GPT GROUP — Annual Report 2018

Feb 10, 2019

2018 ANNUAL RESULT

AGENDA Annual Result 2018	SECTION SPEAKER SLIDE 2018 Annual Result Highlights Bob Johnston 3 Financial Summary & Capital Management Anastasia Clarke 6 Retail Mark Fookes 10 Office & Logistics Matthew Faddy 16 Funds Management Nicholas Harris 23 Summary & Outlook Bob Johnston 26

A high quality portfolio of Australian real estate in the best markets

OUR VISION

To be the most respected property company in Australia in the eyes of our Investors, People, Customers and Communities

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OUR FOCUS

Focus on quality assets and markets that we believe will provide long term growth for our investors

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The GPT Group 2018 Annual Result

2018 Annual Result Financial Highlights

Consistently delivering strong returns

3.5% 3.5% FFO GROWTH DISTRIBUTION GROWTH PER SECURITY PER SECURITY

$ 5.58 15.8% NTA PER SECURITY TOTAL UP 10.7 PER CENT RETURN

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The GPT Group 2018 Annual Result

Progress on Strategic Priorities

Investment Portfolio

• • Portfolio occupancy of 97.8%
• • Like for like income growth 3.8%
• • Revaluation gains of $911 million
• • Weighted Average Capitalisation Rate 5.02%

Development Pipeline

• • Sunshine Plaza 97% leased
• • 4 Murray Rose Avenue completed
• • 32 Smith Street pre-commitment for 51% of NLA + Cockle Bay Park (Darling Park 4) DA progressed + Rouse Hill Town Centre revised DA lodged Q4 2018

Balance Sheet & Capital Management

• • Net gearing at 26.3%
• • Interest rate hedging at 83%
• • Credit ratings unchanged at A / A2
• • Weighted Average Debt Maturity of 6.3 years

Funds Management

• • Market leading wholesale platform
• • Assets Under Management of $12.6 billion
• • 12 month total return of 11.3%
• • Development pipeline of over $1.2 billion
• • Office Fund raised $275 million of new equity
• • Melbourne Central Office and Retail expansion

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The GPT Group 2018 Annual Result

FINANCE & TREASURY

Financial Summary

	12 MONTHS TO 31 DECEMBER($ MILLION) 2018 2017 CHANGE Funds From Operations (FFO) 574.6 554.2 3.7% Valuation increases 910.7 717.7 Treasury items marked to market (39.6) (2.9) Other items 6.0 (1.0) Net Profit After Tax (NPAT) 1,451.7 1,268.0 14.5% Funds From Operations (cents per stapled security) 31.84 30.77 3.5% Funds From Operations (FFO) 574.6 554.2 3.7% Maintenance capex (53.2) (54.4) Lease incentives (60.9) (53.5) Adjusted Funds From Operations (AFFO) 460.5 446.3 3.2% Distribution (cents per stapled security) 25.46 24.60 3.5%
		$1,451.7M STATUTORY NET PROFIT AFTER TAX
		3.5% FFO PER SECURITY GROWTH
		99.8% PAYOUT RATIO

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The GPT Group 2018 Annual Result

Segment Result

12 MONTHS TO 31 DECEMBER ($ MILLION) 2018 2017 Retail 326.2 318.4 Office 268.7 248.9 Logistics 109.9 94.0 Funds Management 42.6 37.0 Net Income 747.4 698.3 Net interest expense (124.4) (102.4) Corporate overheads (34.2) (30.6) Tax expense (14.2) (11.1) Corporate (172.8) (144.1) Funds From Operations 574.6 554.2 ▲2.4% Strong contribution from Melbourne Central, Charlestown and Rouse Hill ▲8.0% ▲16.9% Acquisition of Eclipse Tower, plus strong contribution from MLC, 1 Farrer Place and Australia Square Acquisition of Sunshine Business Estate plus development completions at Huntingwood, Eastern Creek and Seven Hills ▲15.1% AUM increased to $12.6 billion ▲21.5% Higher debt balance; cost of debt flat at 4.2%

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The GPT Group 2018 Annual Result

Capital Management

• • Diversified sources of debt
• • Gearing policy of 25 – 35%
• • Targeting ‘A-space’ credit ratings

Sources of Drawn Debt

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CPI Bonds
2%
Domestic bank
debt
20%
USPP
25%
Bank Debt
40%
Foreign bank
Debt Capital
debt
Markets
Foreign 17%
60%
MTNs
7%
Secured bank
debt
Domestic 3%
Commecial
MTNs
Paper
21%
5%
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KEY STATISTICS	KEY STATISTICS	KEY STATISTICS
	DEC 2018	JUN 2018
Net tangible assets per security	$5.58	$5.31
Net gearing	26.3%	24.7%
Weighted average cost of debt	4.2%	4.3%
Weighted average term to maturity	6.3 years	6.6 years
Interest cover ratio	5.7x	6.0x
Credit ratings (S&P / Moody’s)	A / A2	A / A2
Weighted average term of hedging	4.4 years	4.6 years
Drawn debt hedging	83%	79%

Debt Maturity Profile

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700
600
500
400
300
200
100
0
1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
CPI Bonds US Private Placements Medium Term Notes Drawn Bank Facilities Undrawn Bank Facilities
$ millions
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The GPT Group 2018 Annual Result

RETAIL

Retail Highlights

2.2%

3.6%

99.6% PORTFOLIO OCCUPANCY

LIKE FOR LIKE TOTAL SPECIALTY INCOME GROWTH MAT GROWTH

• $6.2 billion retail portfolio + Like for like income growth of 2.2% led by strong results from Charlestown, Melbourne Central and Rouse Hill

Key Outcomes

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Retail Portfolio
Quality & NT
Exposure
QLD 6%
9%
NSW
41%
44%
VIC
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• Retail segment FFO contribution of $326.2 million, 2.4% growth on 2017

• Revaluation uplift of $161.0 million, WACR[1] of 4.88% + Total Portfolio Return of 8.2%

• Specialty Sales Productivity at $11,460psm

• Sunshine Plaza development stage one opening fully leased

85%

99%

70%

exposure to prime of portfolio located NSW and VIC regional in markets with assets household income above Australian average

1. Weighted average capitalisation rate

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The GPT Group 2018 Annual Result

Retail Sales

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Portfolio MAT
12.6%
Growth by Category
11.4%
9.7%
7.3%
6.5%
6.1%
3.6%
3.6%
3.2%
2.4%
Total Specialty MAT Growth
0.7%
Specialties >400sqm Specialties <400sqm
-1.1%
-2.1% -2.4%
6.9% 2.5% -3.7%
-6.6%
Specialty Sales Productivity (<400sqm)
-10.2%
$
11,460 2.5%
Specialty Sales Specialty Sales
per sqm per sqm growth
Statistics exclude development impacted centres (Sunshine Plaza, Macarthur Square, Wollongong)
Total centre Dept Stores DDS Supermarkets Cinemas Total Specialties Tech & Appliances General Retail Homewares Food Retail Leisure Health & Beauty Dining Fashion,Footwear&Accessories Retail Services Jewellery
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The GPT Group 2018 Annual Result

Retail Leasing

• • High quality portfolio is well positioned with low vacancy and fixed increases of 4.7% achieved on deals completed in 2018
• • Introduction of new retail concepts and remixing to growth categories at Highpoint as part of the re-leasing program in 2018
• • Delivered positive leasing spreads with holdovers reducing to 5.9%
• • Continuing to remix the portfolio, responding to customer demand and focused on driving sales productivity

Portfolio Leasing Statistics

	DEC 2018	JUN 2018
Portfolio Occupancy	99.6%	99.7%
Retention Rate	71.3%	71.0%
Avg. Annual Fixed Increase1,2	4.7%	4.8%
Avg. Lease Term1,2	4.7 years	4.8 years
Leasing Spread2	0.2%	0.6%
Specialty Occupancy Cost2	16.9%	17.0%

1. New leases

2. Specialties <400sqm

Expanding growth retailers

Conversion of apparel into food/lifestyle

First to market retailers

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Statistics exclude development impacted centres (Sunshine Plaza, Macarthur Square, Wollongong) & holdovers

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The GPT Group 2018 Annual Result

Retail Development

Retail Offer

• 40 retail brands new to the Sunshine Coast market including a number of international brands and national flagship stores

+ Destination

Leading entertainment, dining and leisure destination, including the highest outdoor zip line course in Australia, a first for a major

regional shopping centre Customer Insights (opening mid 2019)

Investment Summary

• • $216 million of capital invested (GPT’s 50% interest)

• Approx. 6% stabilised incremental yield

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The GPT Group 2018 Annual Result

Retail Development

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Melbourne Central

• • Progressive enhancement of the existing asset | $50 million during 2019 and 2020
• • Proposed Retail Expansion | $70 million, approximately 7,000sqm of retail over two levels
• • Expansion of leisure and entertainment precinct showcasing the best of Melbourne’s “laneways and high streets” including dining, education, wellness and retail markets
• • Forecast Return | over 6.5% stabilised yield
• • Target Commencement – late 2019 | Completion – late 2021

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Rouse Hill Town Centre

• • Proposed $170 million expansion, including additional 16,300sqm of retail and 4,500sqm of commercial space
• • Responding to demand and retail undersupply in this strong growth market introducing food, leisure, entertainment, health & wellness and international retailers
• • Opportunity for residential to be integrated within retail scheme
• • Development Applications lodged in December 2018
• • Forecast Return | over 6.5% stabilised yield
• • Target Commencement – early 2020 | Completion – early 2022

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The GPT Group 2018 Annual Result

OFFICE & LOGISTICS

Office Highlights

$ 5.8%% 598.5MM

$ 5.8%% 598.5MM 16.9% PORTFOLIO VALUATION TOTAL LIKE FOR LIKE UPLIFT RETURN INCOME GROWTH

• $5.9 billion office portfolio

Key Outcomes

• Office valuation gains driven by Sydney assets, WACR of 4.95%

• Leases signed totalling 158,400sqm and 19,400sqm at terms agreed

• Portfolio occupancy of 97.1% and WALE of 5.2 years

• Operations Net Income up 8.0% to $267.7 million as result of strong underlying portfolio growth and the acquisition of Eclipse Tower, Parramatta

Office Portfolio Geographic Exposure

Premium 54% Sydney - 62% Melbourne – 28% Brisbane - 10% A Grade 46%

• Delivered 4 Murray Rose Avenue, Sydney Olympic Park and commenced construction of 32 Smith Street, Parramatta

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The GPT Group 2018 Annual Result

Office Valuation & Market Fundamentals

• • Valuation uplift for 12 months of $598.5 million for the Office portfolio, representing an increase of 11%
• • Sydney experienced greatest valuation growth, delivering uplift of $485.0 million
• • Positive effective rental growth forecast across Eastern Seaboard markets in 2019
• • Strong 12 month net absorption in Melbourne of ~168,000sqm

Valuation Uplift - Sydney CBD

1 Year to 31 December 2018

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Australia Square 22%
2 Park Street 20%
1 Farrer Place 16%
MLC Centre 14%
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Net Supply vs Vacancy Rate by Market

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sqm Net Supply (LHS) Vacancy Rate (RHS) Vacancy Rate - 10y Avg.
400,000 20%
13.2%
300,000 12.6% 15%
200,000 10%
8.0% 7.6%
100,000 3.7% 5%
4.1%
0 0%
-100,000 -5%
Syd CBD Melb CBD Bris CBD
Sydney CBD Melbourne CBD Brisbane CBD
Source: Data summarises all grades; JLL, GPT Research – Q4 2018
Prime Net Effective Rental Growth by Market 1 year growth
$800 $826
6.4%
Sydney
$700
$600
$500
$400 $432 Melbourne $382 8.0%
$319
$300
$263 $268
$200 Brisbane
3.7%
$100
2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021
Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19
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Source: JLL, GPT Research – Q4 2018

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The GPT Group 2018 Annual Result

Office Leasing

• • 158,400sqm of signed leases with a further 19,400sqm terms agreed
• • Increased occupancy to 97.1% with limited vacancy in Melbourne
• • Renewals secured with Mills Oakley, Baker McKenzie, AusNet Services and Microsoft
• • New leases agreed with CUB, Westpac and NIB

Customer Focus

2018 Leasing Success

OFFICE SYDNEY MELBOURNE BRISBANE PORTFOLIO Leases 158,400sqm 78,600sqm 54,100sqm 25,700sqm Signed Occupancy Incl. Signed 97.1% 96.1% 98.6% 94.8% Leases WALE 5.2 years 5.2 years 5.0 years 5.8 years by Income

• Customer #1 85% 82% Satisfaction Survey by independent consultant GPT portfolio Customer Response Campbell Scholtens ranking to surveyed satisfaction score rate peers

Customer Insights

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19% 28% expected to need more office space

23%

are utilising flexible space on an as-needed basis, with 17% likely to adopt in next 3 years

have already adopted activity based working with a further 16% likely to adopt in the next 3 years

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The GPT Group 2018 Annual Result

Office Portfolio Growth

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Eclipse Tower, 60 Station St, Parramatta

Acquisition Date	September 2018
Asset Area	25,700sqm
Purchase Price	$277.6 million
Initial Yield	5.34%

• • 100% leased to blue chip occupiers
• • High profile quality A-grade asset, completed in 2012
• • Central Parramatta location adjacent to train station

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4 Murray Rose Avenue, Sydney Olympic Park

Completed October 2018 Asset Area 15,800sqm Yield on Cost* 7.75%

• • Valued at $125 million
• • 81% leased, with NSW Rural Fire Service (9,300sqm) now in occupation

• Forecast yield on cost at full occupancy.

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300 Lonsdale Street, Melbourne Central

• • Seeking pre-commit for ~20,000sqm complex above retail centre
• • Unique opportunity to further enhance Melbourne Central as a dominant mixed use precinct
• • Expected yield on cost for office component over 6.50% and end value in excess of $200 million

32 Smith, Parramatta

• • QBE pre-commitment across 13,600sqm, representing 51% of NLA
• • Target completion in late 2020
• • Expected yield on cost of ~6.75% and an end value in excess of $300 million
• • Parramatta office market experiencing record low vacancy rates, limited uncommitted supply

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The GPT Group 2018 Annual Result

Logistics Highlights

2.8% PORTFOLIO LIKE FOR LIKE INCOME GROWTH

Key Outcomes

$ 151.2M 15.2% VALUATION TOTAL UPLIFT RETURN

VALUATION UPLIFT

• • $1.9 billion logistics portfolio
• • High portfolio occupancy of 97.2% and long WALE of 7.1 years
• • 164,300 sqm of leases signed and 39,700 sqm of terms agreed

• Operations Net Income up 12.3% to $104.8 million as a result of underlying portfolio growth, acquisitions and developments

• • Significant valuation uplift and WACR of 5.78%

Logistics Portfolio Geographic Exposure

Sydney - 64% Melbourne - 26% Brisbane - 10%

• Two developments commenced in 2018 have delivered an uplift of $17.6 million, now valued at $85.7 million

• Strong uplift for long WALE assets in Sydney

• • Three investment acquisitions and development land purchased in Melbourne’s west

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The GPT Group 2018 Annual Result

Logistics Portfolio Growth

• • Three prime logistics assets acquired, totalling $102 million, in Sunshine, Derrimut and Truganina in Melbourne’s West
• • Replenishing the Logistics land bank through the acquisition of 8.9 hectares of land in Truganina with capacity to deliver 48,000sqm of GLA
• • Completion of logistics developments at Huntingwood 1B and 50 Old Wallgrove Road at Eastern Creek
• • Six new developments completed over past 18 months, delivering $240 million of investment assets

Huntingwood 1B
Sydney
End Value	$26 million
Asset Area	11,300sqm
Yield on Cost	6.7%
▪ Leased to Cahill	Transport Group

50 Old Wallgrove Road, Eastern Creek Sydney
Forecast End Value	$66 million
Asset Area	30,100sqm
Yield on Cost*	6.6%
▪ Leased to ACR Supply Partners1 * Forecast yield on cost at full occupancy. ~~1 Includes leasing completed post-balance date~~

• Forecast yield on cost at full occupancy. ~~1. Includes leasing completed post-balance date.~~

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Sunshine Business Estate Melbourne	Sunshine Business Estate Melbourne
Located approximately 6km from Port Melbourne
Acquisition Price	$74 million
Initial Yield	6.1%
▪ Four assets fully leased to ASX listed IVE Group for a remaining 8 years

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The GPT Group 2018 Annual Result

FUNDS MANAGEMENT

Funds Management Highlights

$ 12.6B

11.3%%

11.3%% 15.1% TOTAL PROFIT RETURN GROWTH

ASSETS UNDER MANAGEMENT

• Funds Management business delivered a strong total Key return of 11.3% for the full year Outcomes +

• Total Assets Under Management increased by 5% to $12.6 billion

FUNDS MANAGEMENT FINANCIAL SUMMARY 2018 2017 CHANGE ($M) Segment Result 42.6 37.0 15.1%

AUM and EBIT Growth (5 Year CAGR)

• Operating EBIT grew by 15.1% to $42.6 million

• Result demonstrates scalable platform as earnings growth exceeds AUM growth

15.3% 12.2% Assets Under Management

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Underlying EBIT
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The GPT Group 2018 Annual Result

Fund Update

	GPT Wholesale Office Fund • Achieved a 4.8% total return for the year to 31 December 2018 • Leading its unlisted retail fund peers with a 9.6% total return over three years • Progressed its strategy to re-weight portfolio towards super- regional shopping centres • Maribyrnong Homemaker Centre was sold for $67.1 million, a 12% premium to book value • Achieved a 12.7% total return for the year to 31 December 2018 • Leading its unlisted office fund peers over five, seven and ten years • Acquired 32 Flinders Street, Melbourne, as a medium-term precinct development opportunity • Successfully completed a long-dated US Private Placement (USPP) for US$250m (A$351m) at a low margin of 167 bps • Raised $275 million of equity from a mix of existing and new investors, with funds initially used to reduce gearing to 15.5% GPT Wholesale Shopping Centre Fund
			FUND TOTAL ASSETS
			GWOF $7.8b
			GWSCF $4.8b
			Total $12.6b

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The GPT Group 2018 Annual Result

Summary & Outlook

ECONOMIC OUTLOOK

• Economic outlook has softened but expected to remain healthy

• Sydney & Melbourne beneficiaries of public & private investment, low unemployment and population growth

• Fiscal and monetary policy remains accommodative and flexible

SECTOR OUTLOOK

• Retail assets in strong catchments with a compelling proposition will grow productivity

• Sydney and Melbourne office market fundamentals remain robust

• Logistics values will continue to benefit from strong investor demand

GROUP OUTLOOK

• Office and logistics sectors will continue to outperform

• Strategic investment will ensure our retail assets remain preferred destinations

• Developments on-track and provide growth opportunities

• Disciplined capital allocation and strong capital position

2019 GUIDANCE FFO per security growth of 4% DPS growth of 4%

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The GPT Group 2018 Annual Result

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 in this presentation 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. 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 this presentation - 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 2018 unless otherwise indicated.

All values are expressed in Australian currency unless otherwise indicated.

Funds from Operations (FFO) is reported in the Segment Note disclosures which are included in the financial report of The GPT Group for the 12 months ended 31 December 2018. FFO is a financial measure that represents The GPT Group’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. A reconciliation of FFO to Statutory Profit is included in this presentation. Key statistics for the Retail and Office divisions include GPT Group’s weighted interest in the GPT Wholesale Shopping Centre Fund (GWSCF) and the GPT Wholesale Office Fund (GWOF) respectively.

The images for Melbourne Central and Rouse Hill Town Centre on page 15, and for 32 Smith Street and Melbourne Central on page 20, represent artist impressions.

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The GPT Group 2018 Annual Result