Growthpoint Interactive Half Year Report 2018

Growthpoint Properties Australia 2018 Half Year Report 22 Industrial Portfolio Review Significant transactional and leasing activity contribute to solid underlying performance Industrial portfolio key statistics (as at 31 December 2017) — — $1,127.3 million total value — — 716,997 sqm total lettable area — — 6.8% weighted average capitalisation rate — — 34% of Growthpoint’s property portfolio — — 98% occupancy — — 5.1 year WALE — — 2.8% WARR — — 31 assets Summary The first half of FY18 has been a busy period for Growthpoint’s industrial portfolio, with significant transactional and leasing activity contributing to a solid underlying performance. Appetite for well-located assets remains high in both leasing and investment markets, and this was reflected in another strong period of like-for-like valuation growth of $43.8 million (or 4.2%), excellent leasing outcomes to high quality tenants (over 17,650 sqm leased) and occupancy maintained at 98%. The main drivers of industrial demand remain largely positive, with solid export levels, strong population growth and continued growth in e-commerce retail. State and Federal investment in transport infrastructure, particularly in New South Wales (e.g. Western Sydney Airport), Victoria and Queensland (e.g. Melbourne to Brisbane Inland Rail Project), is also driving demand. Acquisitions and Divestments Growthpoint was involved in two major transactions over HY18, both of which generated positive outcomes for the Group: Sale of 522-550 Wellington Road, Mulgrave, Victoria In November 2017, Growthpoint announced it had entered into contracts for the sale of 522-550 Wellington Road, Mulgrave, Victoria for $90.75 million, representing a 37.7% premium to the 30 June 2017 book valuation of $65.9 million. The income yield on the sale price was a record 5.2% per annum for a Woolworths distribution centre. The sale of Mulgrave was a particularly favourable outcome for Growthpoint’s Securityholders and an endorsement of the Group’s highly desirable property portfolio. The sale was consistent with management commentary that we would seek to realise material upside in the sale of assets with future development potential to a higher and better use. The transaction has settled with proceeds used to pay down existing debt. Acquisition of $46 million industrial portfolio at Perth Airport In July 2017, Growthpoint announced it had exchanged contracts for the acquisition of four adjoining, modern industrial warehouses at 36 and 58 Tarlton Crescent and 2 and 10 Hugh Edwards Drive, Perth Airport, Western Australia for $46 million, providing an initial passing yield of 8.13%. The properties are leased to high quality tenants, with an attractive WALE and were at a compelling yield relative to yields for recent comparable transactions on Australia’s Eastern seaboard. The assets are located near the Group’s sole existing property in Western Australia, being a Woolworths distribution centre at Perth Airport. Leasing Several significant leasing transactions were achieved in HY18, the highlights of which were: • • On 1 August 2017 the Group leased 101-111 South Centre Road, Melbourne Airport, Victoria to Direct Couriers. The 14,082 sqm office/ warehouse was leased for 10.2 years with annual rent increases to the greater of CPI and 3.5%. • • In January 2018, the Group finalised a 4 year lease renewal to Toll 1 at 10 Butler Boulevard, Adelaide Airport, South Australia. The lease covers a lettable area of 8,461 sqm with 92 car spaces and annual rent increases of 3.25%. Valuation The value of the industrial property portfolio increased by $43.8 million over HY18 or 4.2% on a like-for-like basis. The weighted average capitalisation rate across Growthpoint’s industrial property portfolio is 6.8% at 31 December 2017 down from 6.9% at 30 June 2017. Andrew Fitt Senior Asset Manager Julian Smith Asset Manager 1. Documents in the process of being executed.