GPT GROUP — Interim / Quarterly Report 2009

Aug 30, 2009

Attention ASX Company Announcements Platform Lodgement of Open Briefing[®]

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The GPT Group Limited Level 52, MLC Centre, 19 Martin Place, SYDNEY, NSW, 2000

Date of lodgement: 31-Aug-2009

Title: Open Briefing[®] . The GPT Group. CEO on H1 09 Results & Outlook

Record of interview:

corporatefile.com.au

The GPT Group last week reported a net loss of $1.2 billion for the first half ended June 2009. This compares with a loss of $67.7 million in the previous corresponding period. Realised operating income was $183.0 million, and you’ve confirmed your guidance of realised operating income of $365 million for the current full year ending December 2009. What are the key risks to your guidance?

CEO Michael Cameron

With 16 weeks to go until the end of the year, we’re pretty confident we’ll deliver our $365 million guidance. This reflects the strong performance of our core business and takes into account the non-core asset sales we’ve completed to date.

With 99 percent occupancy levels across the portfolio and long lease terms, we’re happy that we’ll deliver at least at the guidance level. Even if the economy weakened, it’s unlikely to have an impact on our result in the current year.

corporatefile.com.au

You’ve indicated the core business had like-on-like growth of 4.4 percent. What were the main drivers of this growth and is it sustainable in the current environment?

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CEO Michael Cameron

The main drivers were our high occupancy levels – at around 99 percent – and long lease terms. That reflects the high quality of our portfolio: regardless of where we are in the cycle, our high quality assets tend to perform well.

Also, a large proportion of our tenants have structured rent increases and that guarantees a certain level of growth each year unless occupancy starts to weaken.

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The first half result included a $567.2 million reduction in the value of the core domestic portfolio and Funds Management (Australia) and a $1.3 billion reduction across the non-core portfolios. You’ve indicated you see the devaluation cycle slowing and valuations stabilising in the nearer term. What is your basis for this view?

CEO Michael Cameron

There’s still uncertainty globally about property valuations and the economy remains very fragile. In Australia, there’s a cautious level of optimism and retail sales growth continues to be solid. But one of the most important factors is the very limited supply of new assets coming onto the Australian market. Whilst demand is slowing, at some point it will start to grow and with limited supply it’s guaranteed values will firm.

corporatefile.com.au

When do you see occupancy and rental rates bottoming and what is your experience in recent leasing/lease renewal negotiations?

CEO Michael Cameron

Occupancies have remained strong and stable across our core business and whilst we have 99 percent occupancies we remain in a strong position.

corporatefile.com.au

GPT booked corporate overheads of $14.5 million in the first half. Your guidance for full-year corporate costs of $22 million implies second half costs of $7.5 million. Where have costs been removed and what scope is there for further overhead reductions?

CEO Michael Cameron

Most of the cost reduction reflects the sale of our non-core assets, particularly in Europe with the sale of the Hamburg Trust. As we simplify the business, expenses within the assets and corporate overheads reduce as the business is easier to manage. That’s seen even in my senior team, with a reduction in numbers.

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GPT booked a mark-to-market increase of $607 million on interest and currency hedges compared with December 2008. With most of your offshore asset exposure now removed, what level of cost will be involved in closing out your forex exposures? What is your hedging policy for the core business?

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CEO Michael Cameron

Our policy has been to be at least 80 percent hedged. In recent periods we’ve reduced debt from $5 billion to $2 billion and reduced our hedging from $4 billion to $3 billion. That means we’re about $1 billion over-hedged at the moment.

To close out the existing position would bring forward a payment of around $150 million and result in an annual benefit of about $24 million. That’s something we’ll be addressing over the next couple of months to position ourselves for 2010.

corporatefile.com.au

Net debt was $2.0 billion as at 30 June 2009, down from $4.1 billion six months earlier, and gearing was 22.2 percent, down from 33.7 percent. You’ve indicated you see opportunities to further improve the Group’s liquidity position. Where do you see debt levels trending in the nearer term?

CEO Michael Cameron

It’s worth noting that following the settlement of the asset sales we’ve done in the last two months, our gearing will be less than 20 percent.

Certainly we don’t want to see our gearing exceed 30 percent, but in the short term we’ll get the benefit of selling up to $1 billion in non-core assets which would have a significant benefit to our gearing ratio. Offsetting that, we’ve also got the payment for the Highpoint put option to take care of in the current second half.

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Non-core assets had a total book value of $1.0 billion as at the end of June, following valuation reductions of $216.5 million (excluding the B&B European joint venture). You’ve said you’re not a “forced seller” of these assets but recent sales in the resort portfolio have been at substantial discounts. What is the likely time frame for realising an appropriate value for these assets?

CEO Michael Cameron

The only reason we sold the resorts at significant discounts was that we felt the price levels reflected the current valuations and volatility of earnings in those businesses, as well as their need for ongoing capital injections. These assets were only a very small part of the portfolio and we released $85 million on their sale.

Strategically we’re keen to sell the remainder of the non-core assets. But we also have a desire to get as close to market price as possible, so it may take some time to finalise those sales. With gearing of close to 20 percent we certainly have no financial reason to divest in a hurry.

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GPT paid a distribution of 2.5 cents per security for the six months to June, in line with guidance of 4.5 cents for the full year. What upside is there to the distribution guidance?

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CEO Michael Cameron

Our distribution guidance ties in with our earnings guidance. At this point we’re comfortable with earnings of $365 million and a distribution of 4.5 cents for the full year. We’re not going to revise our guidance at this point.

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What will be the key drivers of distribution growth in the nearer term?

CEO Michael Cameron

The key driver will simply be the earnings from the business: as our earnings continue to grow, there will be proportional growth in the distribution.

corporatefile.com.au

Thank you Michael.

For more information about The GPT Group, visit www.gpt.com.au or call Donna Byrne, Head of Investor Relations and Corporate Affairs on (+61 2) 8239 3515

To access past Open Briefings by The GPT Group, or to receive future Open Briefings by e-mail, visit www.corporatefile.com.au

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