Growthpoint Interactive Annual Report 2018

Portfolio occupancy (%) as at 30 June 2015 97 2016 99 2017 99 2018 98 2014 98 Total portfolio value ($b) as at 30 June 2015 2.4 2016 2.8 2017 3.3 2018 3.4 2014 2.1 Managing Director’s Report Growthpoint delivers another year of positive operational performance and financial returns Dear Securityholders, On behalf of Growthpoint’s management team, I am pleased to present the FY18 Annual Report which demonstrates another strong year of operational performance and financial returns for Securityholders. Over the year the Group achieved a record statutory profit of $357.7 million and delivered an above- sector total return of 22.3% to our Securityholders. Other key highlights over the year were: t t Statutory earnings of 53.5 cents per security (cps), which is the highest reported EPS of any year since Growthpoint’s inception in 2009 t t FFO of 25.0 cps, a decrease of 2.0% on FY17 t t Annual distribution of 22.2 cps, an increase of 3.3% on FY17 t t 10.8% increase in NTA per security, up from $2.88 at 30 June 2017 to $3.19 t t Completed over $257.2 million in property and equity transactions, taking advantage of strong pricing to sell property and reinvest favourably into markets we know and understand t t Undertook 132,433 sqm of new and extended leasing, equating to 13% of total portfolio lettable area, maintaining portfolio occupancy at 98% t t Reduced gearing by 460 basis points (bps), from 38.5% at 30 June 2017 to 33.9% giving the Group significant flexibility to take advantage of growth opportunities should they arise t t Successfully extended near-term debt maturities, maintaining the Group’s weighted average debt maturity at 5 years, with no refinancing required until September 2020 t t Increased the average NABERS energy rating for the office portfolio from 4.5 stars at 30 June 2017 to 4.6 stars at 30 June 2018 Continued repositioning of the portfolio was achieved via transactions weighted towards the first half, with the Group acquiring four adjoining, modern industrial warehouses at Perth Airport, Western Australia for $46 million, providing an initial passing yield of 8.1%. We also announced the acquisition of an 18.2% interest in Industria REIT for approximately $68.1 million, equating to $2.30 per IDR security and an attractive DPS yield of 7.2%. Post-FY18 balance date, Growthpoint entered into transaction documents for the acquisition of 836 Wellington Road, West Perth for $91.3 million. This is Growthpoint’s first office investment in Perth after a long period of due diligence on the Perth office property market which is showing clear signs of a turnaround. Importantly these acquisitions were funded by asset sales which achieved attractive prices. An example of this is 522-550 Wellington Road, Mulgrave, Victoria which sold in December 2017 for $90.75 million, representing a 37.7% premium to the 30 June 2017 book valuation. Achieving a high price on exit and re-investing proceeds into new markets where we believe will achieve long-term upside is a strategy management will continue to deploy. We are constantly reviewing new markets and opportunities to generate the best outcomes for Securityholders. To this end the Group has a pipeline of development and expansion projects it will look to undertake over the next two years, including the exciting development of a new, 19,300 square metre (sqm) A-Grade office building in Richmond, Victoria. Transactions over the year coupled with further uplift in valuations helped reduce gearing by 460 bps to 33.9% giving the Group significant flexibility moving forward. This lower level of gearing, coupled with the successful extension of bank debt leaves the balance sheet in an excellent position to explore further growth opportunities as we move into FY19. Timothy Collyer Managing Director Growthpoint Properties Australia Limited Growthpoint Properties Australia 2018 Annual Report 9 Financial Report Portfolio Review Financial Management Business Overview Governance Additional Information