Valad Property Group Full year results 30 June 2007 Highlights - - PowerPoint PPT Presentation

Full year results

30 June 2007

Valad Property Group

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Highlights

Underlying net profit up 36.1% to $76.2m DPS 11.07 cents; up 7.5% from FY06 Underlying EPS of 11.12 cents, up 6.5% from FY06 Created Asia-Pacific and Pan-European platform Pipeline execution on acquisitions in FY07 $6.2bn AUM A$16.8bn* at 30 June 2007 and now $18.3bn Forecast FY08 DPS and EPS 12.5 cents, represents 12%+ uplift on FY07 $1.8bn equity raised* Restructured organisation for growth Total shareholder return in FY07 of >60%

* Assumes Scarborough transaction complete

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Agenda

Financial performance International expansion Structural changes Pipeline execution and asset performance Valad Capital Services Funds management Outlook

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Financial Performance

Southernhays Garden, Exeter

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Year in review

* NTA is $1.05 post balance date following the Scarborough acquisition

Net Profit

56.0 76.2 36.3 23.1 9.2 20 40 60 80 FY03 FY04 FY05 FY06 FY07 Net Profit ($m)

CAGR 46.5%

DPS

10.30 11.07 9.55 9.80 8.35 8.0 9.0 10.0 11.0 FY03 FY04 FY05 FY06 FY07 Distribution (cps)

CAGR 7.3%

EPS

8.10 9.95 10.44 11.12 9.00 7.0 8.0 9.0 10.0 11.0 FY03 FY04 FY05 FY06 FY07 EPS (cps)

CAGR 8.2%

NTA*

0.82 0.88 0.99 1.25 0.82 0.70 0.80 0.90 1.00 1.10 1.20 1.30 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 NTA ($/security)

CAGR 11.1%

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Financial performance summary

FY07 FY06 $109.1m $78.9m $56.0m 14.9c 10.44c 10.30c Underlying Net Profit* $76.2m 36% Reported EPS 16.0c 7.4% DPS 11.07c 7.5% Underlying EPS* 11.12c 6.5% Change Reported Net Profit 38%

* After income tax and before non-cash items (being: amortisation of intangibles, movement in fair value of investment properties and employee securities ownership plan non-cash benefits)

12.5c 12.5c FY08 12% 11.12c EPS 12% 11.07c DPS Change FY07 Forecast

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Financial performance summary

$m FY07 FY06 48.7 40.9 19.5 VCS income 46.6 12.8 264% 16.0 8.0 Interest income & other income 2.9 3.8 (24%) Total income 137.3 101.0 36% Total operating expenses (38.3) (25.1) 52% EBITDA 99.0 75.9 30% Borrowing costs (22.1) (19.6) 13% Depreciation (0.4) (0.3) 25% Corporate tax (0.3) (0.0) NA Underlying earnings (before non-cash adjustments) 76.2 56.0 36% Amortisation, rental straight-line and non-cash employee benefits (8.6) (4.9) 75% Fair value adjustment – investment property 42.1 27.9 51% Fair value adjustment – derivatives (0.5) 0.0 NA Reported net profit after tax 109.1 78.9 38% 56.1 Fund management & other fee income 26.1 34% Property development & trading 6.4 (60%) Distribution paid/payable 81.5 45% Equity investment income 6.6 (18%) Change Net rental income 19%

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EBITDA split

* Forecast provided in 25 June 2007 PDS

Net Rental & Other Passive 64% VCS & other interest 11% Recurring fees 5% Transaction fees incl. performance fees 11% Profit share – VCS investment & other 9%

FY07 Actual FY08 Forecast*

Recurring Fees 20% Project profits 8% Transaction fees 10% Passive 54% VCS and other interest 8%

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Financial position summary

Jun 07 Jun 06 Change Total Assets $1,382m $1,053m $0.99 $409m Total debt facilities $570m $541m NA $1,391m* Weighted average debt term 3.1yrs 4.1yrs NA 4.7yrs Look through gearing2 (debt/total assets) 31% 44% NA 35% Ave interest rate – all debt (incl margins) 6.45% 6.63% NA 6.28% Interest cover 4.5x 3.9x NA 4.0x 39% $3,243m 31.2% 26.3% (48.4%) Gearing (debt/total assets) 15% 20% NA NTA/Security $1.25 $1.05 $211m Pro forma1 Total debt drawn $666m

1. Pro forma post Scarborough transaction 2. Look through gearing adjusted for Gold Fields House, self storage JV, Crownstone and JV warehouse entities for pro-forma * Excludes warehousing JVs with capacity of $1.9bn

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Capital management

Interest rates

• Interest rates are 77% hedged for the next 12 months. The hedges have a weighted

average maturity of 3.21 years and a weighted average interest rate of 5.08%

Foreign currency

• Balance sheet

– Our foreign currency exposure is actively managed to minimise risks as the business evolves. The existing policy is to maximise borrowings in the currency of the underlying investments in

• rder to limit currency impact on the balance sheet

– Foreign currency investments are substantially hedged through foreign currency borrowings

• r balance sheet hedges – refer appendices for details
• Income statement

– We have hedged foreign currency income within the following ranges: 1-2 years – 70% to 90% 3-5 years – 50% to 70%

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International expansion

89 Essener Strasse, Hamburg

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Valad European business

Note: Leeds and Scarborough offices are shared offices between Teesland and Scarborough Stockholm Malmo Copenhagen Berlin Warsaw Budapest Paris York Leeds The Netherlands Brussels London Edinburgh Gothenborg Belfast Scarborough

Teesland office Valad/Scarborough office Crownstone assets

Helsinki Milan Rome Munich Hamburg Frankfurt

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European platform

• Acquired Scarborough property platform in July 2007
• Presence in local markets across Europe
• Over 250 staff in 19 offices across 11 countries
• Core UK assets and interest in diversified European portfolio
• JV with HBOS which provides additional warehousing capability
• Majority share in European real estate/funds management business
• Diversified property services operation

1 Based on 100% interest in SCP

Scarborough A$10.2bn AUM at 30 June 2007

89 properties across Europe and the UK With a total value of A$1.7bn1 AUM of A$8.8bn 14 funds Core and Core Plus focus

Property Portfolios Funds Management 72%

UK Property Development A$242m Development joint venture financing A$848m Asset Management

Property Services

Currency Conversion: A$1 = €0.629

Portfolio AUM by Geography

France 9% Finland 1% Central Europe 3% Sweden 11% Netherlands 6% Norway 2% Denmark 7% UK 47% Germany 14%

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European post balance date transactions

• SCP investment in 12 assets; acquired for A$322.6m (€202.9m)
• Aircom Park, Ratingen-Tiefenbroich, Germany (stock for German Aktiv fund)

– Multi-let, light industrial asset acquired for €18.5m – Total area 25,829sqm with occupancy of 76.5% – Offers substantial reversionary upside potential

• Tevlingsveien 23, Oslo, Norway (stock for Nordic Aktiv 2)

– Multi-let office/warehouse asset acquired for €39.4m – Total area is 24,277sqm with occupancy of 84% – Rent rises of 20% are expected over calendar year 2007

• EIP - French and Dutch portfolio of 10 industrial assets

– Divestment of €145m portfolio into SCP to be warehoused for future funds – Portfolio of multi-let industrial parks; 77% warehouse, 23% office by floor area – Total area is 233,939sqm with occupancy of 79.5%

• Sc€uro investment in 14 assets; acquired for A$65.2m (€41m)
• German portfolio generally located in the Düsseldorf area

– Mixed use, mainly retail properties acquired for €41m – Total area 42,903sqm with current occupancy of 69% – Key asset is a modern 11,613sqm shopping centre in Monheim (€17m) – Gross initial yield is 9% including rental guarantee over majority of vacant space

Currency Conversion: A$1 = €0.629

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Europe – Crownstone investment

• Pan-European office fund with initial portfolio of

13 properties valued at €750m

• Initial investment of €125m in February 2007,

further €16m invested in two additional buildings in the Paris and Stockholm areas

• Strong leasing progress across the portfolio with

highlights being

• Milanofiori, Milan asset now fully
• ccupied. New 7 year lease executed
• ver pre-existing 22% vacant space
• A further 23% of space taken up on 5

year leases in the Kluuvikatu 3, Helskinki property

• The portfolio now comprises 15 office properties

valued at €820m with significant upside potential underpinned by a large number of quality corporate tenants

Portfolio AUM by Geography

Finland 8% France 58% Italy 21% Netherlands 12% Sweden 1%

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New Zealand

• West Plaza, Auckland
• A$27m office asset; A$10m VCS investment
• NLA of 8,452sqm including 818sqm of retail space. Currently 90% leased
• Opportunity to add value through actively managing the leases and undertaking

minor refurbishment works over the short-term

• Maritime Tower, Wellington
• A$75m prime waterfront office asset, A$18m VCS investment
• NLA of 13,940sqm, currently 98% leased (76% leased on initial investment)
• Opportunity to benefit from future rental growth
• Albany Town Centre, Auckland
• NZ$200m town centre development; A$13m VCS investment
• 13ha of land part of an existing town centre precinct
• Sites acquired have the potential to be developed into over 30,000sqm of bulky

retail, 50,000sqm of office space, a hotel, retirement facilities and residential

• Carter Holt Harvey portfolio (post balance date)
• A$277m investment portfolio comprising:

– 15 Carters depots in NZ; A$48m (earmarked for new Valad fund) – 10 packaging plants Australia and NZ; A$151m (Valad Property Trust) – Auckland office property A$9m (Valad Property Trust) – 5 development sites A$69m (Valad Funds Management Ltd)

Maritime Tower Tauranga

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Japan

Tokyo

• Team headed by Rob Lloyd, CEO, Japan Operations
• Opportunities
• VCS
• Development
• Assets to Funds
• Platform
• Asset classes under due diligence
• Office
• Retail
• Residential
• Healthcare
• Student accommodation
• Timeframe – FY08

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Structural changes

110 St Vincent St, Glasgow

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Management update

Peter Hurley Executive Director EUROPEAN BUSINESS Mickola Wilson Teesland iOG Didier Tandy Scarborough Property Holdings Valad Property Group Board(1) (ASX) Stephen Day Executive Chairman ASIA PACIFIC BUSINESS Jeff Locke COO Asia Pacific Global Coordination Group(2)

Notes:

• 1. Stephen Day, Peter Hurley, Trevor Gerber, Robert Seidler, Andrew Martin, Kevin McCabe and Ian Robertson
• 2. Stephen Day, Peter Hurley, Jennifer Lambert, Stephen McBride and Jeff Locke

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Australian management changes

• Peter Hurley has moved to the UK and

will assume the role of Executive Chairman, Europe

• Martyn McCarthy will have deal flow and

investment committee responsibilities as Chief Investment Officer, Europe

Peter Hurley Executive Director Martyn McCarthy CIO Europe Valad Europe Valad Australia Paul Notaras Group Head VCS Nicki Garrett Head of Funds Management

• Strong growth in the funds management and

VCS business

• Paul Notaras appointed Group Head VCS
• Nicki Garrett appointed Head of Funds

Management

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• The Scarborough acquisition provides immediate scale and track record across key

components of Valad’s integrated business model

• Creates a strong pan-European and Asia-Pacific platform with a highly experienced

management team

• Merged group will have close to 400 people in offices in 12 countries with investment and

funds experience across the property risk/return spectrum

Valad Property Group

Business platform post balance date

Asia Pacific Portfolio UK portfolio SCP Sc€uro 14 Teesland managed funds 8 Valad managed funds

VPG business Scarborough business Combined business

Property portfolios Funds

Development Asset management Leasing & acquisition

Property services

Joint Venture financing Australia/New Zealand European - opportunity

Valad Capital Services

Crownstone

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Pipeline Execution and Asset Performance

38 Threadneedle St, London

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Pipeline execution - acquisitions

Corporate Actions VPG VCS* V+ VOF

$2,055m $641m $3,063m $193m $43m

TOTAL

$6,205m

* Includes Crownstone end value. Development assets given as end value

ICADFs

$210m

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Asset performance – on balance sheet

Office/Industrial FY07 FY06 Valuation $428m1 $338.3m Weighted average cap rate 6.5% 7.7% WALE 3.7yrs 4.3yrs Bulky Goods Retail FY07 FY06 Self Storage FY07 FY06 Valuation $235.1m $231.8m Weighted average cap rate 7.5% 7.5% Average occupancy 91.6%3 97% Like-for-like rental growth2 3.2% 2.9% WALE 5.00yrs 6.0yrs Valuation (50% interest) $160m $145.3m Weighted average cap rate 8.7%4 8.7% Year end occupancy 80.83% 77.4% Year end rate/sqm/pcm $21.31 $20.86 Average occupancy 98% 97% EBITDA $11.6m $10.7m Like-for-like rental growth2 3.7% 3.6%

• 1. Reflects 61% ownership for Gold Fields House
• 2. Adjusted for vacancy
• 3. Average occupancy reflects additional supply at Kawana and Albion Park Stage 2 during the financial year
• 4. Excludes 4 development style assets acquired during the year

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Asset performance – fund inventory

Gold Fields House acquired August 2006 for $274m (61% VFML 39% V+)

• Commercial repositioning - base case

– Valuation on commercial basis as at 30 June 2007 of $302.5m (100% basis) – Floor space ratio (FSR) for office is 12.5:1

• Residential conversion – upside case
• Stage 1: fully conforming residential Development Application

(DA) lodged with Sydney Council – First 5-Star/Green Star multi-unit residential building in Australia – Bio-filter on every wintergarden (first Bio-Filter in a multi- unit residential building) – 33 Residential Floors, 37,500sqm FSA (approximately) – FSR 14:1 (approximately) based on mixed use formula – 124 - 175 units (dependant on number of units per floor) – 345 parking spaces (6-levels of basement)

• Stage 2: design competition

Gold Fields artists concept

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Asset performance – fund inventory

• Craigieburn JV with DF4
• Settled in August 2007
• Base case - sell post planning outcome
• Alternative case – opportunity to develop and hold

– Strong retail leasing market – Scarcity of core retail land – Improving residential market dynamics

• Pentridge (potential stock for VOF series)
• $530m residential and retail project in Melbourne
• 63 apartments in stage one, 80% pre-sold
• Approval for 1,130 units, townhouses and serviced

apartments with a major supermarket, specialty retail shops and a commercial complex on completion

• Carter Holt Harvey portfolio (post balance date)
• 15 Carters retail warehouse depots in New Zealand

(stock for new fund)

• 5 development sites located throughout New Zealand

and Australia

Pentridge artist’s impressions

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Valad Capital Services

Theobalds Rd, London

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Valad Capital Services

25 8 Number of positions 15 6 Number of customers 9 5 Team members 41** 7 Number of properties $4.1bn* $1.2bn End value $570m $160m VPG equity committed FY07 FY06

• Strong growth

* Includes post balance date adjustments ** Includes Crownstone properties

• Track record

31% Chifley 20% Claremont 26% Noosa North Shore Equity IRR

• Pipeline
• Estimates of active pipeline is approximately $1.3 billion in end value

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Commercial 47% Industrial 13% Mixed 7% Retail 16% Retirement 6% Residential 11%

VCS - Diversification

Equity Committed by Property Sector

• Sector
• Portfolio well diversified by sector with 6 asset classes represented
• High relative weighting to income producing commercial/office asset class – gives exposure to improving

market segment

• Geography
• International markets now represented with investments in New Zealand and across Europe
• 41% European weighting represents investment in Crownstone portfolio where coupon to VPG is underpinned

by rental income

Equity Committed by Location NSW 34.2% VIC 0.5% QLD 18.0% NZ 6.3% Europe 41.0%

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Timing of Valad Project Profit 14% 17% 15% 12% 12% 11% 0% 5% 10% 15% 20% 2008 2009 2010 2011 2012 2013

VCS – Risk Management

Investment 46% Private Equity 2% Development 37% Active Repositioning 15%

• Risk management:
• 61% of the portfolio is underpinned by rental income (investment and active repositioning)
• Cash accounted approx 70% of total VCS returns in FY07
• Rigorous approach to sponsor and project selection
• Portfolio profit participation is well spread over coming years

Equity Committed by Risk Profile % of portfolio by equity committed Expected Timing of Valad Profit Share Other

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Funds Management

Senate, Exeter

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Valad Funds Management - $18.3bn AUM

AUM $18.3bn as at 23 August 2007 AUM A$16.8bn as at 30 June 2007*

A$6.6bn A$8.8bn Teesland, 53% Valad, 40% Scarborough Property & Development, 8% A$1.4bn

Teesland 52% $9.5bn Scarborough Property & Development 8% $1.4bn Valad 40% $7.4bn

* As per 25 June 2007 PDS

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Fund product overview - Australia

Fund Launched in 2001. Single property remaining ICA Development Fund 3 Launched in 2002. Two properties remaining Valad Property Trust Expanded with the addition of UK portfolio Proposed alternative assets platform Currently developing a fund focussed on alternative asset classes which may include bulky goods retail, special purpose depots and storage assets ICA Development Fund 4 Fully invested. Investments during FY07: 2a Victoria Ave Castle Hill, 12 Victoria Ave Castle Hill, 13% JV share in Tempe ICA Development Fund 5 Fund closed in April 07. Investments during FY07: its 87% JV share with DF4 investment in Tempe Fully subscribed with $37.6m raised. Successfully converted to an unlisted fund targeting retail investors as the first in a series. Number of assets on balance sheet being warehoused for next fund in the series to be launched in FY08 $25m spent on infrastructure to date. A further $17m of infrastructure works planned in

• FY08. On completion, over a third of the 411ha can be sold for an enhanced value as

fully serviced lots Since launch of fund, 4 additional assets acquired. All assets are delivering ahead of forecast. Strong pipeline

• f value-add opportunities being sourced for a further offer of securities to be made to

Investors during FY08. AUM A$454m ICA Development Fund 2 Valad Opportunity Fund Hunter Economic Zone Valad Core Plus

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Fund product overview - Europe

Fund

European Industrial Partnership Launched in 2001 and investing in multi-let industrial estates across Europe. 19.6% annualised total return to June 2007. European High Income Invested over €750m in European multi-let industrial assets in the three years since its launch in

• 2004. Producing 21% IRR since launch

University Capital Trust Launched in 2005, investing in the high-growth student accommodation sector within university

• towns. 11.5% annualised return to June 2007

Central Euro Industrial Launched 2005, invested in industrial estates in Hungary, Poland and the Czech Republic. Initial target size was €250m; increased to €500m at first closing due to strong investor demand Nordic Aktiv Fund Launched in Nov 2006 with €256m equity. Second closing in 2H07 raised a further €54m equity and was three times over-subscribed. Annualised return of 14.6% since inception. Fund achieved acquisition target of €850m a year ahead of target and is now closed PROPOSED: German Aktiv Fund €2bn Fund currently being marketed with first close expected in 1H08 with equity target of €280m. Mixed commercial fund with excellent prospects for rental and capital growth resulting from resurgence of Europe’s most powerful economy PROPOSED: Nordic Aktiv Fund II Investor driven demand for second Nordic fund with target size of €850m. Same fund rationale as Nordic I of high yields backed by strong regional economic growth

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Fund product overview - UK

Fund Osprey Ltd P’ship Teesland’s first fund, opportunistic and added value. Second highest performer in the HSBC pooled fund index over 4 years since launch at 24% pa. Negotiations to roll over Fund to 2016 agreed subject to contract Industrial Investment P’ship A core fund launched in 2004 managed solely for GIC. Total return to December 06

• f 16.3%.

Teesland Advantage Property Income Trust (TAP) Listed on the London and Guernsey Stock Exchanges in 2005 targeting retail

• investors. Mixed commercial core plus portfolio.

Single investor funds (x4) Specific mandated funds and asset management contracts The Industrial Trust A core plus fund established in 2001 with JV partners, Rockspring. 14.1% pa return since launch in 2001

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Funds management – Asia Pacific

Long term funds – Fund expiry dates1

€605m £280m €855m £140m £50m €250m €855m £260m £460m €770m 2020 Open ended Open ended 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

ICA Development Fund 2 ICA Development Fund 3 ICA Development Fund 4 ICA Development Fund 5 VOF Series Hunter Economic Zone Valad Core Plus Valad Property Trust Proposed new fund

2018+

1 Fund expiry based on financial year

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 European Industrial Partnership Osprey European High Income Industrial Investment Partnership University Capital Trust Central European Industrial Fund Nordic Aktiv Fund Teesland Advantage Property² The Industrial Trust German Aktiv Fund (Marketing)

Funds management – Europe and UK

Long term funds – Fund expiry dates1

2018+

1 Fund expiry based on financial year

Outlook

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Business integration

Valad has developed a detailed integration plan for the Scarborough businesses European Valad re-branding and marketing strategy developed and being implemented Integration assisted by the complementary nature of the businesses Peter Hurley (Executive Chairman Europe) and Martyn McCarthy (CIO Europe) relocated to UK In July 2007 office tour by Stephen Day, Peter Hurley and Martyn McCarthy including Germany, Netherlands, France and UK Senior executive offsite meeting scheduled for early September 2007 An intensive program of staff communications implemented

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Diversification and growth

• Expanding and diversifying income streams:
• By geography

– Invested in NZ and Europe; investigating opportunities in Japan and SE Asia

• By sector

– Expansion of residential/retirement/hotels leisure platform

• By equity sources for managed funds

– Deep European investor base through Scarborough/Teesland network – Domestic retail and high net worth investors targeted with new VOF series – Expanding relationships with Australian wholesale investors

• Risk and return profiles (from Core to Opportunistic)
• Growth in existing business lines
• Property portfolios
• Funds (including fund inventory)
• Property services (including development and trading)
• Valad Capital Services structured for international growth

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2008 and beyond

EPS/DPS growth in excess of peer group; 12%+ growth forecast for FY08 Consolidate and capitalise on existing Asia Pacific and European platform Drive further AUM growth Continue to focus on ROE with lateral approach to acquisitions and disposals Utilise balance sheet to warehouse high value opportunities for funds management business Utilise proven development and value-adding skills Continued strong alignment of interest with security holders

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Appendix

Theobalds Rd, London

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FX Management

Income Hedging profile

Maturing during period ending June Average Hedge rate Amounts Payable £m Average Hedge rate Amounts Payable €m Average Hedge rate Amounts Payable NZ$m 2008 0.41800 7.46 0.00000 0.00 1.13380 2.22 2009 0.41800 14.91 0.00000 0.00 0.00000 0.00 2010 0.41800 12.38 0.00000 0.00 0.00000 0.00 2011 0.41800 9.85 0.57452 59.38 1.16570 4.62 2012 0.41800 9.85 0.59738 13.27 0.00000 0.00

Capital Hedging profile(1)

(1) Includes Cross Currency Swaps, Forward Rate Agreements and Foreign Exchange Swaps (2) Cross Currency Swap for investment into Crownstone which is not yet fully drawn

Maturing during period ending June Weighted average exchange rate £m Amounts payable £m Weighted average exchange rate €m Amounts payable €m Weighted average exchange rate NZ$m Amounts payable NZ$m 2008 0.00000 0.00 0.00000 0.00 1.13714 239.77 2009 0.00000 0.00 0.00000 0.00 0.00000 0.00 2010 0.00000 0.00 0.00000 0.00 0.00000 0.00 2011 0.00000 0.00 0.59740 125.00 1.16570 8.88 2012 0.00000 0.00 0.59738 50 (2) 0.00000 0.00

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Disclaimer

This presentation is not an offer or invitation for subscription or purchase of or a recommendation of securities. It contains general information only and does not take into account the investment objectives, financial situation and particular needs of individual

• investors. Investors should obtain their own independent advice from a qualified financial advisor having regard to their objectives,

financial situation and needs. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to any “U.S. person”. No representation or warranty, express or implied, is made in relation to the accuracy or completeness of the information and

• pinions expressed in the course of this presentation. To the maximum extent permitted by law, each of Valad Property Group, all
• f its related bodies corporate and their representatives, officers, employees, agents and advisors do not accept any responsibility
• r liability for any of the information or for any action taken by you on the basis of the information or opinions expressed in the

course of this presentation, including without limitation any liability arising from negligence on the part of any person. No representation or warranty is given as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the information provided in this presentation. Such forecasts, prospects, returns and statements are by their nature subject to significant uncertainties and contingencies many of which are

• utside the control of Valad Property Group. You must make your own independent assessment of the information and in respect of

any action taken on the basis of the information.