GPT Group
Annual Report 2019

Plain-text annual report

2019 Annual Result Market Briefing 10 February 2020 The GPT Group acknowledges the Traditional Custodians of the lands on which our business and assets operate, and recognises their ongoing connection to land, waters and community. We pay our respects to First Nations Elders past, present and emerging. Artwork created by Molly Wallace Agenda Annual Result 2019 4 9 2019 Annual Result Highlights | Bob Johnston Financial Summary & Capital Management | Anastasia Clarke 13 Office & Logistics | Matthew Faddy 26 Retail | Chris Barnett 33 Funds Management | Nicholas Harris 36 Summary & Outlook | Bob Johnston Our Strategic Focus + Growing our Office & Logistics portfolio + High weighting to NSW and VIC markets + Increased the development pipeline to an expected end value of approximately $5 billion1 + Total Assets Under Management of $25.3 billion Delivering attractive returns 5yr avg. Total Return 13.3% 5yr avg. FFOps growth 5yr avg. DPS growth 4.0% 4.5% Shifting our strategic asset allocation Office 40% TARGET 2019 FOCUS SYDNEY & MELBOURNE GROUP EARNINGS COMPOSITION Logistics 20% Office 41% Logistics 16% NSW 52% Office 36% Logistics 16% VIC 36% Retail 40% Retail 43% NT 2% QLD 10% Funds Management 6% Retail 42% 1. Includes both GPT direct interest and Fund opportunities The GPT Group | 2019 Annual Result | 10 February 2020 4 2019 Annual Result FINANCIAL HIGHLIGHTS Investment Portfolio Consistently delivering strong returns 2.6% FFO GROWTH PER SECURITY 4.0% DISTRIBUTION GROWTH PER SECURITY $5.80 NTA PER SECURITY UP 3.9 PER CENT 8.7% TOTAL RETURN Portfolio occupancy 96.5% Revaluation gains $342.2M Like for like income growth 3.5% Weighted Average Capitalisation Rate 4.95% 161 Castlereagh Street, Sydney The GPT Group | 2019 Annual Result | 10 February 2020 5 Executing on strategy Office & Retail Developments Expected end value of $800 million Current + 32 Smith Street, Parramatta, office development - Expected yield on cost of approximately 6.75% and an end value >$320 million Proposed 2020 commencements + 300 Lonsdale office development - Expected yield on cost of >6.5% and - Subject to securing a pre-commitment an end value of $220 million and authority approvals + Melbourne Central retail expansion - $70 million expansion and an expected yield on cost of >6.5% + Rouse Hill Town Centre, Sydney, retail expansion - $200 million expenditure with an expected yield on cost of >6.0% Darling Park Acquisition & Development Opportunity Expected end value, including Cockle Bay Park development, of >$1 billion1 + Darling Park 1&2 and Cockle Bay Wharf - 25% interest in the premium Sydney CBD $2.1 billion office and retail complex with an initial yield of 5.3% and average fixed rental growth profile of 4.0% per annum + Cockle Bay Park Development - 25% interest in a $2 billion landmark Sydney CBD office development opportunity that will provide future growth with an expected IRR of >12%. Development cost of approximately $400 million (GPT’s share) Growing GPT’s Investment in Logistics Expected development end value of >$1 billion + Western Sydney logistics acquisitions initial yield of 5.4% - Acquired five assets for $212 million with an + Truganina, Melbourne logistics development - Completed Stage 1 (26,500sqm) with five + Wembley Business Park, Brisbane logistics future stages planned development - Construction of first two assets underway with an expected yield on cost of >6% + Andrews Road, Penrith, logistics acquisition - Construction has commenced on a 50,000sqm fund-through opportunity, leased for 10 years + Truganina, Melbourne logistics acquisition - Secured 23,000sqm pre-leased facility for $42m due to settle on completion in 2020 + New land acquisitions - Western Sydney - 36 hectares2 has been secured - Western Melbourne - 48 hectares has been secured 1. 2. GPT direct interest Excludes 10 hectares attributable to Andrews Road, Penrith, fund-through development The GPT Group | 2019 Annual Result | 10 February 2020 6 Environmental Sustainability The GPT Group | 2019 Annual Result | 10 February 2020 7 Social Responsibility The GPT Group | 2019 Annual Result | 10 February 2020 8 Finance & Treasury Annual Result 2019 Artists impression – 550 Bourke Street and 181 Williams Street, Melbourne Financial Summary 12 Months to 31 December ($ million) 2019 2018 Change Funds From Operations (FFO) Valuation increases Treasury instruments marked to market Other items Net Profit After Tax (NPAT) Funds From Operations (cents per stapled security) Funds From Operations (FFO) Maintenance capex Lease incentives Adjusted Funds From Operations (AFFO) Distribution (cents per stapled security) 613.7 342.2 (82.7) 6.8 880.0 32.68 613.7 (55.2) (61.0) 497.5 26.48 6.8% 574.6 910.7 (39.6) 6.0 1,451.7 31.84 2.6% 574.6 (53.2) (60.9) 460.5 25.46 6.8% 4.0% $880M STATUTORY NET PROFIT AFTER TAX 2.6% FFO PER SECURITY GROWTH 4.0% DISTRIBUTION PER SECURITY GROWTH The GPT Group | 2019 Annual Result | 10 February 2020 10 10 Segment Result 12 Months to 31 December ($ million) Office Logistics Retail Funds Management Net Income 2019 2018 Change Comments 276.3 121.0 326.0 46.3 769.6 268.7 ▲ 2.8% Strong comparable income growth of 6.2% driven by strong leasing outcomes and higher rents. Segment result was offset by reduced income post the sale of MLC 109.9 ▲ 10.1% Operations net income up 15.4% driven by acquisitions and development completions, offset by lower development profits 326.2 ▼ 0.1% Operations net income up 0.9% due to fixed rent increases offset by lower turnover rent, increased downtime and lower development profits 42.6 ▲ 8.7% Strong growth due to a 5.6% increase in assets under management 747.4 Net interest expense (108.0) (124.4) ▼ 13.2% Lower average cost of debt by 60 basis points to 3.6% Corporate overheads Tax expense Corporate (35.3) (12.6) (34.2) (14.2) (155.9) (172.8) Funds From Operations 613.7 574.6 The GPT Group | 2019 Annual Result | 10 February 2020 11 11 Capital Management + Modest gearing of 22.1% + Successfully completed $867 million equity raising to fund acquisition and growth opportunities + Increased liquidity to $1.4 billion + Issued US$400 million of debt in US Private Placement market for an average term of 12.9 years and margin of 170 basis points + Hedging reduced following the sale of MLC, with hedging level subsequently increasing as a result of the equity raising + S&P A and Moody’s A2 credit ratings Key Statistics Dec 2019 Dec 2018 Net tangible assets per security Net gearing Weighted average cost of debt $5.80 22.1% 3.6% $5.58 26.3% 4.2% Weighted average term to maturity 7.7 years 6.3 years Interest cover ratio Drawn debt hedging Credit ratings (S&P / Moody’s) 6.7x 82% A / A2 5.7x 83% A / A2 CPI Bonds 2% Domestic bank debt 2% Foreign bank debt 9% USPP 44% Bank Debt 14% Debt Capital Markets 86% Foreign MTNs 7% Secured bank debt 3% Commercial Paper 9% Domestic MTNs 23% $1.4b liquidity Sources of Drawn Debt As at 31 December 2019 Debt Maturity Profile As at 31 December 2019 $m 700 600 500 400 300 200 100 0 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 1H 2H 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 CPI Bonds US Private Placements Medium Term Notes Drawn Bank Facilities Undrawn Bank Facilities The GPT Group | 2019 Annual Result | 10 February 2020 12 12 Office & Logistics Annual Result 2019 Office Highlights 6.2% PORTFOLIO LIKE FOR LIKE INCOME GROWTH 10.0% TOTAL PORTFOLIO RETURN (12 MONTHS) 147,600sqm LEASES SIGNED Portfolio Size & Geographic Exposure Office $6.1bn Retail $6.3bn Key Highlights + Portfolio occupancy of 98.3%1 up 1.2% in the 12 months + WALE extended to 5.3 years as a result of significant leasing progress + Assets Under Management of $13.1 billion with 24 prime assets in deepest office markets + Office valuation gains of $271.2 million, WACR firming to 4.85% + Operations Net Income up 2.8% to $275.3 million as result of underlying portfolio growth and acquisitions / divestments + Low vacancy in Sydney and Melbourne, and improving conditions in Brisbane 1. Occupancy excludes Queen & Collins, Melbourne as under redevelopment Sydney 59% Melbourne 31% Brisbane 10% Logistics $2.4bn 580 George Street, Sydney The GPT Group | 2019 Annual Result | 10 February 2020 14 Office Valuations & Market Fundamentals $271.2m PORTFOLIO VALUATION UPLIFT 4.85% PORTFOLIO WACR + Office valuation gains in 12 months of $271.2 million, with market rental growth contributing over 50% of increase + Melbourne Central Tower together with Governor Phillip & Governor Macquarie Towers and 2 Park Street in Sydney achieved highest uplift + Low vacancy in Sydney and Melbourne, with high levels of pre-commitment for new supply GPT Portfolio 100% Prime Office Vacancy by Grade by Market Prime Vacancy Rate Total Vacancy Rate 11.7% 8.5% 5.0% 4.8% 3.4% 1.8% 5.4% 0.5% Sydney Melbourne Brisbane Parramatta Source: JLL Research, GPT Research. sqm 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - Gross Supply vs. Vacancy Rate Pre-leased Supply Vacant Supply Vacancy Rate (RHS) Vacancy Rate - 20y Avg. 7.8% 7.2% 5.0% 3.4% 11.7% 8.9% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 8 1 0 2 9 1 0 2 0 2 0 2 1 2 0 2 2 2 0 2 8 1 0 2 9 1 0 2 Syd CBD 0 2 0 2 1 2 0 2 Melb CBD 2 2 0 2 8 1 0 2 9 1 0 2 0 2 0 2 1 2 0 2 2 2 0 2 Bris CBD Source: Data includes all grades; JLL Research, GPT Research. Vacancy rate reflecting position as at 31 December for each year. The GPT Group | 2019 Annual Result | 10 February 2020 15 Office Leasing 147,600sqm 98.3% SIGNED LEASES With an additional 29,400sqm of terms agreed PORTFOLIO OCCUPANCY¹ + Strong leasing outcomes achieved with 2020 and 2021 expiry reduced from 29% to 17% in the 12 months² + WALE extended to 5.3 years and renewals secured with key customers: Darling Park 1, Sydney Workplace6, Sydney Melbourne Central Tower 111 Eagle Street, Brisbane Melbourne Central Tower 17,200sqm 18,200sqm 13,700sqm 7,500sqm 7,700sqm Community & Amenity Sustainability Technology Enablement Flexible On-demand Space Customer Centricity + Customer satisfaction score of 86%, highest score in peer set3 + Renewals and expansions make up >70% of 2019 leasing + Targeted upgrades and investment program 1. Occupancy excludes Queen & Collins, Melbourne as under redevelopment 2. 3. Includes leases signed post balance date Survey conduced by Campbell Scholtens, number one position on a rolling three-year average basis The GPT Group | 2019 Annual Result | 10 February 2020 16 Office Acquisitions & Divestments + Significant transaction activity in 2019, investing in high quality assets providing greater control for the Group + Acquired stake in Darling Park 1 & 2, Sydney, made up of two premium office assets and a harbourfront development opportunity + GPT Wholesale Office Fund acquired the remaining 50% share of 2 Southbank Boulevard, Melbourne for $326 million + Divested MLC Centre for $800 million, capitalising on leasing and asset upgrades completed over past 5 years CBA renewal of 17,200sqm $531M PURCHASE PRICE 101,900sqm OFFICE NLA 98.1% OCCUPANCY¹ 6.3 years WALE1 $326M PURCHASE PRICE 53,300sqm OFFICE NLA 99.2% OCCUPANCY¹ 5.7years WALE1 2 Southbank Boulevard 50% Acquisition by GWOF The GPT Group | 2019 Annual Result | 10 February 2020 17 Darling Park 1 & 2 25% Acquisition by GPT 1. As at 31 December 2019 Office Portfolio Composition 6.2% PORTFOLIO LIKE FOR LIKE INCOME GROWTH + Portfolio rebalancing towards newer, less capital intensive assets and securing development opportunities for value creation + Consistent high returns delivered over past 5 years, with average annual like for like growth of 5.9% + 85% of portfolio subject to structured rental increases, averaging 3.9% Operations Net Income ($) and Like for Like Growth (%) $209.5 $223.9 6.3% 6.3% $247.8 5.0% $300 $250 $200 $150 $100 $50 $0 ) m $ ( s n o i l l i M $267.7 $275.3 10% 5.8% 6.2% ) % t ( h w o r G e m o c n I i e k L r o f e k L i 8% 6% 4% 2% 0% 2015 2016 2017 2018 2019 The GPT Group | 2019 Annual Result | 10 February 2020 18 Office Development Pipeline PHOTO FROM GROUND REQUESTED Construction Progress at 31 January 2020 Artists impression Artists impression 32 Smith Street, Parramatta + Construction progressing well, due for practical completion in late 2020 + Asset 64% leased¹ with QBE anchoring the development + 32 Smith is designed to reduce energy and water consumption, with a 5 Star NABERS Energy rating and 6 Star Green Star rating targeted + Smart building attributes focused on customer experience and driving operational performance + Expected yield on cost of ~6.75% and an end value in excess of $320 million 1. Including Heads of Agreement agreed post balance date + Parramatta prime vacancy of 0.5% with new space under construction substantially pre-committed + Positive net absorption of 46,900sqm in 2019 with tenant relocations into the Parramatta market + Significant infrastructure investment, including Sydney Metro West, that will double rail capacity between Sydney CBD and Parramatta, cutting travel time to ~20 minutes The GPT Group | 2019 Annual Result | 10 February 2020 19 Office Development Pipeline Cockle Bay Park, Sydney Frame, 300 Lonsdale Street, Melbourne Artists impression of indicative building scale Artists impression + International Design Competition for Cockle Bay Park is nearing completion + Project will deliver approximately 63,000sqm of office space together with a 10,000sqm retail and entertainment precinct + Targeting commencement in 2022 + Expected end value of ~$2 billion with a development IRR >12% + Further enhance Melbourne Central as a dominant mixed use precinct, incorporating an office building, connected to elevated garden spaces and a new rooftop retail, entertainment and dining precinct + Designed by the award-winning architecture and urban design practice ARM Architecture, featuring a hotel-inspired sky lobby and floor plates of approximately 2,000sqm + The building is targeted to deliver a minimum 5 Star NABERS Energy and Water rating, a 6 Star Green Star rating, and WELL Gold Standard + Expected yield on cost for office component >6.50% and end value in excess of $220 million The GPT Group | 2019 Annual Result | 10 February 2020 20 Logistics Highlights 15.4% OPERATIONS NET INCOME GROWTH 12.1% TOTAL PORTFOLIO RETURN (12 MONTHS) 231,600sqm LEASES SIGNED Key Highlights Portfolio Size & Geographic Exposure Office $6.1bn Retail $6.3bn Sydney 68% Melbourne 24% Brisbane 8% + Portfolio occupancy of 95.7%¹ with long WALE of 7.3 years + Like for Like income growth for 12 months of 3.3% + Logistics valuation gains in 12 months of $117.1 million, WACR firming to 5.40% + Land acquired in Sydney and Melbourne, projects underway and pipeline has capacity to deliver over 550,000sqm of prime logistics facilities with an expected end value in excess of $1 billion + Sector continues to benefit from sustained tenant and investor demand, with limited vacancy in prime markets Logistics $2.4bn 1. Includes leases signed post balance date 21 Shiny Drive, Truganina The GPT Group | 2019 Annual Result | 10 February 2020 21 Logistics Leasing 231,600sqm 95.7% SIGNED LEASES With an additional 27,500sqm of terms agreed PORTFOLIO OCCUPANCY¹ Development 24% New Leasing 26% Total Leasing Volume 259,100sqm across 23 deals Renewal 50% 1. Includes leases signed post balance date + Demonstration of active leasing strategies to drive value and lease future expiries, with strong focus on customer relationships + New Truganina facility completed and fully leased1 + 2020 and 2021 expiry reduced from 21% to 8% in the 12 months + Retention rate for 2019 expiries of 74% Yennora, NSW 33,200sqm Camellia, NSW 29,500sqm Yatala, QLD 22,500sqm Wetherill Park, NSW 20,500sqm Altona North, VIC 18,800sqm Eastern Creek, NSW 15,200sqm The GPT Group | 2019 Annual Result | 10 February 2020 22 Logistics Portfolio Growth + Portfolio growth of $545 million during the year to $2.4 billion + Acquired five prime logistics facilities totalling $212 million in Sydney + Secured a 23,000sqm facility in Truganina, Melbourne for $42 million settling in 2020, pre-leased to an international logistics company for a 10 year term + Two developments completed in Eastern Creek, Sydney and Truganina, Melbourne, with a further four facilities underway and due for completion in 2020 Composition of Portfolio Growth $212m $110m $117m $2.4b $1.9b $106m 2019 Developments 2 facilities totaling $105m 2019 Acquisitions 5 facilities totaling $212m 2020 Acquisitions 1 facility totaling $42m 29% Growth in 2019 Dec-18 Land Investment acquisitions Development & operational capex Valuation uplift Dec-19 2020 Underway Developments 4 facilities totaling $167m The GPT Group | 2019 Annual Result | 10 February 2020 23 Logistics Market Context + Australia population is projected to grow ~20% by 2030 + Population is expected to be increasingly urbanised, with ~70% in capital cities Population Growth Infrastructure Investment + Over $130 billion being invested in transport infrastructure investment by State and Federal Governments + Investment is concentrated in NSW & Victoria + Trade through Australian ports is expected to increase by + Anticipated to drive demand near ports, intermodal ~5% per annum over the long term terminals and key road networks + Online sales reflect approximately 9% of total retail sales + With convenience, speed, and variety of offering driving increased need for inventory management Trade Expansion E-commerce & Supply Chain Sophistication Other 14% Wholesale Trade 8% Manufacturing 17% Eastern Seaboard Industrial Take-Up by Industry (2019) Transport, Postal & Warehousing 37% Retail Trade 24% + Eastern Seaboard take-up dominated by Transport, Postal and Warehousing and Retail Trade, collectively making up 61% of 2019 demand + Melbourne’s West has been the most active market, making up 24% of national take-up + Investment demand for Logistics remains strong, with local and global capital seeking exposure to the sector Source: JLL Research, GPT Research. The GPT Group | 2019 Annual Result | 10 February 2020 24 Logistics Development Pipeline >550,000sqm PIPELINE CAPACITY >$1 billion PIPELINE EXPECTED END VALUE + Land parcels secured in key growth corridors: + Truganina (Boundary Road), Melbourne: 32.8 hectare site secured on deferred settlement terms + Truganina (Niton Drive), Melbourne: 14.9 hectare site forming part of The Gateway Logistics Hub + Kemps Creek, Sydney: 33.4 hectare site secured on deferred settlement terms + Penrith, Sydney: 10.2 hectare site acquired with a fund-through development underway + Glendenning, Sydney: 3.1 hectare site acquired, speculative facility to commence in 1H 2020 + Targeting yield on cost in excess of 6% + Anticipate commencement of projects across three states in 2020 Truganina (Gateway) Truganina (Boundary Road) Kemps Creek Penrith (fund-through) Glendenning Yennora Berrinba Active Development Pipeline State VIC VIC NSW NSW NSW NSW QLD 1. Including Heads of Agreement post balance date 23.0 32.8 33.4 10.2 3.1 1.1 16.1 119.7 Land (Hectares) Expected GLA (sqm) Completed (sqm) 26,500 - - - - - - 142,000 128,200 162,300 50,100 17,100 4,800 74,300 578,800 26,500 100% Leased¹ Underway (sqm) Estimated End Value 2020 2021 Estimated Timing 2023 2022 2024 2025+ - - - 50,100 - 4,800 34,900 89,800 $200m $205m $445m $80m $45m $12m $150m ~$1,137m The GPT Group | 2019 Annual Result | 10 February 2020 25 Retail Annual Result 2019 Sunshine Plaza, Queensland Retail Highlights 1.2% PORTFOLIO LIKE FOR LIKE INCOME GROWTH 99.6% PORTFOLIO OCCUPANCY $11,667 SPECIALTY SALES PRODUCTIVITY PER SQUARE METRE Office $6.1bn Key Highlights + Retail segment FFO contribution of $326.0 million for 12 months to Dec 2019, which is in line with 2018 + Valuation decline of $46 million (<1% of portfolio value) for 12 months to Dec 2019, and a WACR1 of 4.89% + Successful launch of new dining precincts at Melbourne Central and Charlestown Square + Completion of Sunshine Plaza development on 28 March 2019 + Strong progress with development proposals for Melbourne Central and Rouse Hill, scheduled to commence mid 2020. 1. Weighted Average Capitalisation Rate Portfolio Size & Geographic Exposure Retail $6.3bn NSW 41% VIC 44% QLD 10% NT 5% Logistics $2.4bn Melbourne Central, Melbourne The GPT Group | 2019 Annual Result | 10 February 2020 27 Retail Sales SPECIALTY SALES PRODUCTIVITY (<400sqm) Specialty Sales Productivity by Category $11,667 per sqm (psm) TOTAL SPECIALITY SALES PRODUCTIVITY GROWTH (PSM) 11.1% MAT $psm growth 7.6% 5.8% 1.1% 3.3% 2.1% 1.9% 2.3% 0.5% 1.9% -6.5% e r t n e C s e r o S t S D D AVERAGE TOTAL SPECIALTY TENANT SALES >$1.6 million pa per store l t a o T t n e m t r a p e D -7.0% s a m e n C i s e i t l i a c e p S l t a o T s t e k r a m r e p u S i s e c v r e S l i a t e R s e c n a i l p p A & h c e T i g n n D i -0.7% -1.1% -2.0% -2.4% e r u s e L i l i a t e R l a r e n e G s e r a w e m o H y t u a e B & h t l a e H s e i r o s s e c c A & r a e w o o F t l i t a e R d o o F , i n o h s a F Statistics exclude development impacted centres (Sunshine Plaza, Macarthur Square, Wollongong) The GPT Group | 2019 Annual Result | 10 February 2020 28 Retail Leasing + 459 leasing deals completed introducing over 70 new retailers to the portfolio in 2019 + Strong retail demand reflected in high portfolio occupancy + Holdovers down from the half, and in-line with 2018 at 5.7% of specialty rent + New specialty leases achieving fixed increases of 4.8% Portfolio Leasing Statistics Portfolio Occupancy Retention Rate Avg. Annual Fixed Increase1,2 Avg. Lease Term1,2 Leasing Spread1,2 % Debt of Annual Billings Specialty Occupancy Cost2 DEC 2019 99.6% 75% 4.8% 4.7 years (2.2%) 0.5% 17.0% New Dining precincts delivered The Corner – Charlestown Square ELLA – Melbourne Central + Precinct opened fully leased (Dec 19) + Introduction of 10 new retailers including well-known local dining retailers + Tenancy mix reflecting the uniqueness of the Hunter Region + Trading performance exceeding expectations + Precinct opened fully leased (Oct 19) + Introduction of 13 unique and iconic Melbourne food retailers + Strong synergies with office tower and access to train station + Solid trading performance since opening 1. New leases 2. Specialties <400sqm Statistics exclude development impacted centres (Sunshine Plaza, Macarthur Square, Wollongong) & holdovers The GPT Group | 2019 Annual Result | 10 February 2020 29 Retail Portfolio Why Data? Data driven culture – using digital technology and data to create value, drive market share…. Retail Offer that is responding to customer demand Retail Shift – Total Specialties (5 Year CAGR 2014-2019) GLA SQM Sales PSM Growth Total Rent Growth Dining Health & Beauty Leisure Apparel 3.0% 5.3% 2.1% 1.1% 5.3% 7.6% 5.2% (0.7%) o Visitation & GPS o Customer Database o Quantium Data o Sales Reports Data Sources o Centre WiFi o Social Platforms o Mobile o Website Use Responding to customer feedback and creating reasons for visitation Melbourne Central - Customer Solution for Online Returns Parkmore Outdoor Cinema Data Analysis Customer Insights Investment in physical spaces o Leasing Prediction Tool o Tableau Dashboards o Machine Learning (AI) o Net Promoter Score o Voice of Customer o Customer Data Platform “Creating a Single View On3 – Melbourne Central Main St Dining Precinct – Rouse Hill The GPT Group | 2019 Annual Result | 10 February 2020 30 Retail Development Melbourne Central #1 MOST PRODUCTIVE SHOPPING CENTRE IN AUSTRALIA1 5.7% pa MARKET GROWTH FORECAST (2020-2029)2 Artists impression Artists impression + Approx. $70 million - 7,000sqm of retail, focused on entertainment, dining and leisure + Approval received for Development Application + Retail pre-leasing well progressed, currently at 40% + Forecast Return | ~ 6.5% stabilised yield + Target Commencement | mid 2020 1. Shopping Centre Big Guns Publication 2019 2. GPT Research – using Deloitte Access Economic Forecasts Artists impression The GPT Group | 2019 Annual Result | 10 February 2020 31 Retail Development Rouse Hill 7.6% pa SALES PRODUCTIVITY GROWTH (2017-2019) 6.1% pa MARKET GROWTH FORECAST (2020-2029)1 Artists impression Artists impression + Approx. $200 million - 20,000sqm of retail and commercial space + Residential integrated within retail scheme and adjacent to existing asset + Development Application lodged + Forecast Return | > 6% stabilised yield + Target Commencement | mid 2020 1. GPT Research – using Deloitte Access Economic Forecasts Artists impression The GPT Group | 2019 Annual Result | 10 February 2020 32 Funds Management Annual Result 2019 Darling Park, Sydney Funds Management Highlights $13.3B ASSETS UNDER MANAGEMENT 5.6% AUM GROWTH 8.7% FFO GROWTH Key Highlights + GWSCF continued its asset recycling strategy with the sale of Norton Plaza for $153 million + GWOF acquired a 50% interest in 2 Southbank Boulevard, Melbourne for $326 million + GWOF raised $260 million of new equity from a mix of existing and new investors in 2019 + GWOF completed a 6.5 year $200 million MTN issue at a cost of 2.5% Funds Management Financial Summary ($M) Segment Result 2019 2018 CHANGE 46.3 42.6 8.7% 2010 2019 AUM $5.3b 11% $13.3b 9 year CAGR Earnings $11.2m 17% $46.3m 9 year CAGR The GPT Group | 2019 Annual Result | 10 February 2020 34 GWOF - $2 Billion Development Pipeline Corner of George & Bathurst, Sydney Queen & Collins, Melbourne 51 Flinders Lane, Melbourne Artists impression Artists impression Artists impression Asset GWOF Ownership share GWOF Spend Indicative Timing 2019 2020 2021 2022 2023 2024 2025 Queen & Collins, Melbourne 100% $238m Cockle Bay Park, Sydney 50% $800m $238m $40m 51 Flinders Lane, Melbourne (at 32 Flinders Street) Skygarden, Brisbane (at Riverside Centre) Cnr of George & Bathurst, Sydney (at 580 George Street) Cockle Bay Park, Sydney Artists impression 100% $400m $400m 100% $400m 100% $150m $760m $400m $150m Artists impression Skygarden, Brisbane Development approved Under consideration The GPT Group | 2019 Annual Result | 10 February 2020 35 Summary & Outlook Market Outlook Group Outlook + Recovery in residential sector, low interest rates and on-going infrastructure spend expected to support economic growth + GPT’s core markets of Sydney & Melbourne will continue to benefit from strong population growth, densification and low unemployment + Strong investor demand for real estate + 2020 income growth underpinned by structured rental growth across the portfolio, high occupancy and lower interest rates + Development pipeline providing enhanced growth outlook + Capital allocation will continue strategic re-weight toward office and logistics 2020 Guidance FFO per security growth of 3.5% DPS growth of 3.5% The GPT Group | 2019 Annual Result | 10 February 2020 36 Disclaimer The information provided in this presentation has been prepared by The GPT Group comprising GPT RE Limited (ACN 107 426 504) AFSL (286511), as responsible entity of the General Property Trust, and GPT Management Holdings Limited (ACN 113 510 188). The information provided in this presentation is for general information only. It is not intended to be investment, legal or other advice and should not be relied upon as such. You should make your own assessment of, or obtain professional advice about, the information in this presentation to determine whether it is appropriate for you. You should note that returns from all investments may fluctuate and that past performance is not necessarily a guide to future performance. While every effort is made to provide accurate and complete information, The GPT Group does not represent or warrant that the information in this presentation is free from errors or omissions, is complete or is suitable for your intended use. In particular, no representation or warranty is given as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this presentation - such material is, by its nature, subject to significant uncertainties and contingencies. To the maximum extent permitted by law, The GPT Group, its related companies, officers, employees and agents will not be liable to you in any way for any loss, damage, cost or expense (whether direct or indirect) howsoever arising in connection with the contents of, or any errors or omissions in, this presentation. Information is stated as at 31 December 2019 unless otherwise indicated. All values are expressed in Australian currency unless otherwise indicated. Funds from Operations (FFO) is reported in the Segment Note disclosures which are included in the financial report of The GPT Group for the 12 months ended 31 December 2019. FFO is a financial measure that represents The GPT Group’s underlying and recurring earnings from its operations. This is determined by adjusting statutory net profit after tax under Australian Accounting Standards for certain items which are non-cash, unrealised or capital in nature. FFO has been determined based on guidelines established by the Property Council of Australia. A reconciliation of FFO to Statutory Profit is included in this presentation. Key statistics for the Retail and Office divisions include GPT Group’s weighted interest in the GPT Wholesale Shopping Centre Fund (GWSCF) and the GPT Wholesale Office Fund (GWOF) respectively. The GPT Group | 2019 Annual Result | 10 February 2020 37 

Continue reading text version or see original annual report in PDF format above