GPT GROUP — Annual Report 2005

Feb 10, 2005

General Property Trust 2004 Annual Results

11 February 2005

CONTINUED GROWTH FROM QUALITY ASSETS

GPT today declared underlying earnings per unit of 22.0 cents per unit (cpu) for the year to 31 December 2004, an increase of 3.1% over the previous corresponding period. Headline earnings per unit, at 21.3 cpu, were impacted by costs accrued to date associated with the Lend Lease merger proposal and the response to the takeover offer from Stockland.

A distribution of 5.6 cpu for the December quarter was announced, taking the distribution for the year to 31 December 2004 to 22.0 cpu. This represents an increase of 3.8% on the distribution for the 2003 calendar year.

GPT Management Limited Chief Executive, Mr Nic Lyons, said that the strong increase in earnings and distributions reflected a solid result from GPT's property portfolio and the positive impact of recent acquisitions and successfully completed developments.

"This increase in earnings and distributions builds on a consistent growth profile from GPT over the last few years. Although the impact of costs associated with the merger proposed by Lend Lease and Stockland's takeover offer affected the headline operating result, the underlying performance of the Trust has continued its strong growth, reflecting the high quality and low risk of the Trust's assets and the benefit of focused active management and development."

GPT's operating result was strong, with net operating income* of \$442 million, an increase of over 5% on 2003.

"The growth in both earnings and income reflects the benefit of our strategy of building and maintaining a portfolio of high quality assets, with a low risk profile. The quality of GPT's portfolio

Excluding abnormal items, including profit on sale of properties and \$16.5 million in costs accrued in relation to the proposed Lend Lease merger and the subsequent response to the takeover offer from Stockland.

has also been demonstrated in strong positive revaluations, particularly across the Retail Portfolio, which resulted in a net positive revaluation of \$612.5 million across the retail assets."

"The benefit of current developments and recent acquisitions, as well as improving conditions in the office and hotel/tourism sectors, provide an opportunity to continue to deliver growth from GPT's \$9 billion property portfolio," Mr Lyons said.

During 2004, GPT implemented a number of initiatives that will contribute to medium term earnings growth. In July, the Hotel/Tourism Portfolio was enhanced with the acquisition of a \$218 million portfolio of predominantly nature-based resorts, acquired from P&O. The resorts, which provide GPT with a broader offer in the Australian tourism market, have now been integrated with the portfolio.

GPT's large-scale retail development pipeline has continued excellent progress. Erina Fair, completed in November 2003, has delivered on the project's targeted return. Melbourne Central's redevelopment was substantially complete in December 2004, with only the Level 3 entertainment precinct to be finalised in 2005 and initial trading results have been positive. Major expansions of Penrith Plaza and Macarthur Square that commenced in June and September respectively, will be largely complete at the end of 2005.

In the Office Portfolio, the second National Building at Melbourne's Docklands was completed in May 2004. Work is progressing ahead of schedule on the third and final stage of the Darling Park Complex in Sydney. These acquisitions have increased the Portfolio's scale and diversity. while maintaining the high quality of office space across the \$3.1 billion Portfolio.

Operationally, the Trust's property portfolios continue to deliver solid returns and income growth, reflecting the quality of the underlying assets and the application of active management. The Retail Portfolio retains high productivity levels and almost full occupancy and is well positioned for continued robust growth over the medium term. The tourism sector rebounded strongly and GPT's hotel/tourism assets are well positioned to benefit from continued strength in inbound fourism.

Whilst general conditions in the office sector remain soft. GPT's Office Portfolio has maintained consistent occupancy levels and delivered income growth. The acquisition of the third stage of the Darling Park Complex and the completion of the second of the National Buildings in Melbourne reinforces Management's focus on continued upgrading of the Portfolio to contemporary assets. The Industrial and Business Parks Portfolio delivered strong income growth and increased occupancy, to 99.5%, while further acquisitions in Sydney's Homebush Bay have expanded the development pipeline in this sector.

Capital Management

GPT maintains a strong balance sheet, concluding 2004 with total assets of \$9.1 billion and borrowings of \$2.7 billion, representing 29.7% of total assets. This level of borrowing remains below GPT's maximum borrowing limit (40% of total tangible assets). This level of gearing is also well below the LPT sector average, of 37.3%.

Throughout 2004, GPT continued to successfully access the debt markets, issuing \$600 million in Medium Term Notes.

A private placement of 67 million units was undertaken in April 2004, raising \$203 million. The units were issued at a small discount to the market price.

The current weighted average interest rate of GPT's debt is 6.09% (after fees and margins), and the Trust remains relatively protected from interest rate movements, with over 90% 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

"Despite a number of abnormal items, this has been a year of solid performance for GPT, with the underlying performance of the Trust demonstrating growth and the quality of GPT's diversified property portfolio."

"We remain confident in the ability of GPT's core portfolio to deliver growth in earnings to investors," Mr Lyons said.

Yield

The yield on the closing price yesterday of \$3.83 was 5.7%.

NTA

The Trust's net tangible asset backing (NTA) per unit increased to \$3.02, an increase of 29 cents on the previous year's NTA of \$2.73 per unit, largely as a result of significant positive valuations across the Retail Portfolio.

Unit Price

GPT's unit price increased over the year, from \$2.99 at 31 December 2003 to \$3.74 at 31 December 2004. GPT's full year accumulation (unit price movement and income) return for 2004. was 33.6%, above the S&P/ASX Property 200 Accumulation Index, which delivered a total return of 32%.

Stockland Takeover Offer

GPT's Independent Directors continue to believe that the Stockland offer is not in the best interests of GPT Unitholders, for the reasons set out in the Target's Statement and First Supplementary Target's Statement. GPT's Independent Directors have previously announced that they continue to explore alternatives which they consider may be in GPT Unitholders' best interests. That consideration is ongoing and involves continuing discussion with a number of parties.

ENDS

ADDITIONAL INFORMATION

Retail Portfolio

Sales productivity across GPT's Retail Portfolio is high, with regional specialty sales of \$9,355 per square metre (sqm) and regional specialty occupancy costs at 14.4%. Total centre sales per sqm across the Portfolio increased by 4.4% (1.7% at Dec 03) and specialty sales per sqm increased by 6.4% (1.3% at Dec 03) in the year to December 2004.

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

"We have an excellent portfolio of retail assets which has benefited from intensive management and has demonstrated the positive results of recently completed developments."

"Strong sales productivity and the low vacancy rate of less than 0.3% of gross lettable area (GLA) across GPT's shopping centres demonstrates the quality of the portfolio and has contributed to income growth over the past twelve months. Specialty occupancy costs across GPT's shopping centres remain reasonable, enhancing the prospects for continued rental income growth," Mr Fookes said.

Income from the Retail Portfolio was up by 7.8% on the same period last year, including the first full year of income from Erina Fair following the expansion in 2003, and the benefits of income growth achieved across the Portfolio. Comparable income growth was excellent, at 4.5%.

Continuing the trend at Penrith Plaza and Chirnside Park in 2003, large levels of specialty lease renewals at Woden Plaza and Sunshine Plaza during 2004 resulted in strong increases in rents at these centres.

The majority of GPT's shopping centres were valued over the year, leading to a net valuation increase across the Retail Portfolio of \$612.5 million

Further demonstrating the quality of the Portfolio's assets, in March 2004, three of GPT's centres (Sunshine Plaza, Woden Plaza, Penrith Plaza) were named in the Shopping Centre News 'Big Guns' Top Ten list of Australia's most productive regional shopping centres and Sunshine Plaza was voted Queensland's Shopping Centre of the Year by the Property Council of Australia in October 2004.

Transactions

In March 2004, a land parcel for the second stage of Homemaker City Fortitude Valley in Brisbane was acquired. Construction of the 16,000 som second stage is forecast to be complete in early 2005. The completed Centre is being acquired for approximately \$52 million. Combined with the Trust's existing successful stage one, this consolidates Fortitude Valley as one of Brisbane's premier homemaker destinations.

Two smaller bulky goods centres (located at Springwood, Qld and Prospect, NSW) acquired as part of GPT's original portfolio acquisition in November 2001, were sold during the year. The Homemaker Portfolio has a total of twelve centres with a value of close to \$450 million. At the close of 2004, the Homemaker Portfolio represented approximately 10% of the GPT Retail Portfolio (by value).

Development Update

Across the Retail Portfolio, a range of developments were completed and progressed during 2004. These projects are a key driver of future growth and form part of a pipeline of current and future projects with a potential value of more than \$1 billion over the next five 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 was fully leased on completion, has now completed its first full year of trading and delivered on the targeted project yield of 8.5%.

In early 2004, the \$4.7 million upgrade of Forestway Shopping Centre in NSW was completed. An \$8 million remix of Homemaker City Aspley in Queensland was completed in November 2004.

The major redevelopment of Melbourne Central was largely complete in December 2004. More than 230 of the planned 288 tenancies are now open and trading. All but the Level 3 entertainment precinct, which was delayed by fire damage, is now complete. Only 3 of the 288 tenancies remain to be leased (less than 1% of income). Mini-maior retailers such as Borders. Coles, Freedom and Bayswiss, combined with some innovative retail concepts, have delivered on the vision for the Centre which is already trading well. The project is forecast to achieve a yield of approximately 8% in the first full year of operation post completion.

Two major developments are currently underway and anticipated to be largely complete by the end of 2005. These are: the expansion (at an approximate cost of \$100 million - GPT's 50% share) of Macarthur Square, for which stage one is due to be complete in December 2005; and a major expansion of Penrith Plaza (\$138 million), which will be largely finalised at the end of 2005.

The creation of a new Town Centre at the Rouse Hill Regional Centre, for which the masterplan has been approved and a development application submitted in January 2005, is expected to commence construction during 2005.

"The Retail Portfolio continues to have a very positive outlook. The success of recently completed developments such as the Sunshine Plaza Riverwalk and Plaza Parade expansion. the redevelopment of Floreat Forum and the major expansion of Erina Fair demonstrate the potential of our development pipeline to provide strong returns for investors."

"With the completion of further developments in 2005, strong sales growth, and a positive outlook for rental growth, we are confident of continuing to deliver strong investment performance from GPT's retail assets," Mr Fookes said.

In September, GPT (in conjunction with joint owner APPF Retail finalised the termination of the ground lease at Sunshine Plaza Shopping Centre, giving GPT and APPF Retail full entitlement to all future income from the Centre. The capital payment made by GPT, of \$56 million, is anticipated to deliver a year one yield of approximately 10%.

Office Portfolio

GPT's Office Portfolio performed well, delivering income growth and retaining occupancy above the market average throughout 2004.

The quality of the Portfolio and tenant diversity were further improved with the completion of the second of the National Buildings at Docklands in Melbourne, the completion of refurbishment works at Australia Square and Melbourne Central, and the announcement that GPT had acquired the third and final stage of the Darling Park Complex in Sydney.

Revaluations across the Portfolio resulted in a small net decrease in value, of \$29 million,

During 2004, over 120,000 sam of office space was leased across GPT's assets, resulting in an overall occupancy of 93.7% for the Portfolio. Occupancy remained constant with the close of 2003, but above the overall market occupancy of 90.4%.

Mr Tony Cope, GPT's Office Portfolio Manager, said an ongoing focus on leasing and improving the quality of the portfolio had maintained a strong lease expiry profile, with limited short and medium term expiry and an average lease term of 6.4 years.

"The performance of the Office Portfolio was underpinned by the quality of our assets which has continued to be enhanced over 2004 by acquisitions and the completion of capital works. Demand for office space started to improve over the year and the market conditions also demonstrated early positive signs. Improving fundamentals should continue to support leasing

efforts and a return to more positive conditions across the markets with a commensurate uplift in the returns from GPT's Office Portfolio," Mr Cope said.

Acquisitions and developments

In April, GPT increased its exposure to the Sydney office sector with the acquisition of the third stage of the Darling Park Complex. The development, which is anticipated to provide a first year yield of 7.2% (after costs) on the cost of \$228 million, consists of an 18-level office tower which is already 60% leased to Marsh and Mercer Human Resource Consulting. The building is expected to be complete in May 2006.

The second of the two campus-style National Buildings in Melbourne was completed in May. The buildings are each leased to National Australia Bank for 12 years from completion and will deliver a first year vield of over 8% on the total cost of \$242 million.

An extension of the office lobby at Melbourne Central was completed in August 2004. At a cost of \$5.5 million, the works contribute to a stronger street presence and link to the upgraded retail space. In Sydney, works at Australia Square to upgrade the public spaces and Plaza Building were also finalised in 2004.

Leasing

Significant leasing was undertaken across the Portfolio, with more than 120,000 sqm leased or renewed across GPT's office assets in the year to December 2004. This leasing, which was undertaken across a range of assets within the Portfolio, included:

• In Sydney, at Australia Square, over 10,300 sqm was leased or renewed, including leases to Ninemsn (2,060 sqm), Johnson Pilton Walker (780 sqm), Financial Associations Services (780 sqm) and DTL Australia Pty Ltd (780 sqm).
• At Melbourne Central, leases to the ACCC (1,450 sqm), Kaz Technology Services (3,560 sqm) and CSA (5.870 sqm) contributed to occupancy of 99.5% at December 2004.
• At 10 & 12 Mort Street in Canberra, occupancy of the asset was extended to 2011 with the government tenant renewing its lease over both buildings for a further five year term.
• Significant leasing was also undertaken at the Riverside Centre in Brisbane, with over 16,400 sqm leased over 2004, including ten year leases to Deloitte Services (3,000 sqm), ABN Amro Morgans (2,280 sqm) and Blake Dawson Waldron (5,300 sqm).

"It was encouraging to see occupier demand for office property gather momentum through 2004 and we anticipate ongoing improvements in demand during 2005, with positive leading indicators apparent in terms of job advertisements, employment gains and heightened business investment. The performance of the portfolio in the medium term is expected to improve as the office markets continue to strengthen," said Mr Cope.

Hotel/Tourism Portfolio

Mr Bruce Morris, GPT's Hotel/Tourism Portfolio Manager, said GPT's hotel assets had performed well in 2004 and the Portfolio's future outlook had been enhanced with the acquisition of the P&O resorts.

In July 2004, GPT acquired a significant portfolio of nature-based resorts located in some of Australia's most attractive tourism locations. The Portfolio, which includes Dunk. Bedarra. Brampton, Heron, Lizard and Wilson Islands as well as Silky Oaks and Cradle Mountain Lodges was acquired for \$218 million from P&O Australia.

"Inbound tourism to Australia continued its strong recovery throughout 2004 and GPT's Portfolio benefited from this upturn, with income up more than 25% on 2003," Mr Morris said.

Increased income to GPT from the Portfolio was largely as a consequence of improved trading at the Four Points by Sheraton Hotel in Sydney, improved occupancy at Avers Rock Resort and the addition of the P&O resorts portfolio.

The Four Points by Sheraton increased both occupancy and room rate over the year and Ayers Rock Resort exhibited a return to growth following the negative impact of external shocks in previous years. Both assets delivered income growth of over 10% on 2003.

"We continue to be optimistic about the long term outlook for inbound tourism to Australia and the prospects for GPT's Hotel/Tourism Portfolio, which now has an enhanced position in the nature-based tourism sector and a range of quality assets in major Australian tourism locations," Mr Morris said.

Industrial/Business Park Portfolio

GPT's Industrial/Business Park Portfolio grew to \$327.8 million over 2004, with the completion of Quad 3 at Homebush Bay and further acquisitions which provide the capacity for growth via expansion and development.

Mr Victor Georos, Industrial/Business Park Portfolio Manager, said a strong focus on leasing and renewals resulted in over 44,000 sqm of space being leased during the year, which increased the occupancy of the Portfolio to 99.5% and provided a long average lease term, of five years.

"Throughout 2004, we significantly expanded our presence at Homebush Bay in NSW with the completion of the third stage of the Quad, acquisition of the final Quad site and the addition of 7 Figtree Drive and 8 Herb Elliott Avenue," Mr Georos said.

At the Austrak Business Park at Somerton in Victoria, significant progress was made in identifying potential tenants for future development of the 100 hectare site. Subsequent to year end. GPT and Austrak secured Labelmakers Australia to the Park on a 15-year, triple-net lease. The new facility will be completed in August 2005 and comprises 16,700 sqm of warehouse and office space with a further 5,000 sqm of expansion land. The development, which has an anticipated cost of \$13.5 million (including land), is expected to provide an initial yield of over 8.0%, with annual rental increases and five yearly market reviews.

Construction of Quad 3 was complete in June 2004. The 5,300 sqm building is 75% leased with strong enguiry over the remaining space. A 9% yield is anticipated on the \$13.7 million development.

"In addition to quality existing assets, the Portfolio retains 350,000 sqm of expansion land which will facilitate strong medium term growth," Mr Georos said.

Masterplanned Urban Communities

The \$1 billion Rouse Hill Regional Centre being undertaken in joint venture with Lend Lease, achieved masterplan approval in March 2004 and a development application was submitted for the Town Centre in January 2005. Sales commenced for the first stage of the residential component of the development, Honeyeater Crescent, in January 2005 and sales for the southern residential precinct are anticipated to commence late in 2005.

The redevelopment of the Twin Waters resort, in Mudjimba, Queensland, has commenced with the first dwellings released in August 2004. This project is also being undertaken in joint venture with Lend Lease.

Both projects are located in areas with strong population demand and are on track to deliver strong returns for the Trust.

Financial Summary

	12 months to Dec 2003	12 months to Dec 2004
Distribution (cents per unit) Tax advantaged	21.2 45.52%	22.0 44.9%
	At 31 Dec 2003	At 31 Dec 2004
Total assets Borrowings Debt to total assets Responsible Entity's Fee Units in issue ('000) Net asset backing/unit	\$7,695.1m \$2,127.0m 27.6% \$25.6m 1,949,717 \$2.73	\$9,097.0m \$2,698.6m 29.7% \$35.5m 2,016,717 \$3.02
Unit price	\$2.99	\$3.74
Retail Total value Portfolio allocation (by value) Total income* Total centre sales per sqm growth Specialty occupancy costs	\$3,797.8m 50% \$267.0m 1.7% 14.5%	\$4,749.5m 53% \$287.5m 4.4% 14.2%
Office
Total value Portfolio allocation (by value) Total income Portfolio occupancy	\$2,946.7m 39% \$195.9m 94%	\$3,078.9m 34% \$225.0m 94%
Hotel/Tourism
Total value Portfolio allocation (by value) Total income	\$530.1m 7% \$48.2m	\$776.6m 9% \$61.7m
Industrial/Business Park
Total value Portfolio allocation (by value) Total income	\$289.8m $4\%$ \$18.4m	\$327.8m 4% \$23.0m
Masterplanned Urban Communities
Total value Portfolio allocation (by value)	\$26.1m	\$36.1m
Total income	\$0.3m	\$2.8m

$\star$

Includes deposits under retail property JVIA (Sunshine Plaza).
Income includes ground rent and income from deposit under retail property JVIA (Sunshine $\star\star$ Plaza).