GPT GROUP — Management Reports 2010

Mar 1, 2010

==> picture [555 x 107] intentionally omitted <==

----- Start of picture text ----- Attention ASX Company Announcements PlatformLodgement of Open Briefing []----- End of picture text -----

ASX ANNOUNCEMENT: 02 March 2010

CEO on FY 09 Results & Outlook

Open Briefing with CEO Michael Cameron

==> picture [90 x 53] intentionally omitted <==

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

In this Open Briefing[®] , CEO Michael Cameron discusses

o Solid underlying performance reflecting return to core Australian based business

o FY 10 outlook and drivers of superior risk adjusted returns going forward

o Flexibility in funding development pipeline

Open Briefing interview:

openbriefing.com

The GPT Group recently reported a net loss of $1.1 billion for the year ended December 2009, compared with a net loss of $3.3 billion in the previous year. Realised operating income was $375.8 million, down 19.8 percent, but ahead of guidance of $365 million. Where did actual performance vary most significantly from your expectations?

CEO Michael Cameron

Overall, it was a good result. Our core Retail, Office and Industrial/Business Park portfolios performed in line with guidance. The non-core hotel, tourism and seniors housing investments performed better than guidance, driven by stronger occupancy levels and very tight cost control, so we’re very happy with their performance. Our interest expense was lower and that reflected the fact that we unwound excess hedges just before Christmas.

openbriefing.com

For the current year ending December 2010, you’re targeting realised operating income above the 2009 result. What are expected to be the key drivers of any growth and what are the key risks to your guidance?

CEO Michael Cameron

The key driver of our growth will be our fantastic competitive strength: the scale, diversity and quality of the portfolio, and the culture of the organisation. This creates a real advantage over our competitors.

The more immediate driver of growth will be our structured rental increases of 3.5 to 4.5 percent each year which automatically affect about 80 percent of our portfolio. We’ve also

Open Briefing® | The GPT Group | 02 March 2010

1

==> picture [64 x 38] intentionally omitted <==

got a very strong, $2.4 billion development pipeline and an investment capacity at $2.5 billion.

The biggest risk we face at the moment is market confidence in an environment where there’s potential for rising interest rates. This can have a major impact on consumer confidence and spending which can impact sales across our retail centres.

openbriefing.com

GPT paid a distribution of 4.5 cents per security for the 2009 year, in line with guidance. Your distribution guidance for 2010 is “at least” 3 cents. What assumptions do you base this guidance on? How will your revised capital management policy affect distributions in the medium term?

CEO Michael Cameron

Providing sustainable returns is the core of our revised capital management policy. In 2010 we’ll return 80 percent of realised operating income to security holders. In 2009, when we were operating under a different distribution policy, we paid a higher proportion of realised operating income. We believe that paying out a level of earnings that allows us to fund ongoing operational capex is a much more sustainable practice. It’s also something you’ve seen the rest of the industry do.

Our guidance is based on a stable portfolio with no further material sales of non-core assets.

openbriefing.com

The 2009 result reflected non-cash adjustments including a $774.5 million net reduction in Australian core asset valuations, a $203.0 million net reduction in non-core investments and a $1,092.9 million write-off of the value of the Joint Venture with Babcock & Brown. Where are we in the Australian property cycle? Do you see further material reductions in asset valuations in the current year?

CEO Michael Cameron

We’ve seen some stabilisation in asset values and we think we’ve now reached the bottom of the market for prime real estate which is what we’re invested in. Although we’re cautiously optimistic, we believe we’ll see stability through 2010 with the potential for some growth in 2011.

openbriefing.com

Across your core portfolios, comparable income growth in 2009 was 3.7 percent, with the Retail, Office and Industrial/Business Park portfolios booking comparable growth of 4.8 percent, 2.6 percent and 2.5 percent respectively. What were the main drivers of this growth and are these rates sustainable in the current environment?

CEO Michael Cameron

Firstly, we’ve got scale advantages and plenty of liquidity in the market. Being the third largest listed property owner in Australia gives us a real advantage. Secondly, the high quality of our portfolios attracts high quality tenants. For example, 93 percent of our Retail portfolio is made up of regional assets, in the Office space, 100 percent of the portfolio is classed as prime grade, and in our Industrial/Business Park business, all our assets are in prime locations. Thirdly, we have a diversified portfolio with 59 percent retail, 31 percent office and 10 percent industrial. This all provides us with significant benefits.

Open Briefing® | The GPT Group | 02 March 2010

2

==> picture [64 x 38] intentionally omitted <==

Fourthly, our culture is built on the strong heritage of founder Dick Dusseldorp and we have a leadership position in sustainability which continues to be a point of difference for us and attracts premium tenants. Lastly we’ve got an enthusiastic team that is focused on maximising returns through active management: we have a renewed board and a very experienced management team.

openbriefing.com

You have highlighted the high occupancy levels and long lease expiries within your core portfolios, as well as your expectation of structured rent increases across the majority of your portfolio. Given you remain cautiously optimistic about the speed of recovery in Australia, where do you expect rental growth to come from and what type of occupancy rates are you expecting over the current year?

CEO Michael Cameron

Rental increases are built into the majority of our leases across all three portfolios. This gives us immediate benefits. In Retail, we expect occupancy to remain solid. Occupancy levels in the Office portfolio remain above the market at 95.9 percent and with an average lease term of 5.2 years. Occupancy across the Industrial segment remains strong at 96.5 percent with an average lease expiry of 7.2 years, which is approximately two years above the market average.

We’ve seen occupancy reduce in the Office portfolio but we’re currently experiencing good enquiry levels and expect occupancy to improve in 2010. We also have a small amount of space available in the Industrial portfolio and the team is working hard to fill it. Retail is the real stand-out with current occupancy of 99.6 percent. The Retail portfolio has quality assets, very strong terms and we don’t see a material change in 2010.

openbriefing.com

Over the 12 months to December 2009, GPT raised $1.7 billion of capital and sold over $1 billion of non-core assets reducing the ratio of debt to total tangible assets to 23.5 percent from 33.7 percent. Gearing is below your covenant level of 40 percent and below your policy range of 25 to 35 percent. Given still challenging credit market conditions, what gearing level do you expect to maintain over the year?

CEO Michael Cameron

Given our expected capital expenditure over 2010, gearing will increase slightly but will remain well below 30 percent. Our policy of maintaining gearing in the range of 25 to 35 percent will guide us when making any investment decisions. We’re confident of good organic growth, but if larger opportunities emerge over time, we’ll always have a look at them. We have a strong balance sheet and a business model that provides us with the potential to look at attractive opportunities going forward.

openbriefing.com

GPT’s effective interest rate as at 31 December 2010 was 6.8 percent and you expect an average interest cost of 8.2 percent for the 2010 year. With interest costs at this level, to what extent can your $2.5 billion development pipeline be economic?

Open Briefing® | The GPT Group | 02 March 2010

3

==> picture [64 x 38] intentionally omitted <==

CEO Michael Cameron

In regards to cost we are at a point in time when credit conditions are very unusual. Development projects in our pipeline are developed over years and we expect credit conditions to change. We have a variety of funding sources available to us: we may decide to fund projects by either debt or equity or jointly with our business partners or our Wholesale Funds. We’ve got a lot of flexibility.

openbriefing.com

GPT exited its excess offshore interest rate income hedges in late 2009. The Group is now hedged to approximately 60 percent of current outstanding debt and you project this figure to rise to 90 percent by June 2010 as forward start positions are activated. What costs will be involved in boosting hedging to 90 percent and do you foresee the need for further rises in coverage going forward?

CEO Michael Cameron

The increase to 90 percent hedging will incur a cost but it continues to move around so we won’t quantify it at this point. Our policy is to be substantially hedged at approximately 80 percent. We believe it’s prudent to maintain a high level of hedging, particularly in an environment of rising interest rates.

openbriefing.com

You are focused on achieving income growth in excess of CPI annually from your core portfolio and long term total return in excess of your weighted average cost of capital. In 2009 your income growth of 3.7 percent compared with CPI growth of 2.1 percent. To what extent is this indicative of the growth differential you might expect to achieve in future?

CEO Michael Cameron

In the second half of 2009, we booked net profit of $125 million, a strong indicator of the benefits of the strategic changes we’ve made.

We’re focused on achieving income growth in excess of CPI annually from the core portfolio and long term value creation providing a total return in excess of our weighted average cost of capital of about 8.5 percent through the cycle. Our targets for 2010 of realised operating income above the 2009 result and a distribution of at least 3 cents per security, represent a superior risk adjusted return from a high quality portfolio of assets with a high quality tenant base.

openbriefing.com

GPT has two main developments underway: the $470 million Charlestown Square shopping centre and the $185 million One One One Eagle Street office building in Brisbane. Going forward, what is the expected level of spending on development projects and to what extent will growth depend on contributions from new developments?

CEO Michael Cameron

In 2009 we spent about $220 million on development. In 2010 we expect to spend around $460 million, including these two developments, capital expenditure and other minor developments, as we progress the opportunities in the pipeline. Over time we expect to spend maybe two to three times more than this a year. We currently have an investment capacity of $2.5 billion.

Open Briefing® | The GPT Group | 02 March 2010

4

==> picture [64 x 38] intentionally omitted <==

Besides our development pipeline of $2.4 billion, we’ll also achieve growth through the structured rent increases across the majority of our portfolio.

openbriefing.com

Why do you consider GPT a ‘less complicated’ business than it was? What were the key lessons learned from the challenges of the last two years and how have they been incorporated in your strategy for 2010 and beyond?

CEO Michael Cameron

The business is simpler because we’ve returned the company to its core business which is being an active owner of Australian based real estate assets. We’ve also exited complex joint ventures, sold non-core assets and exited offshore businesses. The business model has been simplified, our strategy is clear and our balance sheet is strong. We learnt that when pursuing returns from the business, risks associated with the return should be taken into account. We’re now focused on delivering superior, risk adjusted returns.

openbriefing.com

Thank you Michael.

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

To read other Open Briefings, or to receive future Open Briefings by email, please visit www.openbriefing.com

DISCLAIMER: Orient Capital Pty Ltd has taken reasonable care in publishing the information contained in this Open Briefing®. It is information given in a summary form and does not purport to be complete. The information contained is not intended to be used as the basis for making any investment decision and you are solely responsible for any use you choose to make of the information. We strongly advise that you seek independent professional advice before making any investment decisions. Orient Capital Pty Ltd is not responsible for any consequences of the use you make of the information, including any loss or damage you or a third party might suffer as a result of that use.

Open Briefing® | The GPT Group | 02 March 2010

5