Growthpoint Interactive Half Year Report 2018

Growthpoint Properties Australia 2018 Half Year Report 3 Portfolio Review Financial Report Additional Information Financial Management Business Overview Dear Securityholders, The Board and management are pleased to report continued robust operational and financial performance over the six months to 31 December 2017. Active portfolio management, prudent control of expenses and a focus on favourable leasing outcomes have all helped deliver funds from operations of 12.5 cps and a distribution to Securityholders of 11.0 cps, well on track to meet upgraded FY18 FFO guidance of at least 24.3 cps and distribution totalling 22.2 cps. Statutory profit for the period was $207.3 million, up $94.3 million on the prior corresponding period driven by property revaluation gains and profits generated from asset sales. Property portfolio performance Of the Group’s 56 properties, 31 were independently valued at 31 December 2017 and 25 were valued internally by the Directors’ Valuations. In aggregate, the book value of the property portfolio increased over HY18 by $124.6 million equating to a 4.0% increase on a like- for-like basis. The key drivers of the valuation increase were a 17-basis point compression in the weighted average capitalisation rate over HY18 from 6.53% to 6.36% and improvements as a result of leasing undertaken in the portfolio. Stake in ASX-listed Industria REIT (IDR) On 11 July 2017, Growthpoint announced that it had acquired an 18.2% interest in Industria REIT for approximately $68.1 million, representing $2.30 per IDR security. The acquisition was funded from undrawn debt facilities which have since been paid down following asset sales completed and settled over HY18. As management has previously stated, the stake in IDR was purchased at an attractive DPS yield of 7.2% at the time of acquisition which represented good value compared to pricing for direct real estate available in the market at the time of the acquisition. IDR’s revaluation gains since July have validated the Group’s Introduction from the Chairman and Managing Director Well positioned for the future decision to acquire the stake which is now trading at a 9.6% premium to the $2.30 per security acquisition price (based on IDR closing share price of $2.52 at 31 December 2017). The Board and management continue to view Growthpoint’s interest in IDR as a quality standalone investment. The Group will continue to actively review IDR and consider strategies that are in the best interests of Growthpoint Securityholders. Direct property transactions Acquisitions Also in July 2017, Growthpoint announced the acquisition of four adjoining, modern industrial warehouses at 36 and 56 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 were purchased fully leased to seven tenants with a weighted average lease expiry as at 30 June 2017 of 6.4 years, annual rent reviews either to CPI or a fixed 2.0% increase, a total lettable area of 31,954 sqm and total land area of 57,617 sqm. The properties are located in the Perth Airport industrial precinct approximately 11 kilometres from Perth’s central business district and near the Group’s only other asset in Western Australia, a Woolworths Regional Distribution Centre, also in the Perth Airport precinct. Divestments In November 2017, the Group was also pleased to announce that it had entered into contracts for the sale of 522-550 Wellington Road, Mulgrave, Victoria for $90.75 million. The sale price represented a 37.7% premium to the 30 June 2017 book valuation of $65.9 million. Settlement of the sale occurred on 19 December 2017, with proceeds used to pay down existing debt and further reduce gearing. Total Securityholder return over 1, 3 & 5 years (%) 1 1 year 6.4 10.8 3 years 11.3 14.5 5 years 13.4 17.0 Growthpoint S&P/ASX 300 A-REIT accumulation index 1. Source: UBS Investment Research: Annual compound returns to 31 December 2017 Geoff Tomlinson Chairman Timothy Collyer Managing Director