Investor Briefing - Goodman · 2019. 5. 5. · Briefing Goodman Property Trust 4 October 2018. Contents Unless otherwise indicated, ... Value (psm land area) $834/m2 WALE 6.2 years

InvestorBriefingGoodman Property Trust

4 October 2018

Contents

Unless otherwise indicated, all numerical data provided in this presentation is stated as at 31 March 2018.

All dollar values are NZD unless otherwise stated. All figures are rounded.

Presented by:

John Dakin

Chief Executive Officer

James Spence

Director – Investment Management

Michael Gimblett

General Manager - Development

Andy Eakin

Chief Financial Officer

Auckland Focus 3

GMT Portfolio 12

Development Programme 24

Financial 29

Summary 32

2

Aucklandfocus

Aucklandcontext

4

Auckland

Population 1.7m

% of NZ popn 35%

Urban area1 607km2

GDP growth2 2.7%

Unemployment 4.3%

Melbourne

Population 4.9m

% of Aus popn 20%

Urban area1 2,543km2

GDP growth2 2.9%

Unemployment 6.8%

Sydney

Population 5.1m

% of Aus popn 21%

Urban area1 2,037km2

GDP growth2 2.9%

Unemployment 6.0%

Brisbane

Population 2.4m

% of Aus popn 10%

Urban area1 1,972km2

GDP growth2 2.9%

Unemployment 7.4%

New Zealand

Australia

All statistics refer to greater city region unless stated.1 Refers to urban area only, as defined by nation’s statistical areas2 National statistic, average annual change to June 2018

Australian industrial marketcomparison

＋ Auckland more land constrained than Australian markets

＋ Tight rental range across the Auckland market indicates no differential being paid for location in contrast to Sydney and Melbourne

＋ Opportunity to drive market rentals in key locations with superior logistics qualities

Auckland Sydney Melbourne Brisbane

Prime Industrial stock (million m2) 4.8 11.5 10.3 5.4

Industrial land supply (ha) 1,111 2,815 6,669 3,173

Prime warehouse rental ($/m2) 120-135 119-196 78-125 108-117

Prime capitalisation rate 5.0%-5.5% 4.5%-5.25% 5.75% 6%

Prime vacancy 2% 1% 4% 4%

5Statistics for greater city regions above reflect Goodman’s estimates and various agency reports.

Key logistics infrastructure

6

Key

State Highway 1

Other State Highway

Rail

Auckland

Airport

Port of

Auckland

Wiri Inland

Port

Metroport

＋ Land constrained city driven by geographic challenges

(harbours, topography)

＋ Experiencing increased pressure on existing

infrastructure given

significant net migration

(circa 110,000 people last 4

years)

＋ Major infrastructure projects underway

7

Aucklandindustrialmarket

＋ Economic growth fuelling occupier demand

＋ Historically low vacancy and rising market rents a feature of most

suburbs

＋ Industrial land values now being driven by offshore demand and

residential conversion factors

Auckland industrial rentals$/m2

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F

Prime Secondary

Auckland industrial yields

0%

2%

4%

6%

8%

10%

12%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F

Prime Secondary

Auckland industrial vacancy

0%

1%

2%

3%

4%

5%

6%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F

Prime Secondary

200

250

300

350

400

450

500

550

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

South Auckland Industrial land values$/m2

Source: CBRE

8

Industrialsupply

＋ 186,000sqm pa of new industrial space developed over the past ten years, utilising approximately 37ha of land pa

＋ Currently around 490ha of industrial land supply in core Auckland locations

＋ Total land supply expected to support 13 years of new development

East Tamaki69ha

Wiri251ha

Airport Corridor141ha

Mangere17ha

Mt Wellington8ha

Rosebank2ha

Penrose5ha

New South Auckland Industrial StockNLA million m2

Auckland Industrial Land Supply

Source: CBRE & Goodman

7.07.2

7.5 7.5 7.57.7

7.98.1

8.48.6

0

50

100

150

200

250

300

350

400

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total stock million sqm (LHS) New stock '000sqm (RHS)

Average new stock pa '000sqm (RHS)

Industrial land identified area includes south of Auckland harbour bridge, as far west as Rosebank Rd and as far south as Wiri.

Source: JLL & Goodman

Zoning

$290m

$160m

9

1

Key

Unitary plan zoning

Business – Heavy industry zone

Business – Light industry zone

Future urban zone

West Auckland Glen Innes

East Tamaki

Penrose / Mt

Wellington

Auckland

Airport

Mount

Roskill

Wiri

Otahuhu

＋ Large quantity of industrial stock re-zoned to other uses

within Auckland unitary plan

process

Industrial re-zoninginfluence

＋ Example – 13,000m2 GMT development at Savill link for

NCI who relocated from Mt

Wellington industrial building

re-zoned to mixed use

10

Goodman NCI development

Existing NCI warehouse

11

e-Commercein NZ

GMT top ten customers split by subsidiary companies1

% of portfolio income

0% 1% 2% 3% 4% 5% 6% 7% 8%

New Zealand Post

DHL

Fletcher Building

Coda

Fliway Transport

Toll

Spicers

CSR Building Products

Officemax

Big Chill

＋ e-Commerce is a significant and growing part of global trade and has an estimated value of $3.8 trillion – twice the size of what it was five years ago

＋ New Zealanders spent a total of $3.6 billion online in 2017 ($746 per capita)

＋ Online shopping now delivers 8.1% of all retail spend in New Zealand

＋ The greater Auckland region accounted for 37% of online spend in 2017

＋ NZ Post delivered 38.9 million parcels in the month of December 2017 (9% increase on December 2016)

e-Commerce sales by country% of total retail sales in 2017

23.1%

19.1%

16.0%

12.6%

10.0%9.0%

8.1% 7.9% 7.9%6.6%

3.2%2.2%

0%

5%

10%

15%

20%

25%

Source: New Zealand Post 1 As at 31 March 2018

GMTportfolio

Strategic overview

13

Strategy

＋ High quality portfolio situated in key industrial locations close to consumers

▪ positioned to capitalise on growth in e-commerce and technological

change

＋ Strategic holdings provide development pipeline and urban regeneration opportunities

▪ number of estates held significantly below replacement cost

＋ Development programme improving asset quality and growth profile of GMT

＋ Balance sheet capacity expected to support build out of remaining land holdings

Targeting

＋ Increased growth in rental cashflows and cash earnings

＋ Creation of a lower capex portfolio

＋ Resilient portfolio with the balance sheet capacity to be opportunistic should markets turn

GMToverview

14

6.1yearsWALT 1

$2.7bnProperty portfolio1

6.2%Weighted average

capitalisation rate1

1m sqmNet lettable area1

25.0%Look-through loan

to value ratio2

98.2%Portfolio occupancy1

260+Customers1

$2.0bnMarket capitalisation3

1 Including contracted sales, as at 31 March 20182 Adjusted for all sales contracted as at 31 March 20183 As at 27 September 2018

Aucklandlocations

＋ GMT assets situated in key logistics locations, well suited to

assist in the creation of fast and

efficient supply chains

15

Portfolio statistics1

Value ($m) 2,746.7

Land area (ha) 242.3

NLA (m2) 1,111,244

$psm land 1,133

1 Including contracted sales, as at 31 March 2018 (excludes Roma Rd)2 Under contract

VXV Precinct (conditionally sold)

Central Park (sold)

2

Asset recycling

16

DISPOSALS

$1.2 billion

ACQUISITIONS

$267 million1

DEVELOPMENTS

$672 million2

5 year programme Gateway Warehouses development (artists impression), Highbrook Business Park

Roma Road Estate, Mt Roskill, Auckland

Developed

Bought Sold

1 Includes Roma Rd acquisition2 Development starts (TPC including land)

VXV Precinct, Auckland CBD

＋ Portfolio now predominately Auckland industrial

＋ Improving quality reflected in the portfolio metrics

＋ Like-for-like NPI growth of 3.9% in 2018 and 2.8% in 2017

＋ 98% occupancy

＋ Large number of pending expiries secured in 2018 YTD with only 10% of

portfolio income due to expire over the

FY19 and FY20 years

Portfoliotransformed

17

Key metrics March 2018 March 2013

Auckland weighting 99% 92%

Portfolio occupancy 98% 96%

Weighted average cap rate 6.2% 8.1%

Weighted average lease term (years) 6.1 5.3

Development commitments ($m) 164.8 117.8

Relative property return1

2.9% -0.2%

Industrial60.0%

Development Land 12.0%

Office Park28.0%

MH/DJ – to be 31 March

post contracted sales

1 MSCI New Zealand Universe index2 Post contracted sales, as at 31 March 2018

Industrial94.8%

Development Land4.5%

Office Park0.7%

Asset diversity 20182 Asset diversity 2013

Portfoliomatrix

＋ Strategic decision to focus investment in key locations within the Auckland

industrial market

＋ 93% of core assets have been developed by Goodman

＋ 84% of assets sold have been office

＋ Value add estates offer future opportunity

Pre

ferr

ed

lo

ca

tio

n

Higher quality

Core assets Value-add Sold properties Future disposals

18

19

HighbrookBusinessParkMetrics1

NLA 434,107m2

Land area 107.0ha

Site coverage 41%

Value $1,192m

Value (psm land area) $1,114/m2

WALE 6.0 years

Average age 6.4 years

% complete 82%

Cap rate 5.8%

1 As at 31 March 2018

20

Other core estates

Savill Link

The Gate Industry Park

M20 Business Park

Westney Industry ParkMetrics1

NLA 426,015m2

Land area 96.7ha

Site coverage 44%

Value $800m

Value (psm land

area)$834/m2

WALE 6.2 years

Average age 12.4 years

% complete 96%

Cap rate 6.5%

1 As at 31 March 2018

Value-addestates

Penrose Industrial Estate

Tamaki Estate

Connect Industrial Estate

Metrics1

NLA 92,426m2

Land area 23.1ha

Site coverage 40%

Value $148.6m

Value (psm land

area)$642.4/m2

WALE 2.8 years

Average age 37.9 years

% complete 100%

Cap rate 6.2%

1 As at 31 March 201821

Concourse Industry Park

22

Acquisition:Roma Road

＋ Site located in centre of Auckland Urban area and surrounded by low-

medium intensity residential

＋ Area earmarked for intensification

＋ Access and direct frontage to SH20

＋ Expected to benefit from light rail network running between Auckland

CBD and the airport in the

medium/long term

Waterview

tunnel

SH20

CBD

Proposed

light rail

Roma

Road

23

Acquisition:Roma Road

Metrics

NLA 36,977m2

Land area 13.1 ha

Site coverage 27%

Value $93m

Value (land) $710/m2

WALE 2.5 years

Age c. 40 years

24

Developmentprogramme

Capitaldeployment

＋ $672 million of development starts over the last five years, providing average yield on additional spend of 9.4% and development gains of $81 million1

＋ $165 million of new developments announced in FY18, with a further $54 million YTD

＋ 80% of remaining portfolio has been developed by Goodman, providing for high quality, well-designed long-term investments

25

98.2108.8

148.7

97.0

164.8

54.1

0

20

40

60

80

100

120

140

160

180

FY14 FY15 FY16 FY17 FY18 FY19 Q1$ m

Other Highbrook

100%

100%72%

100% 65%

52%

200

400

600

800

1,000

1,200

Highbrook Savill M20 Westney The Gate Other

Developed by Goodman Other

$ m

Development commencements2

(total project cost including land)

Assets developed by Goodman2

(total value of stabilised assets by estate)

1 Revaluation gains recorded on developments completed during the period2 As as 31 March 2018, including FY19 Q1 announcements

Development programme

2626

Gateway

WarehousesHighbrook Business Park

COMPLETION

November 2018

NLA

22,195m2

Parade

UnitsHighbrook Business Park

COMPLETION

November 2018

NLA

5,972m2

COMPLETION

November 2018

NLA

8,494m2

Savill Drive

WarehouseSavill Link

＋ 66,000 sqm of space currently under construction within GMT portfolio

＋ Includes 27,000 sqm of space which is yet to have terms agreed (equivalent to

circa 2.5% of GMT portfolio)

Constructioncosts

＋ Costs escalating but offset by yield compression and rising rents

＋ Quality of base build specification also rising

＋ Developments typically recording gains of 15-20% when valued on completion

27

$250

$400

$550

$700

$850

$1,000

2013 2014 2015 2016 2017 2018

Warehouse construction cost$/m2

Developmentpipeline

＋ Remaining land supply 22 ha1

＋ Supports a further 116,000 sqm of industrial and commercial development

＋ Yield on additional spend expected to range between 8-9%

＋ Estimated additional spend of approximately $290 million

＋ Highbrook represents 82% of remaining land supply

＋ New land opportunities tightly held and difficult to secure

1 As at 31 March 2018, including FY19 Q1 announcements

28

Gateway Warehouses development (artists impression), Highbrook Business Park

Financial

29

Con

tra

cte

d s

ale

s

WP

H d

isp

osa

l

Com

mitte

d

de

ve

lop

me

nts R

om

a R

oa

d

Deve

lop

me

nt

pip

elin

e

25.0%

14.1%

19.9%

22.9%

NTA + distribution

Total returns

＋ NTA growing strongly with CAGR of 8.9% over last five years

＋ Improving quality and focus on industrial reflected in returns with five year total return of 13.7%

Total returns 2

2 Total return is a combination of NTA growth + distribution paid

11.6%

14.4%

17.2%

13.8%

11.6%

0%

5%

10%

15%

20%

FY14 FY15 FY16 FY17 FY18

Income return Capital return

5 year total

return: 13.7%

5 year income

return: 5.9%

100.4

108.4

120.4

130.4

138.9141.4

90

100

110

120

130

140

150

FY14 FY15 FY16 FY17 FY18 Post WPHsale

1 Post contracted sales, as at 31 March 2018

1

NTA per unitcents

31

Summary

32

Focus

33

Own

＋ Modern high quality assets with strong customer covenants in the best locations

＋ Industrial property is the preferred sector, unique characteristics make it a superior long-term investment

＋ Auckland is the favoured location, demographic and consumer trends support this decision

Develop

＋ Development programme has created portfolio of unrivalled quality

＋ Essential business activity to service customers, while continually improving the portfolio

＋ New land opportunities difficult to secure, value add opportunities increasingly important

Manage

＋ Assets and customer relationships to maximise rental cashflows and long-term value

＋ Balance sheet capacity funding development programme

＋ Treasury initiatives to manage interest costs improving diversity and tenor

＋ Transition to cash earnings based distribution policy, headwinds while completing asset disposals

Thank you

34