kong remains an important regional logistics hub given its strategic location and mature logistics industry
    • The macro-economic headwinds will likely lead to a softening in demand

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9%
5%
21%
1%
Hong Kong 64%
South
West
East
North
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China economic backdrop

    • The Chinese government has set the target GDP growth rate in 2016 to a range of 6.57.0% p.a., in line with market consensus
    • Accelerated pace of fiscal and monetary policy easing being implemented to promote stable growth
    • Domestic consumption continues to expand as the major growth driver in China

Market fundamentals

    • Favourable demand fundamentals, including urbanisation, domestic consumption, and e- commerce growth underpin growth of the logistics sector
    • Increasing supply in certain sub-markets is placing some pressure on rental growth potential
    • Global and local investors continue to invest into the sector, driving down yields

Source: WSJ, National Peoples Congress, HK TDC Research

Hong Kong industrial supply

Top ten customers (by NPI)

Snapshot¹
Assets under management A$7.3bn
Stabilised properties 43
Investment GLA (sqm) 3.8m
Occupancy 96%
Development WIP A$461m
Pre-committed development 50%
Managed Partnerships 3
People 381
  1. As at 31 March 2016

Source: Savills; HK Rating and Valuations Department

14

- Greater China Phil Pearce, Managing Director

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Development
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Huiyang Industrial Park P1 and 2, Guangdong Huiyang Industrial Park P1 and 2, Guangdong
Customer JD.com
Lettable area 106,900 sqm
Site area 263,330 sqm
Contracted owner GCLP
Description + A 5 year pre-lease commitment secured
with JD.com over 106,900 sqm GLA of the
estate
+ Practical completion in 2 phases - October
2016 and February 2017
+ Once fully developed the park will provide a
total GFA of 232,062 sqm with an expected
end value of circa US$160 million

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Development Divestment
YTO Best
YTO
Chongqing Airport Logistics Park P5, Chongqing Portfolio in Tianjin and Nanjing
Customer YTO Express and Best Logistics Wuqing E-Commerce Park, Tianjin
Properties Nanjing Airport Logistics Centre, Nanjing
Lishui Distribution Centre, Nanjing
YTO Express: 23,759 sqm
Lettable area
Best Logistics: 18,885 sqm Lettable area Total portfolio: 244,576 sqm
Site area 88,050 sqm Site area Total portfolio: 476,646 sqm
Contracted owner GCLP Contracted owner GCLP and GMG
+ Pre-leases for YTO Express and Best
+ The properties are considered to be value
Logistics for 5 and 8 years respectively
maximised opportunities and are in
+ Strong leasing success achieved at the
locations where assets could be replaced
estate driven by robust demand and lack of
via new development activities
supply of quality logistics space in
Description Chongqing Description + Portfolio divested at an initial passing yield
of 6.1%
+ Once fully completed the Park will provide
+ Divested to a leading global real estate
282,551 sqm of prime logistics space, with
an expected end value of US$200 million private equity firm
+ Goodman’s flagship development in + Capital to be recycled into development
Chongqing
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15

- Europe Philippe Van der Beken, Managing Director

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Economic backdrop

    • Eurozone forecast annual GDP growth of 1.6% p.a. for 2016 and 1.8% p.a. for 2017
    • Low interest rate and inflation environment expected to continue in the medium term

Market fundamentals

    • Key drivers of industrial demand are increasing consumer spending, occupiers reorganising distribution channels and a growing e-commerce sector
    • Steadily increasing demand over the last 4 years has substantially resorbed vacancy levels in the market and is driving increased supply. Limited speculative activity
    • Rents remain stable in real terms
    • Current investment volumes are historically high, on the back of attractive yield spreads with 10yr government bonds (500-600bps)
51%
17%
13%
7%
4%
3%
3%
1%
1%		 Snapshot¹
Assets under management A$5.2bn
Stabilised properties 133
Investment GLA (sqm) 5.2m
Occupancy 98%
Development WIP A$645m
Pre-committed development 89%
Managed Partnerships 3
People 179
  1. As at 31 March 2016

Source: European Commission, European Economic Forecast Spring 2016

Key operating statistics

FY13 FY14 FY15 Q3
FY16
Development
WIP (m sqm)		 0.6 0.6 0.5 0.6
Leasing (m sqm) 1.0 0.8 0.9 1.0
WALE (years) 4.5 5.0 4.9 5.3
Occupancy (%) 95 95 96 98
Number of
properties		 123 137 129 133

Top ten customers (by NPI)

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European industrial supply

16

Source: JLL

- Europe Philippe Van der Beken, Managing Director

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Development Development Leasing
Signed
France, Brie and Le Mans - Carrefour Germany, Hamburg – Interlink Amazon - Leipzig, Saran and Montélimar
Asset type FY16: 2 warehouses (dry and chilled storage) Lettable area 38,489 sqm Asset type 3 logistics warehouses
FY16: 103,000 sqm Customers Airbus, Diehl and Stute Lettable area 184,762 sqm (3 properties)
Lettable area FY15: 124,000 sqm
FY13: 32,000 sqm Contracted owner GEP Rent pa €7.1m (A$ 10.7m) (3 properties)
Contracted owner GEP/Carrefour
+ In 2013 Goodman secured a plot in the Contracted owner GEP
heart of the port of Hamburg, the second
largest container port in Europe
+ Carrefour is the world’s second largest + The three phases of the speculative + During the last 4 yers Amazon EU
retailer and the number 1 in Europe development have all been leased and the witnessed fast growth, by 2017 they require
+ First project signed with Carrefour in complete build out will have taken less than an additional 700k sqm
Marseille in 2012 Description 3.5 years + Saran (69,000 sqm), Montélimar (36,000
Description + The developments are part of a redesign of + In terms of rental levels, WALE and vacancy Description sqm) and Leipzig (79,000 sqm) were
the supply chain (project “Caravelle”) of the project exceeded the assumptions at Amazon’s first FC’s in France and Germany
+ So far 259,000 sqm have been signed, underwriting + The leases had a break or termination
another 208,000 sqm are currently in + Altenwerbe – DSV (GEP owned) is located option coming up in 2017
discussion in the neighborhood and still offers 12,000 + Amazon signed a 10 year lease renewal at
sqm development potential passing rent across all 3 sites
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17

- United Kingdom

Economic backdrop

    • Brexit vote 23 June
    • 2016 Forecast GDP of 2%
    • Inflation of 0.3%
    • Unemployment of 5.1%
    • Consumer expenditure largest driver of GDP growth

Market fundamentals; Industrial

    • Supply at 55% of 10 year average
    • Rental growth in prime locations
    • E-Commerce key driver – retailers, direct and 3PLs

Market fundamentals; Business Parks

    • SE office supply at 5%-30% below 10 year average
    • Constrained Grade A availability in Birmingham and Bristol markets
    • Rents in most SE and regional cities above 2008 peak
    • Limited development pipeline

Source: UK Office for National Statistics

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Jim Johnston, MD Business Parks Charles Crossland, MD Logistics

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South East
Midlands
North
6%
24%
70%
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Snapshot¹
Assets under management
Stabilised properties		 A$1.9bn
18
Investment GLA (sqm) 0.3m
Occupancy
Development WIP		 90%
A$338m
Pre-committed development
Managed Partnerships
People		 57%
3
73
  1. As at 31 March 2016

Key operating statistics

FY13 FY14 FY15 Q3
FY16
Development
WIP (m sqm)		 0.02 0.05 0.20 0.12
Leasing (m sqm) 0.06 0.07 0.15 0.03
WALE (years) 4.5 4.5 5.1 5.4
Occupancy (%) 90 89 95 90
Number of
properties		 37 32 13 18

Top ten customers (by NPI)

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United Kingdom industrial supply

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Source: CBRE
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- United Kingdom

Jim Johnston, MD Business Parks Charles Crossland, MD Logistics

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Leasing Development
Northampton Commercial Park, Northampton Centrum Logistics Park, Burton on Trent
Customer Clipper Logistics Ltd Customer Palletforce
Lettable area 28,318 sqm Lettable area 24,000 sqm
Site area 21.2 acres Site area 14.48 acres
Contracted owner GUKP Contracted owner GMG
+ Speculative development of 2 units totalling
+ Build to suit facility for Palletforce on a 15
43,198 sqm
year lease
+ Practical completion reached in March 2016
+ Sectional completion in early April 2017,
+ Unit A (28,318 sqm) let to Clipper Logistics
Description Description practical completion set for June 2017
on a 10 year lease on PC
+ Strategy to sell during construction
+ Good enquiry on Unit B
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Development
Eastside Locks, Birmingham
Asset type Mixed use development
Lettable area 83,600 sqm
Site area 7.7 acres
Contracted owner GMG
+ Land drawdown agreement with
Birmingham City
+ Phase 1 office development prelet to
Birmingham City University
Description + Capital receipts from student housing land
sale recycled to complete 70% infrastructure
+ Phase 2 office development expected to
commence in 2H 2016
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19

- North America Brandon Birtcher, CEO

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Economic backdrop

    • Key industrial demand drivers of industrial production, trade, retail sales, and consumer product inventories have staged a strong recovery
    • US economy continues steady growth with 2.4% p.a. recorded in 2015
    • Consumption represents nearly 70% of GDP
    • E-commerce continues to be a key structural driver, with sales growing at over 14%
    • Seaports account for 99% of US international trade by weight and 64% by value

Market fundamentals

    • Inland Empire West: 12 month rent growth totalled 10.4%; vacancy equalled 2.8%; 12 month net absorption was 14.5m sqft
    • Los Angeles: 12 months rent growth totalled 12.9%; vacancy equalled 1.8%; 12 month net absorption was 12.2m sqft
    • New Jersey Exit 10-15: 12 months rent growth totalled 7.5%; vacancy equalled 7.0%; 12 month net absorption was 3.4m sqft

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9%
90%
1%
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    • Central Pennsylvania / Lehigh Valley: 12 months rent growth totalled 5.7%; vacancy equaled 6.3%; 12 month net absorption was 7.6m sqft

Source: US Bureau of Economic Analysis

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New supply and net absorption
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Major customers (by NPI)
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Snapshot¹
Assets under management2 A$0.8bn
Properties² 12
Investment GLA (sqm)2 0.4m
Occupancy2 96%
Development WIP A$378m
Pre-committed development 3%
Managed Partnerships 1
People 38

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Source: CBRE
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  1. As at 31 March 2016

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  1. As at 31 May 2016

- North America Brandon Birtcher, CEO

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Leasing
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Value add
Goodman Logistics Center SFS II
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Goodman Commerce Center Eastvale

Location Eastvale, CA – Inland Empire West Customer Amazon Lettable area Bldg B – 1,033,192 sqft Site area 43.3 acres

  • Location Santa Fe Springs, CA – Los Angeles Customer Safeway Inc. Lettable area 6 buildings - 989,809 sqft Site area 78.2 acres + Seller leased back property for 24 months post settlement

    • Provides a rare opportunity to acquire a substantial, strategic value add portfolio located in the prime infill Los Angeles industrial market

  • Description + The site currently provides flexibility for ambient, climate-controlled, and freezer space totalling 1m sqft plus 18 acres of trailer parking area

    • Offers long term development upside via rezoning

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+ Amazon executed a ten-year lease for
100% of the building commencing July 2016
+ Vertical construction on adjacent 1m sqft
industrial building to commence shortly
Description + Estate consists of 205.4 acres including
other uses such as retail, business park,
and hospital / medical office
+ Leasing interest and activity has been
strong for all product types
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Redevelopment
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Goodman Logistics Center El Monte

  • Lettable area El Monte, CA – Los Angeles Customer Safeway Inc. Lettable area 2 Buildings – 1,215,340 sqft Site area 55.9 acres + Seller leased back property for 24 months post settlement

    • Provides a rare opportunity to acquire a substantial, strategic redevelopment site located in the prime infill Los Angeles

  • Description industrial market

    • Upon leaseback expiry, redevelopment will commence to deliver two Class A distribution facilities; 653,100 sqft and 562,240 sqft by 2019

21

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Brazil – Cesar Nasser, CEO

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5%
17%
78%
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Economic backdrop

Snapshot¹
Assets under management A$0.2bn
Stabilised properties 3
Investment GLA (sqm) 0.3m
Occupancy 93%
Development WIP A$52m
Pre-committed development 100%
Managed Partnerships n/a
People 28
    • GDP forecast growth of 1.9% p.a. on average
    • Interest rates (Selic Index) are expected to decrease from 13.7% p.a. in 2017 to 9.4% p.a.
    • Inflation rates (IPCA Index) should stabilise at 4.5% p.a. after reaching 7% p.a. at the end of 2016

Market fundamentals

    • Gross absorption is expected to decrease by the end of 2016, reaching 834,000 sqm
    • Greater part of recent demand is due to the relocation of companies to newer and more efficient facilities, which offer similar lease prices compared with the old facilities (“flight to quality”)
    • Over the past two years supply has been higher than demand, leading to a decrease on the average asking lease price and higher vacancy rates

  • As at 31 March 2016

Source: Itau BBA Bank, Colliers

Key operating statistics

FY14 FY15 Q3 FY16
Development WIP 0.06 0.28 0.06
Leasing (m sqm) n/a n/a 0.3¹
WALE (years) n/a n/a 9.1
Occupancy (%) n/a n/a 93%
Number of
properties		 3 4 4

Major customers (by NPI)

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Brazilian Class A inventory and gross absorption

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  1. Includes development leasing

Source: Colliers

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Brazil - Cesar Nasser, CEO

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Development Leasing Stabilised
Goodman Betim – Minas Gerais Goodman Caxias – Rio de Janeiro Goodman Campo Grande – Rio de Janeiro
Customer Large US retailer Customer Brazilian Post Office / Rio Olympic Committee Customer Via Varejo
Lettable area 62,597 sqm Lettable area 63,000 sqm Lettable area 145,000 sqm
Site area 129,288 sqm Site area 111,000 sqm Site area 291,000 sqm
Contracted owner GMG Contracted owner GMG Contracted owner GMG
+ Built to suit cross dock and sort facility + Built to suit facility delivered to Via Varejo,
+ Pre-lease to Rio de Janeiro Olympic
currently under construction to Walmart with a 15 year lease term
Committee, with a 2 year lease term
Brazil, with a 12 year lease term + Via Varejo represents Casas Bahia and
Description + The facility will support the Walmart e- Description + After the Olympic games in Rio, the Description Ponto Frio, two of the biggest retailers in
commerce division Brazilian post office intends to operate part Brazil and is part of the Casino Group
of the facility until the end of the lease term
+ Practical completion expected in January + Cross dock and sort facility
+ Delivered in December 2015
2017 + Delivered in December 2015
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Section 3+ Funds management Nick Kurtis, Group Head of Equities

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Centenary Distribution Centre, Australia
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Key trends

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+ Asset and investment strategy

  • Focus on increasing exposure to ‘gateway cities’

  • Reduce exposure to low barrier entry markets

  • Core assets currently expensive in most markets

  • Development and asset repositioning remains the main method to undertake investment

  • Monetise existing land banks

  • Greenfield land development sites are preferred

  • Selective Brownfield value add opportunities

+ Capital management

  • Look to maintain/not increase current debt volumes across the platform

  • Finance new opportunities through sale of non-core assets

  • Match long term assets with long term debt capital market (“DCM”) liabilities

  • Target 50/50 mix between DCM and bank sources where appropriate

  • Allow asset valuation growth to naturally decrease leverage at this point in the cycle

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25

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Section 4+
Customer service
model
Richard Harry
General Manager,
Business Development
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Customer service model

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    • Key Question: What are we learning from our customers that we then apply to our own operational strategy?
    • Two geared customer service model:

  • Underpins the importance of executing at operational level in the short term

  • Mid to long term strategic direction

    • Allows active engagement with our senior customers on two fronts to ascertain the key structural influences/changes affecting their core operations and knock on requirements for real estate
    • Offset this operational information against GMG real estate strategy to ensure relevancy of our overall direction, e.g. gateway cities strategy

+ Key areas of consideration:

  • Location drivers

  • Key market industries being pursued

    • Base building facility design

  • Commercial requirements

27

Customer Service Model

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Graben Logistics Centre - Germany
Customer Amazon
Lettable area 936,764 sqm
Geographical
2 regions, 5 countries
Exposure
+ Most dynamic global customer in
terms of supply chain and fulfillment
+ Advancing requirements up and down
delivery chain
Comments
+ Time critical value proposition (Prime),
move to facilities located closer to their
customers
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Xindu North Industrial Park – Chengdu, China Interlink – Hong Kong
Customer Walmart Customer DHL - Deutsche Post
Lettable area 712,014 sqm
Lettable area 26,810 sqm
Geographical
Geographical Exposure 5 regions, 9 countries
1 region, 1 country
Exposure
+ Worlds largest retailer going through + Worlds biggest 3PL, their challenge is
massive transformation staying No.1
+ Exposure via transactions allowed us + Strategic focus on PEP to drive
corporate revenue, within this e-
Comments access to supply chain and real estate Comments commerce is a key component
management
+ Collaborative opportunity to be + Emerging markets growth
involved in their fulfilment transition opportunities, APAC centric
process
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28

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Section 4+
Customer service
model
Richard Harry
General Manager,
Business Development
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Airgate Business Park

Location 283 Coward St, Mascot
GLA 40,983 sqm
Site area 7.7 ha
Ownership GMG
Number of customers 6
Occupancy 100%
Customers +
Toll (17,702 sqm)
+
Woolworths (9,752 sqm)
+
Nippon Express (4,612 sqm)
+
Hellman Worldwide Logistics (4,142 sqm)
+
UTI Austalia (4,675 sqm)
+
Si My Chenh (100 sqm)
    • Airgate Business Park is located approximately 8 kilometres south of the Sydney CBD in Mascot. Southern Cross Drive is approximately 2 kilometres away and provides direct access to the Eastern Distributor and the M5 Motorway. The asset is adjacent to the airport and provides exposure for customers on Airport Drive for their brand.
    • The total site area is 7.7 hectares and consists of six freestanding modern high quality industrial office/warehouse distribution centres with a total GLA of 40,983 sqm (26% office) and parking for 592 cars. The IN1 General Industrial zoning allows for a broad range of industrial uses.
    • The estate was built over three stages commencing in 2000 with major customers including Toll Transport, Woolworths, Hellman Worldwide Logistics and Nippon Express.

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30

thank+ you

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