Growthpoint Interactive Half Year Report 2018

Growthpoint Properties Australia 2018 Half Year Report 8 Financial Management Well placed to meet upgraded FFO and distribution guidance Dion Andrews Chief Financial Officer Summary The Group’s financing activities benefited from revaluation gains and asset sales at significant premiums to book value over the first half of FY18, helping to reduce gearing and increase NTA. Highlights for HY18 include: • • FFO of 12.5 cents per security; • • Distributions of 11.0 cents per security equating to a payout ratio of 88.3%; • • FY18 guidance increased to at least 24.3 cps for FFO and 22.2 cps for distributions; • • NTA per security of $3.08, 6.9% above 30 June 2017; and • • Gearing of 35.8% 1 , down 270 basis points from 30 June 2017. Strategic execution Growthpoint retains a good balance between shorter term, more flexible bank debt and longer term fixed debt. Funding sources have been diversified, and the weighted average maturity of debt has been increased over time. Looking ahead, the Group has $515 million of bank debt maturing in 12 to 24 months. The Group is considering all available debt markets to achieve the best outcome for Securityholders. It is important to have the right balance between the overall cost of debt, the average tenor and overall diversification in sources of funding. The Group will look to increase the weighted average maturity of the debt book with the goal of aligning it closely with the WALE. Gearing 35.8% 1 as at 31 December 2017 Gearing as at 31 December 2017 was 35.8% 1 , down from 38.5% 1 as at 30 June 2017 and towards the bottom of the target range of 35% - 45%. The chart below tracks the events that impacted gearing during the half year. There was $231 million of undrawn facilities at 31 December 2017, with the Group targeting approximately $100 million as an undrawn balance over time to allow for flexibility in transactions, while not allowing an excessive cost burden from holding undrawn debt lines. Fixed debt percentage increased to 79% At 31 December 2017, fixed debt was 79%, up from 75% at 30 June 2017. The weighted average maturity of fixed debt is 6.0 years which means a high percentage of debt is protected for the medium term against any future interest rate rises. Financial Management key statistics (as at 31 December 2017) — — 12.5cps FFO — — 11.0cps distribution — — $3.08 NTA per security — — 35.8% 1 gearing — — 6.0 years weighted average fixed rate debt maturity — — 79% debt fixed Items influencing gearing (%) for 6 months ended 31 December 2017 Accretive acquisitions over the half leave the Group well placed to meet upgraded Funds From Operations (FFO) and distribution guidance, while asset sales and strong revaluation gains support further reductions in gearing, leaving the balance sheet in good shape. 41% 40% 39% 38% 37% 36% 35% 34% 33% 30 Dec 16 30 Jun 17 Pay down excess cash Sell Nundah Purchase IDR stake Purchase Perth industrial Sell 10 Gassman Distribution paid Sell 522-550 Wellington Road Revaluations 31 Dec 17 -1.5% -2.1% +1.3% +0.7% +2.2% -2.0% -1.2% 38.5% 1 40.7% 1 -0.1% 35.8% 1 270bps reduction since 30 June 2017 1. Gearing calculation changed during the period from interest bearing liabilities divided by total assets to interest bearing liabilities less cash divided by total assets less cash. This change brings Growthpoint’s gearing calculation more closely in line with industry peers.