GOODMAN BONDS FEBRUARY 2018 Arranger and Joint Lead Manager Joint Lead Managers
This presentation contains the key terms of an offer of fixed rate secured debt securities by GMT Bond Issuer Limited (Issuer), a wholly owned subsidiary of Goodman Property Trust (). The offer of is made in reliance upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conduct Act 2013 (FMCA). The have identical rights, privileges, limitations and conditions (except for the interest rate and maturity date) as the Issuer s: IMPORTANT NOTICE AND DISCLAIMER + + + $100,000,000 fixed rate secured bonds maturing on 16 December 2020 (which have an interest rate of 6.20% p.a.) which are currently quoted on the NZX Debt Market under the ticker code GMB020 (GMB020 Bonds); $100,000,000 fixed rate secured bonds maturing on 23 June 2022 (which have an interest rate of 5.00% p.a.) which are currently quoted on the NZX Debt Market under the ticker code GMB030 (GMB030 Bonds); and $100,000,000 fixed rate secured bonds maturing on 31 May 2024 (which have an interest rate of 4.54% p.a.) which are currently quoted on the NZX Debt Market under the ticker code GMB040 (GMB040 Bonds), (the GMB020 Bonds, the GMB030 Bonds and the GMB040 Bonds, together the Existing Bonds). The are of the same class as the Existing Bonds for the purposes of the FMCA and the Financial Markets Conduct Regulations 2014. The Issuer is subject to a disclosure obligation that requires it to notify certain material information to NZX Limited (NZX) for the purpose of that information being made available to participants in the market and that information can be found by visiting www.nzx.com/companies/gmb. The Existing Bonds are the only debt securities of the Issuer that are in the same class as the that are currently quoted. Investors should look to the market price of the Existing Bonds to find out how the market assesses the returns and risk premium for those bonds. This document does not constitute a recommendation by the Issuer, Goodman (NZ) Limited (Manager), Goodman Property Trust, Westpac Banking Corporation (ABN 33 007 457 141) (acting through its New Zealand branch), (Westpac and the Arranger) Deutsche Craigs Limited or First NZ Capital Securities Limited (together with Westpac, the Joint Lead Managers), Public Trust (Bond Trustee and the supervisor), nor any of their respective directors, officers, employees or agents to subscribe for, or purchase, any of the. To the extent permitted by law, the Manager, the Arranger, the Joint Lead Managers, the Bond Trustee and any of their respective directors, officers, employees or agents accept no liability whatsoever for any loss arising from this document or its contents, or otherwise in connection with the offer or any person s investment in the. A terms sheet (Terms Sheet) has been prepared by the Issuer in respect of the offer of, which sets out how may be applied for. The distribution of this presentation, and the offer or sale of the, may be restricted by law in certain jurisdictions. Persons who receive this presentation outside New Zealand must inform themselves about and observe all such restrictions. Nothing in this presentation is to be construed as authorising its distribution, or the offer or sale of the, in any jurisdiction other than New Zealand and the Issuer accepts no liability in that regard. The may not be offered or sold directly or indirectly, and neither this presentation nor any other offering material may be distributed or published, in any jurisdiction except with the prior consent of the Issuer and in conformity with all applicable laws and regulations of that country or jurisdiction. 0 2 Application has been made to NZX for permission to quote the on the NZX Debt Market and all the requirements of NZX relating thereto that can be complied with on or before the distribution of the Terms Sheet have been duly complied with. However, NZX accepts no responsibility for any statement in this document. NZX is a licensed market operator and the NZX Debt Market is a licensed market under the FMCA. Unless otherwise indicated, all numerical data provided in this presentation is stated as at 30 September 2017 and all property statistics are as at 31 December 2017. All figures are rounded. All figures are in New Zealand dollars.
INVESTMENT HIGHLIGHTS security + first ranking security over a portfolio of prime property assets + security shared equally on a pro rata basis with existing bondholders, USPP noteholders and lenders under GMT s bank facility investment grade BBB+ expected issue credit rating proven business model + listed property trust investing in prime industrial and business space real estate predominantly in Auckland + high quality property portfolio with a book value of $2.6 billion 1, a weighted average lease term (WALT) of 6.1 years and an occupancy rate of 97.6% + stable income stream supported by a high quality customer base + strong balance sheet with a conservative level of debt term 5½ years size $75m Up to $75m with up to $25m of over subscriptions The Crossing Highbrook Business Park 0 3 1 total property portfolio includes GMT s proportionate share in the properties owned by its Viaduct joint venture.
CONTENTS Presented by: Keith Smith Chairman & Independent Director Attending Auckland only Andy Eakin Chief Financial Officer +64 21 305 316 James Spence Director - Investment Management +64 21 538 934 Business focus 05 Investment portfolio 09 Development programme 14 Financial overview 20 Capital management 23 Business outlook 26 28 Questions & thank you 34 Selected abbreviations 0 4 Square metres Net lettable area Year to date sqm NLA YTD
BUSINESS FOCUS ACCO Highbrook Business Park 0 5
GOODMAN PROPERTY TRUST Assets by region + + + GMT is a listed unit trust that invests in prime industrial and business space property, predominantly in Auckland externally managed by ASX-listed Goodman Group Board of the Manager has a majority of independent directors, elected by GMT investors Auckland ~99% $2.6bn 1 total property portfolio 1m sqm net lettable area 97.6% property occupancy $1.7bn 2 market capitalisation + Goodman Group is GMT s largest unitholder, currently holding 21% of the units in GMT + total property portfolio of $2.6 billion 1 + + GMT has a BBB (stable) corporate credit rating GMB020 Bonds, GMB030 Bonds and GMB040 Bonds have a BBB+ (stable) credit rating Christchurch ~1% 6.1 years WALT 6.5% weighted average capitalisation rate 200+ customers 32.4% 3 Loan to value ratio (look through basis) 1 total property portfolio includes GMT s proportionate share in the properties owned by its Viaduct joint venture. 06 2 market capitalisation of Goodman Property Trust Ordinary Units as at 31 January 2018. 3 on a proportionately consolidated basis including GMT s interests in its Viaduct joint venture. Holders of will receive the benefit of a separate loan to value covenant which is described in more detail on slides 30 and 31.
REINFORCING STRATEGIC GOALS prime portfolio + prime investment portfolio with strategic land holdings situated in key industrial locations + focused on Auckland, New Zealand s gateway city + development programme improving asset quality and growth profile of GMT + assets actively managed to maximise earnings, value and balance sheet strength prudent capital management + gearing currently within 30% to 35% range, with strong liquidity profile + sustainable growth with asset recycling funding development and investment activity + diversity of capital sources + asset sales enabling de-gearing and funding of development pipeline strongly aligned manager + Goodman Group, a long term partner committed to the New Zealand market and current business structure + Manager s relationships provide access to international customers, investors and global capital markets 07
BUILDING EXCELLENCE operating outlook + positive economic outlook continues, particularly in Auckland + property markets reflecting increased customer demand with high occupancy levels and improved rental growth active strategy + operating conditions supporting an organic growth strategy with new development and investment activity funded through asset disposals + continued focus on realising the value in GMT land holdings with around $100 million of new development projects targeted per annum + active portfolio management, maximising rental income and asset values strong financial focus + focused on cash earnings to maximise unitholder value + sustainable level of distributions to support investment activity 08
INVESTMENT PORTFOLIO Ford Highbrook Business Park 09
AUCKLAND ESTATES Viaduct joint venture Concourse Industry Park Connect Industrial Estate Tamaki Estate Penrose Industrial Estate The Gate Industry Park Highbrook Business Park Savill Link Westney Industry Park M20 Business Park
HIGHBROOK BUSINESS PARK Quest Expansion Highbrook Crossing KERWYN AVE BUSINESS PARADE STH Parade Units 8 Business Parade Sth UNDERWOOD ST PUKEKIWIRIKI PL EL KOBAR DR BUSINESS PARADE NTH Plytech Warehouse Office Building 6 Highbrook Crossing HIGHBROOK DRIVE BUSINESS PARADE STH SIR WOOLF FISHER DR WAIOURU RD Multi-storey Car Park Highbrook Drive Sir Woolf Fisher Dr Warehouses 38 Sir Woolf Fisher Drive TO SH1 Spicers (NZ) Limited Waiouru Road Showroom Warehouses 80 Highbrook Drive Gateway Warehouses 102 162 Highbrook Dr Map contains artist impressions to show planned developments
QUALITY-+-INCOME top ten customers (percentage of revenue) + a positive economic environment and strong property fundamentals are supporting greater levels of customer demand + top ten customers represent 27.5% of total income + + cash rental growth through fixed increases (47%), market based review (31%) and CPI based reviews (23%) average occupancy of 97% in YTD FY18, 97.6% as at 31 December 2017 New Zealand Post Group DHL Fletcher Building Limited Fonterra Coda Toll Group New Zealand Spicers (NZ) Limited Air New Zealand Datacom Officemax Limited portfolio occupancy 0% 1% 2% 3% 4% 5% the colours in the chart above represent the contribution from different subsidiary companies. + 97.7% industrial occupancy 100% 98% 96% 94% 96% 97% 96% 97% 98% 98% 92% 12 90% Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Dec-17 portfolio statistics presented are on a portfolio income basis and include the Viaduct joint venture.
QUALITY-+-CERTAINTY + WALT of 6.1 years at 31 December 2017 asset diversity 1 Development Land Office Park 10.6% + 10.1% of income due to expire in FY19 Industrial 84.5% lease expiry profile 2 1 asset diversity is presented on a value basis on completion of current developments and contracted sales. 2 lease expiry profile is presented on a portfolio income basis. 35% 30% 25% 20% 15% 10% 5% 0% 13 Vacant Expiring Income
DEVELOPMENT PROGRAMME CSR, The Gate 393 Church Street, Penrose 14
DEVELOPMENT ACTIVITY commenced development projects $m (total project cost including land) + continued focus to activate remaining land with development starts reaching record levels YTD + a greater volume of development activity has included a successful industrial build-to-lease programme underway since 2012 with around 90% leased within six months of completion commenced development projects sqm (NLA) 15
COMPLETED PROJECTS CSR, The Gate The Hill, Highbrook Business Park ACCO, Highbrook Business Park COMPLETION May 2017 VALUE $11.0m NLA 4,937 sqm COMPLETION June 2017 VALUE $17.8m NLA 7,503 sqm COMPLETION Aug 2017 VALUE $16.9m NLA 6,402 sqm 16
COMPLETED PROJECTS Coda Stage 2, Savill Link AB Equipment, Highbrook Business Park Showroom Units, Highbrook Business Park COMPLETION Nov 2017 NLA 7,410 sqm COMPLETION Dec 2017 NLA 2,929 sqm COMPLETION Dec 2017 NLA 1,730 sqm 17
WORK IN PROGRESS Building 6 Highbrook Business Park Quest Expansion Highbrook Business Park Crossing Carpark Highbrook Business Park COMPLETION Sep 2018 NLA 3,006 sqm COMPLETION Nov 2018 ROOMS 60 COMPLETION May 2019 CARPARKS 343 18
NEW DEVELOPMENTS + seven developments announced YTD, $164.8 million total project cost + $118.4 million of additional spend, yielding 8.3% + 131,000 sqm of development land utilised + 63,468 sqm of additional NLA + build-to-lease units receiving strong enquiry with three units leased prior to construction commencement Development Location Additional Capital ($m) NLA Completion Date Spicers Highbrook Business Park $13.4m 9,800 sqm Mar-18 Fliway expansion Westney Industry Park $2.7m 1,895 sqm Feb-18 Gateway units Highbrook Business Park $46.1m 21,470 sqm Dec-18 Parade units Highbrook Business Park $11.0m 5,770 sqm Jul-18 Selwood units The Concourse $22.2m 10,933 sqm Dec-18 Savill Link Warehouse Savill Link $11.7m 8,500 sqm Nov-18 Plytech Highbrook Business Park $11.4m 5,100 sqm Nov-18 Total YTD $118.4m 63,468 sqm 19 Parade units Artist Impression Gateway units Artist Impression
FINANCIAL OVERVIEW Courier Post Highbrook Business Park 20
1H18 FINANCIAL HIGHLIGHTS stable operating earnings + $64.9 million net property income ($67.5 million in 1H17) + $59.8 million operating earnings before tax ($59.9 million in 1H17) + $45.3 million before tax profit ($73.1 million in 1H17) + $39.5 million after tax profit ($67.6 million in 1H17) positive property performance + property level rental growth through fixed, CPI and market increases + developments contributing $10.1 million of value uplift in 1H18 capital management + low gearing levels with a look through loan to value ratio of 32.4% 1 + sector leading diversity of debt funding sources + $209 million sale of Central Park 2 21 1 on a proportionately consolidated basis including GMT s interests in its Viaduct joint venture. Holders of will receive the benefit of a separate loan to value covenant which is described in more detail on slides 30 and 31. 2 subject to Overseas Investment Office approval.
FINANCIAL SUMMARY + stable performance as a result of balancing divestment and development activity + quality of earnings improved through new developments and asset recycling + look through loan to value ratio remains low 30 September 2017 6 months 30 September 2016 6 months 31 March 2017 12 months 31 March 2016 12 months Net property income ($m) 64.9 67.5 134.2 133.8 Operating earnings before tax ($m) 59.8 59.9 121.7 117.0 Profit after tax ($m) 39.5 67.6 213.8 233.1 Investment Property assets ($m) 2,313.9 2,109.7 2,249.3 2,275.3 Total assets ($m) 2,561.4 2,543.5 2,460.7 2,475.5 Total liabilities ($m) 884.7 977.2 785.8 939.3 Equity ($m) 1,676.7 1,566.3 1,674.9 1,536.2 Borrowings for LVR calculation 1 ($m) 835.5 664.5 761.6 832.4 Assets for LVR calculation 1 ($m) 2,575.0 2,310.1 2,491.7 2,458.5 Look through loan to value ratio 1 (%) 32.4 28.8 30.6 33.9 NTA per unit (cpu) 130.2 122.4 130.4 120.4 22 1 on a proportionately consolidated basis including GMT s interests in its Viaduct joint venture. Holders of will receive the benefit of a separate loan to value covenant which is described in more detail on slides 30 and 31.
CAPITAL MANAGEMENT Highbrook Business Park 23
CAPITAL MANAGEMENT conservative financial gearing + GMT s look through loan to value ratio is 32.4% + bond debt covenant loan to value ratio of 35.9% + bond, bank, USPP and Trust Deed loan to value covenants aligned at 50% + FY18 interest cover ratio expected to be greater than 3.0 times providing significant headroom against GMT s banking covenant of no less than 2.0 times strong balance sheet + over $750 million of sales in the last 4 years 1 + strong contracted rental cashflows from high quality customers + GMT debt currently around 60% 2 hedged to reduce interest rate volatility + USPP USD issuance swapped to NZD; no exchange rate risk industry leading diversity + 56% of drawn debt from non-bank funding 2 + weighted average debt term to expiry of 4.2 years 2 + most diversified funding in NZ listed property sector 24 1 incudes the contracted sale of Central Park 2 as at 31 December 2017, excludes GMT s interests in its Viaduct joint venture.
ISSUANCE+BENEFITS stronger funding metrics + weighted average debt term to expiry of 4.6 years (from 4.2 years) 1 + around 68% of drawn debt from non-bank funding (from 56%) 1 + bank funding retained for operational flexibility maturity profile well-suited to multiple funding sources + amounts of $150 million or less are well suited to sourcing funding in multiple markets + post issuance, GMT will have around $350 million of headroom within its bank facility Debt maturity profile 2 25 1 based on 31 December 2017 debt levels 2 excludes GMT s 51% share of its Viaduct joint venture debt facility. GMT s Viaduct joint venture has a $112 million debt facility maturing September 2019.
BUSINESS OUTLOOK Big Chill Highbrook Business Park 26
STRATEGIC OBJECTIVES + focus on asset and customer quality + targeted investment to Auckland industrial market + intensification of development programme to utilise GMT s land bank + sustainable growth with asset recycling funding new investments + greater balance sheet capacity and improved financial metrics + alignment between cash earnings and cash distributions 27
GOODMAN+ BONDS The Crossing Highbrook Business Park 28
THE ISSUER GMT Bond Issuer Limited + a wholly-owned subsidiary of GMT + sole purpose of the Issuer is to issue bonds for the benefit of the wholly-owned subsidiaries of GMT (GMT Group) + funds received from the offer will be loaned to GMT + the Issuer will receive interest from GMT to enable it to pay interest to holders of the + this is the fifth issue of senior secured bonds by the Issuer + the Issuer has the same board as GMT s Manager, Goodman (NZ) Limited, providing consistency and appropriate oversight for holders of bonds 29
SECURITY + are guaranteed by GMT + secured over certain property and other assets (Security Pool Assets) of the GMT Group + assessed security value (ASV) of $2,220 million + finance debt of $797 million + bond debt covenant loan to value ratio (LVR) of 35.9% + security over the Security Pool Assets is held by the Security Trustee (NZGT (GMT) Security Trustee Limited) for the benefit of existing bondholders, USPP noteholders and lenders under GMT s bank facility, pro rata based on the outstanding indebtedness owing to them at that time + Security Pool Assets include: + real estate properties wholly owned by the GMT Group or in which the GMT Group hold a freehold interest or a leasehold interest + certain real estate assets co-owned on a 50:50 basis with Goodman Group + Security Pool Assets do not include; + the incremental spend on developments in progress, or + any shares in the Viaduct joint venture (Wynyard Precinct Holdings Limited) or the joint venture s assets, or + any related rights arising from GMT s shares in the joint venture 30
COVENANT & DEFAULT + LVR covenant restricts total borrowings of GMT and the GMT Group to 50% of the Assessed Security Value of the Security Pool Assets + breach of LVR covenant is an event of review requiring + 6 months to formulate plan + 20 business day notice period + further 6 months to remedy before event of default occurs + other events of default include + non-payment of interest or principal + insolvency + cross-acceleration from bank debt or USPP notes 31
KEY TERMS OF THE OFFER + Issuer GMT Bond Issuer Limited (Issuer) + Guarantee Guaranteed by Goodman Property Trust (GMT) 1 + Instrument Fixed rate senior secured retail bonds (), ranking equally with debt owed to GMT s main banking syndicate, GMT s United States private placement noteholders and the existing holders of the bonds issued by the Issuer The are supported by security granted by the wholly-owned subsidiaries of GMT, which hold GMT s property assets 2 + Tenor and Maturity Date 5½ years, maturing 1 September 2023 + Corporate credit rating GMT is rated BBB by S&P + Issue credit rating are expected to be rated BBB+ by S&P + Issue Amount Up to $75,000,000 with the ability to accept oversubscriptions of up to $25,000,000 at the discretion of the Issuer + Interest rate Will be set on 23 February 2018 (Rate Set Date) + Use of proceeds The Issuer will loan the proceeds to GMT, which will use those funds (net of issue costs) for general corporate purposes and to repay indebtedness under GMT s bank facility + Bond Trustee / Supervisor Public Trust + Registrar Computershare Investor Services Limited + Application Amounts $1.00 per Goodman+Bond. Minimum $5,000 with multiples of $1,000 thereafter + Listing 3 It is expected the Bonds will be quoted under the ticker code GMB050 on the NZX Debt Market 32 1 GMT s obligations under the guarantee are limited to its assets. GMT s obligations under the guarantee are in turn guaranteed by its wholly-owned subsidiaries and the guarantees given by those entities are not limited. 2 security pool assets do not include, among other things, any shares in its Viaduct joint venture vehicle (Wynyard Precinct Holdings Limited) or any of the joint venture s assets. 3 application has been made to NZX for permission to quote the on the NZX Debt Market. NZX accepts no responsibility for any statement in this presentation.
KEY DATES OF THE OFFER + NZX notice announced 19 February + offer opens 19 February + firm bids due 10:30am, 23 February + rate set date 23 February + offer closes 23 February + issue date 1 March + expected date of initial quotation on the NZX debt market 2 March + interest payment dates 1 September and 1 March each year including the maturity date + first interest payment date Monday, 3 September 2018 1 + maturity date 1 September 2023 1 payment will be made on Monday 3 September 2018 as 1 September 2018 is a Saturday 33
QUESTIONS & THANK YOU Highbrook Business Park 34