GPT GROUP — Annual Report 2004

Jan 28, 2004

General Property Trust 2003 Annual Results

29 January 2004

QUALITY PORTFOLIO DELIVERS SOLID GROWTH

GPT today declared earnings per unit of 21.6 cents per unit (cpu) for the year to 31 December 2003, an increase of 5.6% over the previous corresponding period.

A distribution of 5.4 cpu for the December quarter was announced, taking the distribution for the year to December 2003 to 21.2 cpu. This represents an increase of 3.9% on the distribution for the 2002 calendar year and continues a positive trend in the Trust's underlying earnings and distributions.

GPT Management Limited Chief Executive, Mr Nic Lyons, said that the 5.6% increase in earnings reflected a solid result from GPT's property portfolio as well as the impact of a recent change to GPT's fee structure.

"This increase in earnings and distributions builds on the growth achieved over the last few years and demonstrates the strength of GPT's Retail Portfolio, the resilience of GPT's quality Office and Hotel/Tourism Portfolios in difficult market conditions and the benefit of acquisitions and developments undertaken over the last eighteen months."

"The growth in both earnings and income reflects the benefit of our strategy of building and maintaining a portfolio of high quality assets."

"GPT is well placed to continue to deliver future growth as the benefits of a number of developments recently completed and underway across its \$7.6 billion property portfolio are delivered and conditions in the office and tourism sectors improve," said Mr Lyons.

In Retail, high productivity levels, reasonable occupancy costs and almost full occupancy in conjunction with the completion of major developments, have the Portfolio well positioned for continued growth over the medium term. The tourism sector has continued to suffer the effects of world events on inbound tourism but is anticipated to recover over 2004. Whilst general conditions in the office sector remain soft. GPT's Office Portfolio has withstood current market conditions and delivered income growth.

Over the year GPT also implemented a number of initiatives that will contribute to medium term earnings growth. In February, GPT entered the Masterplanned Urban Communities sector and over the course of 2003 secured close to 2,000 lots/dwellings in joint venture with Lend Lease across the \$1 billion Rouse Hill Regional Centre (NSW) and the smaller Twin Waters Resort (QLD). These sites, which will be developed over the next 10 years, will boost earnings growth and represent the first of a number of potential projects with the ability to enhance earnings without materially increasing the Trust's risk profile.

Major developments - a key driver of future growth - were also completed over 2003. In the Retail Portfolio the \$106 million (GPT's 50% share) expansion and redevelopment of Erina Fair (NSW) opened fully leased in November 2003. The first of the two National Buildings in Melbourne's Docklands was also completed, boosting the size of GPT's Office Portfolio to over \$2.9 billion.

Future opportunities for growth were also secured with \$355 million in acquisitions across the Office, Retail and Industrial/Business Park Portfolios and further progress on future developments, including expansions of Macarthur Square and Penrith Plaza and the development of the Rouse Hill Town Centre.

Capital Management

GPT maintains a strong balance sheet, concluding 2003 with total assets of \$7.7 billion and borrowings of \$2.1 billion, or 27.6% of total assets. This level of borrowing remains below GPT's maximum borrowing limit (of 40% of total tangible assets) and is within the policy range adopted by GPT's Board, of 20-30% of total tangible assets. This level of gearing is also below the LPT sector average, of 35.4%.

Michael O'Brien, GPT's Fund Manager said, "GPT's current level of gearing gives us the capacity to fund the extensive development program currently underway and planned."

Over 2003, GPT continued to successfully access the debt markets, issuing \$452 million in 3, 5 and 10 year notes under the existing Medium Term Note Program.

"The pricing and term of our Medium Term Note issues confirms the attractiveness of GPT's debt, and our ability to access competitive funding," Mr O'Brien said.

The current weighted average interest rate of GPT's debt is 5.98% (after fees and margins), and the Trust remains relatively protected from interest rate movements, with 83% of borrowings hedged across a range of maturities. GPT also retains the highest credit ratings in the Australian LPT sector. with Standard & Poor's ratings of $A+$ (long-term) and A-1 (short-term).

Outlook

"This has been a year of solid performance for GPT."

"Over the last twelve months we have continued to improve the quality of the portfolio and to enhance its diversity, and have leveraged our core skills and GPT's strong balance sheet to add value both in managing the existing assets and pursuing plans for future growth."

"We expanded the Trust's diversity and accessed additional growth opportunities with our entry into the Masterplanned Urban Communities sector. Quality acquisitions across the Retail. Office and Industrial/Business Park Portfolios have also contributed to an enhanced performance outlook for GPT in the long-term."

"Our outlook is positive for the 2004 calendar year, as we expect to see strong growth in retail and industrial income and an improvement in office and tourism markets. The Trust has retained earnings of \$7.6 million to mitigate the potential volatility in earnings if a performance fee is paid in 2004 or a delay in the office market recovery results in extended vacancy periods across the Office Portfolio," Mr Lyons said.

Yield

The yield on the closing price yesterday of \$2.98 was 7.1%.

NTA

The Trust's Net Tangible Asset Backing (NTA) per unit increased to \$2.73, an increase of 13 cents on the previous year's NTA of \$2.60 per unit, largely as a result of significant positive valuations across the Portfolio.

Unit Price

GPT's unit price increased over the year, from \$2.97 at 31 December 2002 to \$2.99 at 31 December 2003. GPT's full year accumulation (unit price movement and income) return for 2003 was 8.2%, slightly below the S&P/ASX Property 200 Accumulation Index, which delivered a total return of 8.8%

ENDS

ADDITIONAL INFORMATION

Retail Portfolio

Total centre sales for the year to December 2003 across GPT's retail centres totalled \$3.7 billion.

Sales productivity across GPT's regional centres is high, with specialty sales of \$8.755 per square metre. Total centre sales across the Portfolio increased by 2.9% and specialty sales increased by 4.1% in the year to December 2003. (On a per square metre basis total centre sales increased by 1.7% and specialty sales by 1.3%.)

General Manager Retail Investment, Mr Mark Fookes, said the majority of GPT's centres trade well above industry sales productivity benchmarks.

"Importantly, the Portfolio's sales productivity gives us confidence in the expansion potential of the Portfolio and the level of specialty occupancy costs across GPT's shopping centres remains reasonable, at 14.5%. The low vacancy rate of less than 0.5% across the Portfolio and success in renewals achieved over the past twelve months further consolidates our outlook for continued Retail Portfolio rental income growth," Mr Fookes said.

Income from the Retail Portfolio increased significantly on the same period last year (up 11.2%), including the first full year of income from Penrith Plaza following the termination of the JVIA in 2002, the first year post Sunshine Plaza's Riverwalk & Plaza Parade development, and the benefits of income growth achieved across the Portfolio.

Lease renewals at Penrith Plaza and Chirnside Park over 2003 resulted in strong increases in rents. Over 2004 renewals at Woden Plaza and Sunshine Plaza are also anticipated to generate strong future growth.

A number of GPT's retail assets were valued over the year, leading to a net valuation increase across the Retail Portfolio of \$216 million. These assets included Woden Plaza, Charlestown Square, Dandenong Plaza, Erina Fair, Penrith Plaza, Sunshine Plaza, Chirnside Park, Wollongong Central, Macarthur Square, and the Homemaker City centres at Bankstown, Cannon Hill, Fortitude Valley, Jindalee, Maribyrnong and Prospect.

Further demonstrating the quality of the Portfolio's assets, in March 2003, four of GPT's centres (Sunshine Plaza, Woden Plaza, Penrith Plaza and Erina Fair) were named in the Shopping Centre News 'Big Guns' Top Ten list of Australia's most productive regional shopping centres.

Acquisitions

In August, Homemaker City Epping in Victoria was acquired for \$37.7 million (including costs). The acquisition increases GPT's highly successful Homemaker portfolio to a total of 14 centres with a value of close to \$415 million.

A number of smaller strategic acquisitions across the Retail Portfolio were also made during 2003, providing future expansion opportunities. These included assets adiacent to Charlestown Square and Penrith Plaza and land adiacent to Homemaker City Castle Hill.

Development Update

Across the Retail Portfolio a range of developments were completed and progressed during 2003. These projects are a key driver of future growth and future projects have a potential value of \$1 billion over the next six years.

The major expansion and redevelopment of Erina Fair (GPT's 50% share at a cost of \$106 million) opened ahead of schedule in November 2003. The development, which includes an outdoor Town Centre, a new food court, leisure and community facilities as well as 142 additional specialty shops was fully leased on completion, and is forecast to deliver a year 1 yield above the project commerce of 8.5%.

A smaller expansion at Floreat Forum in Perth (at a cost of \$48 million) was completed in August. In Victoria, a minor remix of the foodhall at Chirnside Park (\$3.5 million) was finalised in May and at Forestway in NSW the \$4.7 million upgrade of Forestway Shopping Centre is underway and due to be completed early in 2004.

The major redevelopment of Melbourne Central's retail space has continued to gain momentum over 2003, with 65% of the construction program and 80% of the leasing (by income) now finalised. A number of catalyst retailers have been secured, including the first Australian stores for international fashion labels Tommy Hilfiger, G Star and Carhardt. The first stages of the development opened in late 2003 and the project is on track for completion of the final stage at the end of 2004. Creation of additional tenancies, additional scope to a number of tenancies (in particular the cinema and gymnasium) and additional acoustic treatment for the entertainment precinct has resulted in the development cost increasing to \$245 million. With resulting additional income the target yield remains unchanged at 8.5% in the first year of operation.

A number of developments are anticipated to commence in 2004. These include: the expansion (at an approximate cost of \$80 million - GPT's 50% share) of Macarthur Square, for which a development application has been approved; a major expansion of Penrith Plaza (\$130 million), for which a development application has been lodged; and the creation of a new Town Centre at the Rouse Hill Regional Centre for which the masterplan has been submitted.

"The outlook for future growth is positive. The positive response to the expanded offer and the increase in valuation at Erina Fair has demonstrated the potential of our development pipeline to aenerate strong returns and our next major project. Melbourne Central, is progressing well."

"With further developments expected to commence this year and a positive outlook for rental growth, we are confident in continuing to deliver good growth from GPT's retail assets," Mr Fookes said.

Office Portfolio

Despite a slow leasing market, reflecting relatively soft tenant demand. GPT's Office Portfolio performed well over 2003, delivering income growth and retaining occupancy above the market average.

The quality of the Portfolio and tenant diversity were further improved with the acquisition of an interest in 1 Farrer Place in Sydney, the completion of the first of the National Buildings at 800 Bourke Street, Melbourne and progress on refurbishment works at Australia Square and Melbourne Central.

Revaluations across the Portfolio resulted in a small increase in value, of \$16.4 million.

Over 47,000 sqm of office space was leased across GPT's assets over 2003, resulting in an overall occupancy of 94% for the Portfolio. This was a strong result in weak market conditions.

Mr Tony Cope, GPT's Office Portfolio Manager, said a focus on leasing across the Portfolio had maintained a strong lease expiry profile, with limited short and medium term expiry and an average lease term of 5.5 years.

"The performance of the Office Portfolio was underpinned by low vacancy and the quality of our assets which was further enhanced over 2003 by acquisitions and capital works," Mr Cope said.

Acquisitions and developments

In December, GPT acquired a 25% interest in 1 Farrer Place, a premium quality office complex, with a high standard of services and finishes. The complex offers over 85,000 sqm of premium office space, with harbour and city views and is occupied by major tenants such as the NSW State Government, Mallesons Stephen Jaques and Goldman Sachs JBWere. The complex consists of Governor Phillip and Governor Macquarie Towers and the Phillip Street terraces and was acquired for \$240 million (before costs).

The first of the two campus-style National Buildings in Melbourne was completed in October. The second building is anticipated to be complete in mid 2004. The buildings are each leased to National Australia Bank for twelve years from completion and will deliver a first year yield of 8% on the total cost of \$242 million.

An extension of the office lobby at Melbourne Central was commenced in 2003. At a cost of \$5.5 million the works will create a stronger street presence for the asset and a more cohesive link to the upgraded retail space. In Sydney, works at Australia Square to upgrade the public spaces and Plaza Building are well progressed and contributing to leasing interest at this asset.

Leasing

Significant leasing was undertaken across the portfolio, with over 47,000 sqm leased or renewed across GPT's office assets. At Australia Square and Melbourne Central, leases over 13,500 sqm and 6,700 sqm respectively reduced short-term vacancy at these assets. Leasing was undertaken across a range of assets, with major leasing including:

• Australia Square, where leases to Origin Energy (4.100 sqm), RGA (780 sqm), Grange Securities (1,030 sqm) and Halliday Financial Management (1,030 sqm) were signed over the year;
• Melbourne Central, where Accenture (5,200 sqm) and Wilson Parking (1,200 sqm) have reduced vacancy;
• Riverside Centre, where leases to Xstrata (2.300 sqm) and the ATO (1.500 sqm) have contributed to ongoing high occupancy of 99%.

"Whilst we believe the market retains solid long-term fundamentals, and anticipate an improvement in office markets over 2004, our continued success in leasing and the market environment over 2004 will dictate the extent of income growth this year. We maintain our outlook for growth from our Portfolio in the medium term, with timing dependent on the strength and speed of the office market recovery," said Mr Cope.

Hotel/Tourism Portfolio

Mr Bruce Morris, GPT's Hotel/Tourism Portfolio Manager, said GPT's hotel assets had performed well in a market that continued to be characterised by external shocks.

"Overall 2003 was again a difficult year for tourism in Australia," Mr Morris said.

Despite the impact of market conditions, the Four Points by Sheraton in Sydney increased both occupancy and room rate over the year and Ayers Rock Resort exhibited resilience, delivering income in line with the previous year.

Across the Portfolio, income to GPT was up slightly on the previous year, largely as a consequence of improved trading at the Four Points by Sheraton Hotel. The performance of the Cape Tribulation Resorts was impacted by the closure of parts of the Resorts during refurbishment and the external shocks to inbound tourism but is anticipated to rebound over 2004.

"Despite the current uncertain environment, and the difficulty in discerning trends over a period which has seen both positive and negative influences (including the Rugby World Cup, SARS, and the war in Iraq), we remain positive about the long-term outlook for inbound tourism to Australia and GPT's Hotel/Tourism Portfolio." Mr Morris said.

Industrial/Business Park Portfolio

GPT's Industrial/Business Park Portfolio grew to \$290 million over 2003, with the acquisition of a 50% interest in the Austrak Business Park at Somerton, the completion of Stage 2 of 11 Grand Avenue, Camellia (NSW) and a facility for Just Jeans adiacent to the Citiwest Industrial Estate in Victoria and the commencement of construction of Quad 3 at Homebush Bay.

Mr Victor Georos, Industrial/Business Park Portfolio Manager, said the Portfolio had retained occupancy at over 94% and had a long average lease term, of 5.9 years.

"Over 2003, we acquired additional assets, significantly expanding our presence at Homebush Bay in NSW with the third stage of the Quad and in Melbourne with the Austrak Business Park in Somerton," Mr Georos said.

The Austrak Business Park at Somerton in Victoria represents a high quality industrial asset which includes one of the first inter-modal freight terminals in Australia. The Park, which is situated on approximately 100 hectares of land, already has facilities leased to Visy. IPS Logistics and Effem Foods and provides the potential for further development. GPT acquired a 50% interest in the Park for \$57.3 million (including costs). A first year yield of 9.2% is anticipated on the existing improvements and future income growth will be achieved as additional facilities are leased.

GPT further expanded its investment in the Homebush Bay (NSW) area, with commencement of construction of Quad 3, and in January 2004 the acquisition of a small asset at 8 Herb Elliot Avenue. Quad 3 is the third stage of a four stage planned business park. The development, which will consist of 5,400 sqm of office space, is anticipated to cost \$13.7 million and to be complete in June 2004.

The \$9.7 million second stage of 11 Grand Avenue, Camellia (NSW) and a 12,200 sqm office and warehouse facility for Just Jeans at the Citiwest Industrial Estate in Melbourne were both completed during the year.

"The Portfolio now has 350,000 sqm of expansion land which will allow us to generate medium term growth. Much of this space is located at the Austrak Business Park in Somerton which provides the opportunity to develop a large-scale industrial park, with a real point of difference." Mr Georos said.

Masterplanned Urban Communities

Following the announcement in February 2003 that GPT would expand its portfolio and provide further diversity in income through entry into the Masterplanned Urban Communities sector via an alliance with Lend Lease's Urban Communities business, two projects have been secured.

The potential to access a new sector with a highly skilled and experienced partner gives GPT the ability to enhance the Trust's growth profile and to further expand the investment opportunities available to GPT's unitholders without materially increasing the Trust's risk profile.

GPT and Lend Lease were named preferred tenderer for the \$1 billion Rouse Hill Regional Centre in February 2003 and confirmed as developer of the site in October 2003. The Rouse Hill Regional Centre, which is located in the fast growing north-west Sydney region, includes over 1,500 residential lots, a mixed use Town Centre and supporting infrastructure. GPT and Lend Lease will develop the residential lots over approximately 10 years. This component of the project will deliver a significant increase in earnings to the Trust for a small capital outlay (anticipated to average \$30 million per annum over the life of the project).

Stage 1 of the Rouse Hill development is anticipated to commence in the second half of 2004 and will include a vibrant Town Centre, consisting of a retail market place, bulky goods retail, commercial and learning space to be developed and owned by GPT. Health and community facilities, over 150 residential lots and supporting infrastructure will also be completed by the joint venture as part of the initial stage of the development.

The Twin Waters development, which was secured in October 2003, represents the Trust's second masterplanned urban community development. Located on the site of the Twin Waters Resort in Mudjimba, Queensland, the project will be undertaken in joint venture with Lend Lease. GPT's share of the initial acquisition was \$20.6 million (plus acquisition costs).

The Twin Waters Resort consists of the Novotel Twin Waters Resort, an 18 hole championship golf course and leisure facilities and forms part of the larger Twin Waters masterplanned community that has been progressively developed by Lend Lease over a number of years. The Resort will be redeveloped over a period of 7 years into a resort and residential community of approximately 370 dwellings. The golf course, central facilities and leisure facilities are to be onsold to specialist operators. It is expected that the first stage of the residential component will complete in mid 2005.

Both projects are located in areas with strong population demand and will deliver significant earnings growth to the Trust for a limited capital outlay. GPT and Lend Lease continue to review alliance investment opportunities through a pipeline process.

Financial Summary

	12 months to Dec 2002	12 months to Dec 2003
Distribution (cents per unit) Tax advantaged	20.40 45.72%	21.20 45.52%
	At 31 Dec 2002	At 31 Dec 2003
Total assets Borrowings Debt to total assets Responsible Entity's Fee Units in issue ('000) Net asset backing/unit Unit price	\$6,696.6m \$1,361.0m 20.3% \$33.9m 1,949,717 \$2.60 \$2.97	\$7,695.1m \$2,127.0m 27.6% \$25.6m 1,949,717 \$2.73 \$2.99
Retail
Total value Portfolio allocation (by value) Total income* Total centre sales per sqm growth Specialty occupancy costs	\$3,335.9m 50% \$253.1m $3.0\%$ 14.1%	\$3,797.8m 50% \$267.0m 1.7% 14.5%
Office
Total value Portfolio allocation (by value) Total income Portfolio occupancy	\$2,550.8m 39% \$188.8m 97%	\$2,946.7m 39% \$195.9m 94%
Hotel/Tourism
Total value Portfolio allocation (by value) Total income	\$507.3m 8% \$46.3m	\$530.1m 7% \$48.2m\$
Industrial/Business Park
Total value Portfolio allocation (by value) Total income	\$204.1 m $3\%$ \$13.3m	\$289.8m 4% \$18.4m
Masterplanned Urban Communities
Total value Portfolio allocation (by value)		\$26.1m
Total income		\$0.3m

$\star$

Includes deposits under retail property JVIA (Sunshine Plaza).
Income includes ground rent and income from deposit under retail property JVIAs (2002 -
Sunshine Plaza and Penrith Plaza, 2003 – Sunshine Plaza only). $\star\star$