GPT GROUP — Annual Report 2015

Feb 17, 2016

0

GPT Annual Result 18 February 2016

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Agenda

Section	Speaker	Page
Group Strategy	Bob Johnston	2
2015 Annual Result Highlights	Bob Johnston	7
Financial Summary & Capital Management	Anastasia Clarke	8
Retail	Vanessa Orth	11
Office & Logistics	Matthew Faddy	17
Funds Management	Nicholas Harris	25
Summary & Outlook	Bob Johnston	26

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[1 ]

Group Strategy

Focus on core property sectors

Build on strong market position and high quality portfolio

• Maintain investment focus on Retail, Office and Logistics sectors

• Leverage expertise and scale to grow market position in each core sector

• Targeting a Group Total Return in excess of 8.5% p.a.

GPT Portfolio

31 December 2015

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13%
50%
37%
Retail Portfolio Office Portfolio Logistics Portfolio
14 shopping centres 24 assets 31 assets
990,000 sqm GLA 1,190,000 sqm NLA 810,000 sqm GLA
Retail Office Logistics 3,400 + tenants 450 + tenants 90 + tenants
$5.0b portfolio $3.7b portfolio $1.3b portfolio
$7.9b AUM $8.5b AUM $1.7b AUM
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[2 ]

Group Strategy

Development pipeline

Maximise value of development pipeline opportunities

• Development pipeline of $3 - 4 billion underpins growth of core portfolio

• Significant rezoning and mixed use outcomes inherent in the portfolio

• Continue to build the logistics platform through development and acquisitions

Enhancement Expansion Redevelopment & Renewal MLC Centre Rouse Hill Sydney Olympic Park

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[3 ]

Group Strategy

Funds management platform

Consolidate our position as a leading fund manager

• Renew GWOF and GWSCF fund management terms

• Focus on performance, and position for growth in the medium term

• Sell non-core assets ($280 million identified in GWOF)

GPT Total Return from Funds Management

Growth in Funds Under Management

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14.0%
11.8%
11.0% 11.3%
10.1%
8.9%
2010 2011 2012 2013 2014 2015
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$10.0b
$9.6b
$7.1b
$6.6b
$5.6b
$5.3b
Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015
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[4 ]

Group Strategy

Financial and business management

Maintain strong capital position and efficient operating model

• Target gearing 25-35%

• Maintain “A” credit ratings

• Review of corporate overhead commenced

Sources of Drawn Debt

Management Expense Ratio

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CPI
Bonds 0.66%
3% 0.63%
USPP
16% Domestic 0.58%
bank debt
46%
Foreign
0.40% 0.40%
MTNs 0.38%
4%
Domestic
MTNs
18%
Secured Foreign
bank debt bank debt
4% 9% 2010 2011 2012 2013 2014 2015
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Group Strategy

Summary

Investment Portfolio Development Funds Management Strong Balance Sheet & Efficient Structure

• Retain focus on 3 core sectors

• • Drive organic growth through asset management

• • Target a Group Total Return of greater than 8.5% p.a.

• Measured increase in exposure

• • Internal pipeline of $3 - 4 billion of investment product

• • Maximise value of repositioning opportunities & mixed use outcomes

• Consolidate position and renew Fund terms for GWOF and GWSCF

• • Focus on performance

• • Position for growth over the medium term

• • Gearing range 25-35%

• • Maintain “A” credit ratings

• • Ongoing focus on business efficiency

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2015 Annual Result Highlights

Strong business platform delivers solid results

Delivering results from core business Investment Portfolio Performance

5.5%

11.5%

10.9%

3.8%

FFO[1] per security growth

Total Return Total Portfolio Return (unlevered return)

Portfolio like for like income growth

Capital Management

Portfolio leasing and occupancy

4.6% Weighted average cost of debt

26.3% Net gearing

95.3%

Total portfolio occupancy

5.3 YRS Weighted Average Lease Expiry

1. Funds From Operations

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2015 Annual Result Summary

Financial summary

12 months to 31 December ($m)	2015	2014	Change (%)
Net Profit After Tax	868.1	645.3	34.5%
Less: Valuation increases1	(432.1)	(249.5)
Less: Distribution on exchangeable securities	(1.7)	(25.0)
Add: Treasury items marked to market	74.0	89.1
Less: Other	(6.6)	(7.8)
Funds From Operations (FFO)	501.7	452.1	11.0%
Less: Maintenance capex and lease incentives	(118.6)	(95.1)
Adjusted Funds From Operations (AFFO)	383.1	357.0	7.3%
Weighted average securities on issue (million)	1,773.9	1,686.3
Funds From Operations per stapled security (cents)	28.28	26.81	5.5%
Distribution per stapled security (cents)	22.5	21.2	6.1%
Total Return (12 months to 31 December)	11.5%	9.6%

1. Includes revaluations and fair value adjustments.

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2015 Annual Result Highlights

Segment result

12 months to 31 December ($m)	2015	2014	Change (%)
Retail NOI	251.7	248.7
Office NOI	153.8	141.8
Logistics NOI	91.4	85.9
GPT share of Fund FFO	98.2	87.1
Investment Management expenses	(6.3)	(7.6)
Investment Management	588.8	555.9	5.9%
Asset Management	7.8	5.6
Development – Retail & Major Projects	1.8	1.9
Development – Logistics	2.2	6.5
Funds Management	44.6	32.5	37.2%
Net interest expense1	(117.6)	(128.5)
Corporate overheads	(33.1)	(30.1)
Tax expense	(4.9)	(2.8)
Non-core income	12.1	11.1
Funds From Operations	501.7	452.1	11.0%

Comparable growth +3.0% Comparable growth +6.3% Comparable growth +0.7%

1. Includes distribution to exchangeable securities

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Capital Management Strong capital position

	31 Dec 2015	31 Dec 2014	Change
Net tangible assets per security	$4.17	$3.94	5.8%
Total borrowings	$2,948m	$2,718m	8.5%
Gearing (net debt to total tangible assets)	26.3%	26.3%	-
Look through gearing (net debt to total tangible assets)	27.8%	28.2%	(40) bps
Weighted average cost of debt	4.6%	4.8%	20 bps
Weighted average term to maturity	5.1 years	5.8 years	(0.7) years
Interest cover ratio	5.3 times	5.4 times	(0.1) times
Credit ratings	A- (positive) A3 (stable)	A- (positive) A3 (stable)	-
Weighted average term of interest rate hedging	5.6 years	6.6 years	(1.0) years
Average interest rate hedging over the hedge term	57%	60%	(300) bps

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Retail Portfolio

2015 highlights – High quality portfolio delivering strong results

3.0% like for like income growth

Portfolio Commentary

• 8.9% Total Portfolio Return for the 12 month period

• Solid like for like income growth

6.5% specialty sales MAT growth $133.7m valuation uplift

• Strong retail sales

• Leasing spreads improving

• Divestment of Dandenong Plaza

Retail Markets & Outlook

5.58%

weighted average cap rate

• Higher disposable incomes supported by low interest rates and a strong housing market

• Lower AUD driving domestic spend

99.2% occupancy

• 83% of the Retail portfolio located in strong markets of NSW and Victoria

• Retail fundamentals remain strong

Note: Portfolio statistics exclude Assets Held for Sale: Dandenong Plaza

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Retail

Cap rate compression contributing to a valuation uplift of $133.7m

• Strong cap rate compression of 29bps across the portfolio

	Valuation Uplift	Valuation Uplift
Property		2015
	$m	%
Melbourne Central	$64.8	6.1%
Rouse Hill Town Centre	$38.5	7.7%
Westfield Penrith (50%)	$22.8	4.0%
Highpoint (16.66%)	$11.0	3.3%
Casuarina Square (50%)	$4.0	1.4%
Charlestown Square	$1.6	0.2%
Sunshine Plaza (50%)	$0.4	0.1%
GWSCF Ownership	($9.3)	(1.4%)
Total	$133.7	2.6%

Note: Portfolio statistics exclude Assets Held for Sale: Dandenong Plaza

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Retail

Specialty sales up 6.5% in the year to December 2015

Monthly Specialty Sales Growth[1,2 ]

Moving Annual Change in Retail Sales by Category[1 ]

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6 monthly = 7.3% 6 monthly = 5.8%
Quarterly = 5.4%
9.3% 9.3%
7.8% 8.0%
7.3%
6.9%
6.3% 6.0%
5.4%
4.4% 4.5%
2.3%
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
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23.0%
Specialty breakdown
14.8%
13.1%
6.5%
8.0% 7.2% 6.1% 6.1%
4.1% 4.2% 3.5%
2.8%
1.9%
1.0%
-0.7% -0.1%
Total Centre Dept Store DDS Supermarket Mini & Other Majors Other Retail Total Specialties Mobile Phones Homewares General Retail Retail Services Food Catering Leisure Jewellery Apparel Food Retail
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1. Based on GPT weighted interest. Excludes development impacted assets (Wollongong Central) and Assets Held for Sale (Dandenong Plaza). 2. Chart excludes Forestway Shopping Centre from November 2015 following the sale of the asset by GWSCF.

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Retail

Strong sales growth underpinning positive leasing results

Portfolio Highlights

Highpoint

Delivery of Level 1 Asian Dining and Entertainment Precinct opened July 15

Charlestown Square

Delivery of an International Mini Major precinct, due to open September 16

Melbourne Central

Strong leasing activity including the opening of Sephora (first to Melbourne market), in November 15

12 months to 31 December	2015	2014
Specialty Base Rent Expiry	28%	21%
Specialty Base Rent Holdover	129 (6%)	110 (6%)
Specialty WALE	2.5 years	2.5 years
Specialty MAT sales psm	$10,460	$9,754
Specialty Occupancy Cost	17.4%	17.9%
Leasing Spreads	(1.6%)	(4.2%)
Retention Rate	70%	61%

Note: Portfolio statistics exclude Assets Held for Sale: Dandenong Plaza

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Retail

Digital initiatives informing portfolio and tenant strategies

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Using digital technology and data…
MARKET SHARE
GAIN AND
RETURN ON
INVESTMENT
SHOPPER
INSIGHTS
ASSET
RESPONSE
DATA
SOURCES
DATA
ANALYSIS
…to drive market share and
investment returns
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Retail

Evolving retail mix as part of the retail development pipeline

Property	Forecast Total Cost	GPT’s Share	GWSCF’s Share	Development Opportunity
GPT Assets
Casuarina Square	$34m	$17m	$17m	Leisure and Entertainment
Rouse Hill Town Centre	$300m	$300m	-	Dept. Store, specialty retail and mixed use
Sunshine Plaza	$400m	$200m	-	Dept. Store and specialty retail
Casuarina Square	$230m	$115m	$115m	Dept. Store and specialty retail
GWSCF Assets
Macarthur Square	$240m	-	$120m	Expanded DDS, Fresh Food, Mini Majors
Highpoint	$450m	$75m	$262m	Mini Majors and specialty retail
Westfield Woden	$200m	-	$100m	Mini Majors and specialty retail
Chirnside Park	$70m	-	$70m	Expanded DDS and specialty retail
Parkmore Shopping Centre	$30m	-	$30m	Additional supermarket

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Office Portfolio

2015 highlights – Portfolio delivering strong results

6.3% like for like income growth

Portfolio Commentary

• 12.8% Total Portfolio Return with all assets recording positive revaluations

133,925 sqm leases signed

• Occupancy increased by 4.6% to 96.0%

• Portfolio cap rate tightened 47 bps

• WALE of 5.8 years

96.0% occupancy

• Investing in the portfolio with $300 million of projects planned or underway

Office Markets & Outlook

$212.7m valuation uplift

• 88% of portfolio in strongest markets of Sydney and Melbourne

• Sydney and Melbourne achieving positive demand and rental growth

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5.94%
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weighted average cap rate

• Brisbane showing some early signs of improved office demand

• Robust investor demand driving cap rates close to historical lows

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Office

Leasing success resulting in high occupancy

• 133,925 sqm of leases signed, and 39,670 sqm of deals at Heads of Agreement stage

• −Average incentive of 28% (19% including effective deals)

• Space requirements led by Property and Business Services and Information and Technology sectors

• −Amazon lease of 9,300 sqm at 2 Park Street concluded in 2H15

• Small tenants dominating demand

• −197 negotiated leasing deals (including Heads of Agreement) with average deal size of 881 sqm

Portfolio Occupancy & Leasing by Size Cohort

Total Leasing Volume by Sector

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sqm
180,000 90.5% 91.4% 96.0% 100% Education 2% Other 6% Finance and
160,000 95% Insurance
Government 16%
140,000 90% 10%
85%
120,000
80%
100,000
75%
80,000
70%
60,000 65%
40,000 60% Information
20,000 55% Media and
Telecommunica
- 50% tions
2013 2014 2015 Property and 23%
Business
1,501sqm plus 751 to 1500sqm 251 to 750sqm Less than 250sqm Occupancy including Signed Leases Services
43%
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Office

Leasing and cap rate compression driving 12.8% Total Portfolio Return

• Cap rate compression, market rental growth and a reduction in downtime from forward solving expiries has resulted in $212.7 million of revaluations for the period.

Valuation Uplift 2015

Property	$m	%	Comment
2 Park Street	$40.1	9.3%	Reduction in downtime and caprate compression
Melbourne Central Tower	$28.0	6.5%	Reduction in downtime and firmingof metrics
One One One Eagle Street	$22.6	9.2%	Caprate compression
MLC Centre	$17.5	4.6%	Reduction in downtime due to a high volume of leasing
1 Farrer Place	$16.3	4.8%	Rentalgrowth and caprate compression
Corner of Bourke and William Streets (CBW)	$11.3	3.7%	Moderate caprate compression and rentalgrowth
Australia Square	$3.8	1.2%	Moderate caprate compression
GWOF Ownership	$73.1	8.2%	Rentalgrowth and caprate compression
Total	$212.7	6.3%

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Office

Actively resolving future expiries

Lease Expiry Profile by Income

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17.2%
Expiry as at Dec-14 Expiry as at Dec-15
13.2%
8.8% 9.6% 8.3% 8.3% 9.4% 9.9%
7.2%
4.9%
2016 2017 2018 2019 2020
MCT: MCT: MCT: 750 Collins: CBW:
DHS ACCC Allianz AMP IAG
5,870 sqm 7,560 sqm 7,260 sqm 37,300 sqm 28,520 sqm
(1.3%) (1.7%) (1.5%) (1.6%) (3.0%)
DP3: 2 Southbank: Workplace6: Aus Sq: MCT:
Marsh PwC Google Origin Energy NBN Co.
9,650 sqm [1 ] 22,970 sqm 9,850 sqm 5,150 sqm 10,800 sqm
(0.6%) (0.5%) (0.6%) (0.9%) (2.6%)
Other: Other: Other: CBW: CBW:
36,700 sqm 74,100 sqm 82,100 sqm Baker & McKenzie Deloitte
(3.0%) (6.1%) (6.2%) 4,540 sqm 18,120 sqm
(0.7%) (2.5%)
Other: Other:
79,800 sqm 114,400 sqm
GWOF asset
1. Uncommitted Marsh area (6.7%) (9.1%)
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1. Uncommitted Marsh area

Note: Includes Signed Leases and Heads of Agreements

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Logistics Portfolio

2015 highlights – Portfolio well positioned

0.7% like for like income growth

92.3% occupancy

Portfolio Commentary

• 13.7% Total Portfolio Return for 12 month period

• High portfolio WALE of 8.2 years due to significant leasing and new investment product completed during the year

• Lower portfolio occupancy due to Melbourne vacancies

• $112m of asset sales at an average premium to book value of 44%

$300m

developments completed

• Brisbane development projects on track with increasing tenant inquiry

Industrial Markets & Outlook

• Improving tenant demand in key markets of Sydney and Melbourne

$88m valuation uplift[1 ]

• Strong investment demand for both prime and secondary grade assets

• Focus on value creation opportunities within portfolio and creating product out of land bank

7.03% weighted average cap rate

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1. Excludes the gain on sale of 1&2 Murray Rose

Logistics

13.7% Total Portfolio Return

Revaluations of $99.5m[1] driven by cap rate compression, leasing and sales

DEVELOPMENT

$20.3 million

INVESTMENT PORTFOLIO

$45.3 million

ASSET SALES

$33.9 million

Development

• $300m completed in FY15

• Completions:

• Rand, Erskine Park

• Coles, Erskine Park

• 3 Murray Rose, SOP

Enhancing and re-leasing

• Value-add leasing - 165,977 sqm leased

• Leasing driving valuation upside

• Somerton leasing to Murray Goulburn

Non-core asset sales

• $112m in sales

• 44% premium to book value

  • Berry Street

  • Pinkenba

  • 1&2 Murray Rose, SOP

• Quad 4 new 15 year lease

• Citiport 7,600 sqm

• Yennora lease extension

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1. Includes the gain on sale of 1&2 Murray Rose Avenue.

Logistics

Focus on development deliveries and land opportunities

Development completions – $300 million end value

Asset	End Value	WALE	Completion Date
Coles RRM, Erskine Park	$135.0m	20 years	June 2015
Rand, Erskine Park	$84.3m	20 years	February 2015
3 Murray Rose, Sydney Olympic Park	$80.2m	7 years	March 2015

Development Pipeline – 135 hectare land bank with potential end value of $400 million

Asset	Land Value	Area	Timing
Metroplex Wacol, Brisbane1	$46.5m	58.3 ha	2016 – 2021
Austrak Business Park, Somerton1	$19.4m	35.8 ha	2016 – 2020
Wembley Business Park, Berrinba, Brisbane	$28.1m	21.0 ha	2016 – 2020
Other	$43.5m	20.2 ha	2016 – 2018
Total	$137.5m	135.3 ha

1. Joint venture

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Logistics

Good progress on reducing near-term expiry profile

• Minimal expiry over next 12 months: two expiries in Dec 2016

• 2017 expiries reduced from 24% to 18%

Lease Expiry Profile by Income

Expiry as at Dec-14 24.0% Expiry as at Dec-15 18.2% 12.6% 10.2% 10.2% 7.5% 8.2% 8.8% 4.3% 3.7% 2016 2017 2018 2019 2020 Yatala: Kings Park: Rosehill: Minto: Eastern Creek: 18,300 sqm 40,300 sqm 29,500 sqm 15,300 sqm 15,100 sqm (2.2%) (4.5%) (4.4%) (2.5%) (2.6%) Sydney Olympic Holker Street: Citiport: Yennora: Wetherill Park: Park: 7,430 sqm 10,346 sqm 33,200 sqm 20,500 sqm 6,800 sqm (3.7%) (2.1%) (4.0%) (2.0%) (2.1%) Citiwest: Somerton: Other: Citiport: 41,700 sqm 40,600 sqm 8,332 sqm 8,807 sqm (3.3%) (1.5%) (1.0%) (1.9%) Other: Other: Other: 47,307 sqm 19,147 sqm 17,845 sqm (6.7%) (2.2%) (2.2%)

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Funds Management

Strong contribution to overall Group return

GPT Total Return from Funds Management

• FM business generated a 14.0% total return to the Group over the year

• FUM increased by 4.6% during the year to $10.0 billion

• GPT Wholesale Office Fund

• 14.9% return over the 12 months

• Net performance fee of $6.9m

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14.0%
3.0%
4.8%
6.2%
Distribution Yield Capital Growth FM Business Total Return
Contribution
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• Discussions progressing on the Fund terms review

• GWSCF return impacted by a decline in portfolio valuation

• GMF distributions ahead of PDS forecast, and NTA increased by 13.2% to $2.15

		Contribution
Fund	FUM	GPT’s Investment	Return (1Yr IRR)
GWOF	$5.8b	$980.3m	14.9%
GWSCF	$3.8b	$623.3m	4.4%
GMF	$0.4b	$36.0m	13.6%1
Total	$10.0b	$1,639.6m

1. Total Unitholder Return

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Summary & Outlook

Well positioned to deliver growth

 High portfolio occupancy with structured rent increases

 Organic growth opportunities through internal development pipeline

• Strong balance sheet

2016 Guidance

• FFO per security growth of 4-5%

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Disclaimer

The information provided in this presentation has been prepared by The GPT Group comprising GPT RE Limited (ACN 107 426 504) AFSL (286511), as responsible entity of the General Property Trust, and GPT Management Holdings Limited (ACN 113 510 188).

The information provided in this presentation is for general information only. It is not intended to be investment, legal or other advice and should not be relied upon as such. You should make your own assessment of, or obtain professional advice about, the information described in this paper to determine whether it is appropriate for you.

You should note that returns from all investments may fluctuate and that past performance is not necessarily a guide to future performance. Furthermore, while every effort is made to provide accurate and complete information, The GPT Group does not represent or warrant that the information in this presentation is free from errors or omissions, is complete or is suitable for your intended use. In particular, no representation or warranty is given as to the accuracy, likelihood of achievement or

reasonableness of any forecasts, prospects or returns contained in the information - such material is, by its nature, subject to significant uncertainties and contingencies. To the maximum extent permitted by law, The GPT Group, its related companies, officers, employees and agents will not be liable to you in any way for any loss, damage, cost or expense (whether direct or indirect) howsoever arising in connection with the contents of, or any errors or omissions in, this presentation. Information is stated as at 31 December 2015 unless otherwise indicated.

All values are expressed in Australian currency unless otherwise indicated.

FFO is reported in the Segment Note disclosures which are included in the financial report of The GPT Group for the twelve months ended 31 December 2015.

To provide information that reflects the Directors’ assessment of the net profit attributable to stapled securityholders calculated in accordance with Australian Accounting Standards, certain significant items that are relevant to an understanding of GPT’s result have been identified. The reconciliation FFO to Statutory Profit is useful as FFO is the measure of how GPT’s profitability is assessed.

FFO is a financial measure that represents GPT’s underlying and recurring earnings from its operations. This is determined by adjusting statutory net profit after tax under Australian Accounting Standards for certain items which are non-cash, unrealised or capital in nature. FFO has been determined based on guidelines established by the Property Council of Australia and is intended as a measure reflecting the underlying performance of the Group.

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