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Goodman’s development work in progress reaches $2.2bn, matched with $2.5bn of third party equity

Thursday, June 20, 2013

Goodman Group (Goodman or Group) today provided an operational update for the nine months ended 31 March 2013.

Key operational highlights

+ Leased 1.9 million sqm across the Group and managed funds, representing $186 million of annual rental income

+ Occupancy maintained at a high 96% across the Group and managed funds, achieving a weighted average lease expiry of 4.7 years

+ Development work in progress of $2.2 billion across 70 projects, with a forecast yield on cost of 8.8%

+ Secured $1.5 billion of new development commitments and completed $1.1 billion of projects in the year to date

+ 71% of new developments pre-committed and 78% pre-sold

+ External assets under management (AUM) increased to $17.4 billion

+ $2.5 billion of new third party equity raised year to date

− Completed GAIF equity raising, with total demand of over $1 billion

− Fully subscribed US$300 million  equity raising by GHKLF to part fund acquisition of interest in ATL Logistics Centre Hong Kong

+ Maintained focus on capital management initiatives at a Group and managed fund level

− Completed $4.5 billion in debt capital market and bank facilities, including GELF
inaugural €500 million Eurobond issue

Goodman Group Chief Executive Officer, Mr Greg Goodman said: “Goodman has experienced solid operating activity levels for the nine months to 31 March 2013 continuing to build on the accelerating business activity in our key markets over the first half of the year and the focused execution of our day to day operational activities by our teams globally. Significant leasing activity across the Group and managed funds reflects the robust underlying property fundamentals and in turn our high occupancy levels and retention rates.”

Goodman’s development business is benefitting from the ongoing undersupply of prime logistics space and a number of structural changes taking place globally, including the rapid growth in e- commerce. This has driven the growth in Goodman’s current development work book to $2.2 billion.

“Overall development demand has been strong in all of our markets, particularly in Australia where we have secured a number of large pre-commitments, increasing our development work book to $970 million. In China, demand continues to run ahead of supply, while in Europe, activity reflects the high customer demand which has been led by e-commerce retailers and the automotive sector. As a result, this provides us with good visibility into our development volumes and growth well into FY2014.”

During the quarter, Goodman benefitted from the strong support of its equity and debt capital partners, with Goodman Australia Industrial Fund completing its equity raising and securing demand in excess of $1 billion. Goodman Hong Kong Logistics Fund separately raised US$300 million of fully subscribed new equity to part fund the acquisition of an interest in ATL Logistics Centre Hong Kong. Initiatives were also undertaken in line with the Group and its managed funds’ continued focus on diversifying debt funding sources, with Goodman European Logistics Fund completing its inaugural €500 million Eurobond issue. Across the Group and managed funds, a total of $4.5 billion in debt capital market and bank facility related initiatives were completed over the nine months to 31 March 2013.

Mr Goodman added: “The strong investment demand from our capital partners over the quarter has seen $2.5 billion of new third party equity raised in the year to date, which is an exceptional result . We now have $3.8 billion in uncalled debt and equity, ensuring our Managed Funds are well positioned to participate in development opportunities from the Group and broader market.”

Strategy and outlook

“We are committed to the prudent yet active execution of our stated business strategy, and to the delivery of consistent quality product. Our strong competitive position is maintained through the diversity of our global operating platform, which is a key advantage, and combined with recently completed initiatives positions us well to take advantage of the demand for high quality industrial space. As a result of the continued strength of our third quarter operating activity, we expect 2HFY13 earnings per security to be in line with 1HFY13 of 16.2 cents, which will result in a full year earnings per security of 32.4 cents, slightly above our initial guidance of 32.3 cents.

“Yesterday we announced that the estimated final distribution will be 9.7 cents per security, resulting in a full year distribution of 19.4 cents, up 8% on the prior full year.” Mr Goodman said.

Attached is an Investor Update presentation, which provides additional information on Goodman’s year-to-date FY2013 operational highlights, together with updates from each of its regions. The presentation forms part of an investor update briefing being hosted by Goodman today.