ANNUAL RESULT 2018
SECTION SPEAKER AGENDA 2018 Annual Result Highlights Bob Johnston Financial Summary & Capital Management Anastasia Clarke Retail Mark Fookes Office & Logistics Matthew Faddy Funds Management Nicholas Harris Summary & Outlook Bob Johnston ANNUAL RESULT 2018
3 RESULTS PRESENTATION OUR VISION To be the most respected property company in Australia in the eyes of our Investors, People, A high quality Customers and portfolio of Communities Australian real estate in the best markets OUR FOCUS Focus on quality assets and markets that we believe will provide long term growth for our investors 3 The GPT Group 2018 Annual Result
2018 Annual Result Financial Highlights 2018 Annual Result Financial Highlights Consistently delivering strong returns 3.5 % 3.5 % $ 5.58 15.8 % FFO GROWTH DISTRIBUTION GROWTH NTA PER SECURITY TOTAL PER SECURITY PER SECURITY UP 10.7 PER CENT RETURN 4 The GPT Group 2018 Annual Result 4 RESULTS PRESENTATION
5 RESULTS PRESENTATION Progress on Strategic Priorities Progress on Strategic Priorities Investment Portfolio Balance Sheet & Capital Management + Portfolio occupancy of 97.8% + Net gearing at 26.3% + Like for like income growth 3.8% + Interest rate hedging at 83% + Revaluation gains of $911 million + Credit ratings unchanged at A / A2 + Weighted Average Capitalisation Rate 5.02% + Weighted Average Debt Maturity of 6.3 years Development Pipeline Funds Management + Sunshine Plaza 97% leased + Market leading wholesale platform + 4 Murray Rose Avenue completed + Assets Under Management of $12.6 billion + 32 Smith Street pre-commitment for 51% of NLA + 12 month total return of 11.3% + Cockle Bay Park (Darling Park 4) DA progressed + Development pipeline of over $1.2 billion + Rouse Hill Town Centre revised DA lodged Q4 2018 + Office Fund raised $275 million of new equity + Melbourne Central Office and Retail expansion 5 The GPT Group 2018 Annual Result
FINANCE & TREASURY ANNUAL RESULT 2018 6 RESULTS PRESENTATION
7 RESULTS PRESENTATION Financial Summary 12 MONTHS TO 31 DECEMBER ($ MILLION) 2018 2017 CHANGE $ 1,451.7 M Funds From Operations (FFO) 574.6 554.2 3.7% STATUTORY NET PROFIT 910.7 717.7 Valuation increases AFTER TAX Treasury items marked to market (39.6) (2.9) 6.0 (1.0) Other items 3.5 % 1,451.7 1,268.0 Net Profit After Tax (NPAT) 14.5% FFO PER SECURITY GROWTH Funds From Operations (cents per stapled security) 31.84 30.77 3.5% Funds From Operations (FFO) 574.6 554.2 3.7% (53.2) (54.4) Maintenance capex 99.8 % Lease incentives (60.9) (53.5) PAYOUT RATIO Adjusted Funds From Operations (AFFO) 460.5 446.3 3.2% 25.46 24.60 3.5% Distribution (cents per stapled security)
Segment Result 12 MONTHS TO 31 DECEMBER 2018 2017 ($ MILLION) Strong contribution from Melbourne Central, Charlestown and Retail 326.2 318.4 ▲ 2.4% Rouse Hill Office 268.7 248.9 ▲ 8.0% Acquisition of Eclipse Tower, plus strong contribution from MLC, 1 Farrer Place and Australia Square Logistics 109.9 94.0 ▲ 16.9% Acquisition of Sunshine Business Estate plus development Funds Management completions at Huntingwood, Eastern Creek and Seven Hills 42.6 37.0 ▲ 15.1% AUM increased to $12.6 billion Net Income 747.4 698.3 Net interest expense (124.4) (102.4) ▲ 21.5% Higher debt balance; cost of debt flat at 4.2% Corporate overheads (34.2) (30.6) Tax expense (14.2) (11.1) Corporate (172.8) (144.1) Funds From Operations 574.6 554.2 8 RESULTS PRESENTATION
9 RESULTS PRESENTATION Capital Management KEY STATISTICS + Diversified sources of debt DEC 2018 JUN 2018 + Gearing policy of 25 – 35% Net tangible assets per security $5.58 $5.31 + Targeting ‘A - space’ credit ratings Net gearing 26.3% 24.7% Weighted average cost of debt 4.2% 4.3% Weighted average term to maturity 6.3 years 6.6 years Interest cover ratio 5.7x 6.0x Sources of Drawn Debt Credit ratings (S&P / Moody’s) A / A2 A / A2 CPI Bonds Weighted average term of hedging 4.4 years 4.6 years 2% Domestic bank Drawn debt hedging 83% 79% debt 20% USPP Debt Maturity Profile 25% 700 600 Bank Debt 40% 500 Foreign bank $ millions Debt Capital 400 debt Markets 300 Foreign 17% 60% MTNs 200 7% 100 Secured bank debt 0 Domestic 3% 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H Commecial MTNs Paper 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 21% 5% CPI Bonds US Private Placements Medium Term Notes Drawn Bank Facilities Undrawn Bank Facilities
RETAIL ANNUAL RESULT 2018
11 RESULTS PRESENTATION Retail Highlights 2.2 % 3.6 % 99.6 % Retail Portfolio Quality & NT Exposure LIKE FOR LIKE TOTAL SPECIALTY PORTFOLIO QLD 6% INCOME GROWTH MAT GROWTH OCCUPANCY 9% NSW 41% 44% + $6.2 billion retail portfolio Key VIC + Revaluation uplift of $161.0 million, WACR 1 of 4.88% Outcomes + Like for like income growth of 2.2% led by strong results from Charlestown, Melbourne Central and Rouse Hill + Retail segment FFO contribution of $326.2 million, 2.4% 85% 99% 70% growth on 2017 + T otal Portfolio Return of 8.2% exposure to prime of portfolio located + NSW and VIC regional in markets with Specialty Sales Productivity at $11,460psm assets household income + Sunshine Plaza development stage one opening fully above Australian leased average 1. Weighted av erage capitalisation rate
Retail Sales Retail Sales Portfolio MAT Growth by Category 12.6% 11.4% 9.7% 3.6 % 7.3% 6.5% 6.1% 3.6% 3.2% Total Specialty MAT Growth 2.4% 0.7% Specialties >400sqm Specialties <400sqm -1.1% 6.9 % 2.5 % -2.1% -2.4% -3.7% -6.6% Specialty Sales Productivity (<400sqm) -10.2% 2.5 % $ 11,460 Total centre Dept Stores DDS Supermarkets Cinemas Total Specialties Tech & Appliances General Retail Homewares Food Retail Leisure Health & Beauty Dining Fashion,Footwear&Accessories Retail Services Jewellery Specialty Sales Specialty Sales per sqm per sqm growth Statistics exclude development impacted centres (Sunshine Plaza, Macarthur Square, Wollongong) 12 The GPT Group 2018 Annual Result 12 RESULTS PRESENTATION
13 RESULTS PRESENTATION Retail Leasing Retail Leasing + + Introduction of new retail concepts and remixing to growth categories High quality portfolio is well positioned with low vacancy at Highpoint as part of the re-leasing program in 2018 and fixed increases of 4.7% achieved on deals completed in 2018 + Delivered positive leasing spreads with holdovers reducing to 5.9% + Continuing to remix the portfolio, responding to customer demand and focused on driving sales productivity Portfolio Leasing Statistics DEC 2018 JUN 2018 99.6% 99.7% Portfolio Occupancy 71.3% 71.0% Retention Rate Expanding 4.7% 4.8% Avg. Annual Fixed Increase 1,2 growth retailers 4.7 years 4.8 years Avg. Lease Term 1,2 Conversion of apparel 0.2% 0.6% Leasing Spread 2 into food/lifestyle 16.9% 17.0% Specialty Occupancy Cost 2 First to market retailers 1. New leases 2. Specialties <400sqm Statistics exclude development impacted centres (Sunshine Plaza, Macarthur Square, Wollongong) & holdovers 13 The GPT Group 2018 Annual Result
Retail Development Retail Development Sunshine Plaza Retail Offer + 40 retail brands Stage One new to the Sunshine + Opened fully leased Coast market including a number of on 15 November 2018 including 33 new international brands and specialty stores and a national flagship stores + Destination refurbished Myer + During first 6 weeks, Leading entertainment, sales performance has dining and leisure been strong destination, including Investment the highest outdoor zip line course in Australia, Summary Stage Two a first for a major + $216 million + regional shopping centre Opens 28 March 2019 Customer Insights (opening mid 2019) including David Jones, of capital invested Big W, H&M and 70 (GPT’s 50% interest) + Approx. 6% new specialty stores stabilised incremental yield 14 The GPT Group 2018 Annual Result 14 RESULTS PRESENTATION
15 RESULTS PRESENTATION Retail Development Retail Development Melbourne Central Rouse Hill Town Centre + + Progressive enhancement of the existing asset | $50 million during 2019 Proposed $170 million expansion, including additional 16,300sqm of retail and 2020 and 4,500sqm of commercial space + + Proposed Retail Expansion | $70 million, approximately 7,000sqm of retail Responding to demand and retail undersupply in this strong growth over two levels market introducing food, leisure, entertainment, health & wellness + and international retailers Expansion of leisure and entertainment precinct showcasing the + Opportunity for residential to be integrated within retail scheme best of Melbourne’s “laneways and high streets” including dining, + education, wellness and retail markets Development Applications lodged in December 2018 + + Forecast Return | over 6.5% stabilised yield Forecast Return | over 6.5% stabilised yield + + Target Commencement – late 2019 | Completion – late 2021 Target Commencement – early 2020 | Completion – early 2022 15 The GPT Group 2018 Annual Result
OFFICE & LOGISTICS ANNUAL RESULT 2018
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