Mirvac Industrial Trust – Results Presentation FY07cdn0.blocksassets.com/assets/mirvac-funds/...final.pdf · > Maintain same hedge profile on rolling six month basis > Current weighted

Mirvac Industrial TrustResults FY07 1Page

Mirvac Industrial Trust – Results Presentation FY07 29 August 2007


> Key Achievements FY07> Financial Summary FY07> Capital Management> Portfolio Metrics> Chicago Market Update> Strategy and Outlook> Appendices

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Agenda


Key Achievements FY07

Distribution delivered DPU of 9.75 cents

Earnings delivered EPU of 10.32 cents

Strong balance sheet Retained earnings balance of 0.83 cents per unit

Maintained gearing 51.6 per cent

Whole of business approach Enhancing earnings by managing Trust expenses

Reduced vacancy To 9.0 per cent – down 25 per cent

Leased 2.5 million square feet Reduction in expiry in FY08 to 10.2 per cent

High tenant retention 90.4 per cent1 (since IPO)

1. As at 29 August 2007 – reflecting up-to date leasing announcements.


Key Achievements FY07

Sales

Six non-core asset sales in FY07 Total net profit A$3.5 million1

Portfolio efficiency Reduced number of tenants by 15 per cent

Post FY07 2 non-core assets and 1 non-core land parcel

Acquisitions

1900 North 5th Avenue for US$10.7m 7.93 per cent passing yield2, lease term and credit

1880 Country Farm Road for US12.3m 7.60 per cent passing yield2, lease term and credit

1. Represents MIX 95 per cent share.2. Pre acquisition costs.


FY07 FY06 Change (%)Net profit after tax (A$m) 38,148 18,571 105.4

Distributable core earnings (CPU) 9.37 7.70 21.7Distributable realisations (CPU) 0.95 0.00Total distributable1 (CPU) 10.32 7.70 34.0Distribution (CPU) 9.75 7.30 33.6Retained earnings c/f (CPU) 0.83 0.26 219.2NTA (US$) (CPU) 0.83 0.79 5.1NTA (A$)2 (CPU) 0.98 1.07 8.4

Closing market price (A$) 1.035 0.975 6.2Gearing (%) 51.6 52.5 1.7

1. Distributable EPU allows for AIFRS adjustments to remove non-cash items. Unadjusted earnings per unit are 13.37 cents (see Appendices).2. Reduction in NTA is attributable to movement in AUD/USD exchange rate from $0.7382 to $0.8487 at 30 June 2007. At AUD/USD $0.7382 the NTA

would be $1.13. NTA per unit is adjusted to remove the effect of the deferred tax liability.

Financial Summary FY07FY06 versus FY07


> Hedges for 100 per cent of income for the next two years with 20 per cent annual cascade following three years

> Maintain same hedge profile on rolling six month basis

> Current weighted average AUD/USD hedge rate is $0.7446

> Two hedge rolls in FY07 saw 36bp increase in average hedge rate, from $0.7410 to $0.7446

Settlementdate

Hedged%

Blended FXrate ($)

02 Jan 08 100 0.7405

30 Jun 08 100 0.7430

31 Dec 08 100 0.7403

30 Jun 09 100 0.7430

31 Dec 09 80 0.7399

30 Jun 10 80 0.7463

31 Dec 10 60 0.7360

30 Jun 11 60 0.7526

31 Dec 11 40 0.7429

29 Jun 12 40 0.7932

Average 0.7446

Capital ManagementForeign Exchange Profile


> Positioned to withstand volatility– High fixed rate component

– Mid-dated remaining term

> Gearing at 51.6 per cent

> FY07 debt service coverage ratio of 2.32 times

Debt Component1

Fixed (%) 94.23

Floating (%) 5.77

Weighted Average1

Weighted average debt cost (%) 5.64

Floating rate cost (%) 6.08

Fixed rate cost (%) 5.61

Weighted remaining term (years) 3.76

Capital ManagementDebt Profile

1. As at 28 August 2007.


Portfolio Metrics


Area sq ft1

(m)Budgeted/Prior net rent

US$mAchieved net rent

US$mChange

(%)

New 0.6 1.7 1.8 7.6

Renewal 1.9 8.5 8.6 0.6

Total 2.5 10.2 10.4 1.9

> Executed lease transactions over 2.5 million square feet1

> Improvement of 7.6 per cent1 over budgeted rents on previously vacant space

> Blended 1.9 per cent rental improvement on renewals and leases on previously vacant space

1. As at 29 August 2007 – reflecting up-to-date announcements.

Portfolio MetricsLeasing Results


1. As at 29 August 2007 – reflecting up-to-date announcements.2. As at 29 August 2006.

Portfolio MetricsLeasing Items

FY071 (%) FY062 (%) Change (%)

Short term (FY08) expiry 10.2 13.1 22.1

Mid term (FY09) expiry 17.2 18.1 5.0

Vacancy 9.0 12.0 25.0

Tenant retention 90.4 91.4 1.1

Weighted average lease expiry (yrs) 4.1 4.0 2.5

> Vacancies and upcoming expiries = key risks and management focus

> Historical retention rate = positive outlook for impending expiries


Ongoing asset management focus:> Further reduce vacancy and expiry rates

> Increase weighted average lease expiry

> Maintain contracted rental growth profile

> Complete portfolio rationalisation of non-core assets

Portfolio MetricsLease Expiry Profile

All data reflecting up-to-date announcements as at 29 August 2007.

9.2%9.0%

10.2%17.2%

9.6% 8.0%

Vacant 2008 2010 2011 20122009

36.8%

0.1%

MTM 2013+


Portfolio Metrics Rental Income Streams

FY07 PDS FY071 Change (%)

Gross rent (US$’000) 73,505 79,627 7.7

Operating expenses (US$’000) 22,047 23,815 7.4

Net Operating Income (US$’000) 51,458 55,812 7.8

> Slow leasing of large space has affected Net Operating Income:– 6510 West 73rd Street – 306,552 square feet (2.1 per cent of portfolio by area)

– 920 Frontenac Street – 121,220 square feet (0.8 per cent of portfolio by area)

– 900 East 103rd Street – 181,586 square feet (3.7 per cent of portfolio by area)

– 21399 Torrence Avenue – 172,834 square feet (2.6 per cent of portfolio by area)

> Partially offset by higher contracted rents on both in-place tenants and vacant space

1. May 2006 PDS Forecasts.


29/8/07 26/2/07 Change (%)Rent with fixed reviews (%) 65.5 70.9 7.6

Weighted average fixed increase (%) 2.6 2.4 8.3

Portfolio rental growth from fixed reviews (%) 1.7 1.7

Portfolio MetricsContracted Rental Growth – FY08

> Contracted rental growth for FY08 maintained since reported on 26 February 2007


Portfolio Metrics Valuations & Market Effects

> 19 valuations undertaken to 30 June 2007–undertaken at time of credit and market volatility

> weighted average cap rate is sustainable in volatile market

1. Weighted average portfolio valuation market rent

FY07 FY06 Change (%)

Average $/sq ft 47.72 47.04 1.45

Weighted average upfront cap rate (%) 7.29 7.50 (2.80)

Weighted average terminal yield (%) 7.82 N/A

Portfolio Market1 Change (%)Average net rent $/sq ft 3.29 3.75 (12.3)


> US$12.3 million purchase price

> Yield 7.60 per cent (pre acquisition costs)

> Leased to Westfalia-Surge Inc., on a triple net lease to 30 September 2011

> Funded via sale of 1455 Sequoia and 1560 Frontenac – both substantially vacant

> Similar acquisitions being sought to replace other asset sales

Portfolio MetricsAcquisition – 1880 Country Farm


Chicago Market Update


> Vacancy rate fell 30 basis points quarter on quarter to 8.4 per cent1

> 13.3 million square feet leased year to date1

> 4.4 million square feet of construction completions in the quarter (67 per cent pre-committed)1

> 9.43 million square feet of space was under construction at the end of Q2071

> Average net lease rates remained stable at US$4.43 per square foot1

1. Source, CB Richard Ellis.

Chicago Market UpdateChicago Industrial Update

Metropolitan Chicago Historical Vacancy Rates1

Q305 Q405 Q106 Q206 Q306 Q406

9.0%8.8% 8.6% 8.7% 8.8% 8.8% 8.7% 8.4%

Q107 Q207


Strategy and Outlook


> Minimising vacancy

> Minimising short-term expiry risks

> Continuing rationalisation program of non core assets

> Prudent management of foreign exchange income hedging profile

> Intensive management of debt profile

> Deal flow characterised by total return, not yield

Strategy and Outlook Maximising Returns to Unitholders


Appendices


FY07 PDS FY073 Change (%)Net profit after tax (A$m) 38,148 36,233 5.3

Distributable core earnings (CPU) 9.37 9.80 4.4

Distributable realisations (CPU) 0.95 0.00

Total distributable1 (CPU) 10.32 9.80 5.3

Distribution (CPU) 9.75 9.75

Retained earnings c/f (CPU) 0.83 0.26 219.2

NTA (US$) (CPU) 0.83 0.77 7.8

NTA (A$)2 (CPU) 0.98 1.04 5.8

Closing market price (A$) 1.035 0.975 6.2

Gearing (%) 51.6 52.5 1.7

Financial Summary FY07FY07 versus PDS FY07

1. Distributable EPU allows for AIFRS adjustments to remove non-cash items. Unadjusted earnings per unit are 13.37 cents.2. Reduction in NTA is attributable to movement in AUD/USD exchange rate from $0.7382 to $0.8487 at 30 June 2007. NTA per unit is adjusted to remove

the effect of the deferred tax liability.3. May 2006 PDS Forecasts.


A$’000

Net profit attributable to unitholders 51,213

- Fair value of foreign currency derivatives (12,480)

- Fair value of interest rate swaps (282)

- Revaluation of investment properties (3,724)

- Straight lining of rental income (2,804)

- Minority interest (1,635)

- Amortisation 1,108

- Tax expense 6,752

Net income available for distribution 38,148

AIFRS Adjustments Reconciliation to Stated Distributable Earnings


Total Return Comparables – Peer Market 1 July 06 to 31 July 07

Inde

xJu

ne 0

6 =

100

Source, S&P/UBS

80

90

100

110

120

130

140Ju

l-06

Aug-

06

Sep-

06

Oct-0

6

Nov-

06

Dec-

06

Jan-

07

Feb-

07

Mar

-07

Apr-0

7

May

-07

Jun-

07

Jul-0

7

MIX MCW MDT MOF RAT RNY TSO IIF S&P/ASX 200 Prop.


Delivery The Path to 30 June ’07 - Revisited

Item/Statement CommentReduce vacancy Substantially reduced (25 per cent) but remains ongoing focus

for management with “big-ticket” space prioritised

Non-core asset sales Mostly complete with some sales falling into FY08. Three to complete in FY08

Re-investments Acquired two assets (to replace three sales) with further acquisitions being progressed. Unit buy-back remains one option. Sales to complete before decision-making

Development JV with CNT Has not proceeded due to increasing interest costs and prohibitive debt guarantee requirements having compounding effects on short-term dilutionary impact to Trust

Build to suit (BtS) with CenterPoint No build to suit opportunities in this period but “captured market” of 107 tenants constantly monitored

> At H107 management identified numerous H207 initiatives:


Top 10 Tenants (by income) % Net Rental Income (annual)

DSC Logistics 5.2

Truserv Corporation 5.1

Factory Card Outlet 4.4

Rockwell Automation 4.1

APL Logistics 3.7

Innoware (formerly Duni) Corporation 2.9

California Cartage Co 2.7

Prairie Packaging 2.7

Newell Window Furnishings 2.7

City of Chicago 2.6

Total 36.1

Tenant Diversification


Mirvac Industrial Trust – Results Presentation FY07 29 August 2007

Mirvac Industrial Trust – Results Presentation FY07cdn0.blocksassets.com/assets/mirvac-funds/...final.pdf · > Maintain same hedge profile on rolling six month basis > Current weighted

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