Quarterly report+ 30 September 2012 Goodman European Business Park Fund Goodman European Business Park Quarterly Report September 2012 1
snapshot+ Year to 31 Dec 2011 3 Months to 31 March 2012 6 Months to 30 June 2012 9 Months to 30 Sep 2012 Total Assets ( m) 242.7 240.6 242.5 221.3* Net asset value ( m) 33.4 32.6 37.6 52.8 Gearing LTV () 80.3 80.4 78.5 68.5 Profit/(loss) after tax ( m) (6.2) (1.1) 3.6 18.5 Ungeared return () 3.8 1.0 2.0 12.8 Highlights for the year 2012 to date: + Refinance completed in May 2012 + *Disposal of Dusseldorf asset for 41.1m (87 above book value) and subsequent prepayment of debt on both Dusseldorf and Marseille + Gearing reduced to 68.5 and cash position strengthened following Dusseldorf sale + Portfolio occupancy decreased to 71.7 from 74.9, following the Dusseldorf sale, (100 occupied) offset in part by strong void leasing during the period of 10,292 + Total leasing (void and renewals) of 28,035 for the year to date, compared to 23,839 for the same period in 2011. + WALE to first break of 2.3 years, down from 2.5 years as at 31 December 2011 Goodman European Business Park Quarterly Report September 2012 2
Fund Director s report+ Contents Fund Director s report 3 Analysis of the financial results 6 Portfolio summary 7 Park updates 9 Financial report (unaudited) 17 Glossary and corporate directory x I am pleased to present the Goodman European Business Park Fund ( GEBPF or the Fund ) quarterly report ended 30 September 2012. Market The economic environment in Europe deteriorated in the third quarter of 2012 as GDP contracted by (0.1), this following the contraction of (0.2) seen in Q2. The economic woes of the Southern European economies has now been observed in a number of the principal economies as well with the French and German economies only showing very nominal (0.2) growth in Q3. Because of this, H2 2012 performance is likely to be much weaker than first anticipated. Conditions in labour markets across Europe remain considerably weak, with the unemployment rate in the EU-15 currently sitting at 10.7, relatively stable of late but remaining at a historical high. Performances vary markedly between the different countries. Spain (25.1) and France (10.8) have seen increases recently in the rate of unemployment; Germany (5.5), Italy (10.7) and Belgium (7.4) have seen stability, with the rate in Germany being at a historical low. On the back of this negative sentiment, office occupier demand continues to be adversely impacted. For the year ending on 30 September 2012, take-up in the largest nine Western European cities fell by 10. Despite these low activity levels, low development completions resulted in a small contraction in the average vacancy rate for Q3 2012. Goodman European Business Park Fund Quarterly Report September 2012 3
Prime yields for all categories of real estate across Europe remain relatively stable. Office investment across the major European markets reached the highest level seen since mid-2008, with a rolling year increase of +19. This being said, performance divergence amongst countries and cities remains a key theme shown in the lack of investment activity in the markets in which GEBPF operates. During the first nine months of 2012, total commercial real estate investment in Spain amounted to 510m, approximately 30 of the total seen in the same period in 2011. Asset management The sale of Dusseldorf completed in September for a price of 41.1m, 19.1m (86.8) above the December 2011 valuation of 22.0 million and represented a gross passing yield of 6.7. The sale resulted in net proceeds of approx. 23.6 million after incurring expenses for legal consultancy and outstanding liabilities including debt of 14.5 million in relation to the asset. Under the terms of the BNP debt refinance these proceeds were used to repay all outstanding debt at Marseille. Activity within the Funds portfolio has been relatively positive over the first nine months of 2012 with 10,293 of new leases completed against a budget of 9,206. Take up was due largely to a new lease completed in Q1 with Indra Sistemas for 4,190 at Madrid though significant new leases were also completed with existing Madrid customers Transcom and Dimetronic for of 1,758 and 581 respectively. The major exception to this positive performance has been the lack of leasing at Barcelona. Low levels of tenant relocations across the city have meant there have been no new leasing deals completed since the Unilever lease was signed in late 2011. As a result occupancy at the Park has fallen slightly, to 54.2, against our budget occupancy for September of 60. For the year to date, Management have been successful in completing a total of 17,743 of renewals. These renewals have resulted in a portfolio retention rate for Q3 of 68.4, down from 64.9 as at the end of Q2. WALE for the portfolio has increased marginally over the quarter to 2.3 years to first break with the 12 month rolling expiries representing 13.2 of portfolio income. Portfolio occupancy has fallen from 74.9 in December 2011 to 71.7 as at September 2012 largely due to the sale of Dusseldorf which was 100 leased. New leasing transactions completed in Q3 include: Park Tenant Area Lease term Rental p.a. Madrid Dimetronic 581 4.5 73,143 Madrid Medline 369 5.0 48,728 Madrid Karl Storz 41 3.7 4,891 Madrid Kaizen 130 3.0 15,600 Total 540 142,362 Goodman European Business Park Fund Quarterly Report September 2012 4
Performance The below table outlines the performance of the portfolio against budget for the first three quarters of 2012: 30 Sept Actual 30 Sept Budget Variance Occupancy 71.7 76.7 (5.0) NPI ( 000) 8,153 8,722 (569) Exercised Expiries () (7,675.8) (3,316.5) (4,359.3) Void leasing () 10,292.9 9,206.3 1,086.7 Net leasing () 2,617.1 5,889.8 (3,272.7) The profit and loss statement for GEBPF for the nine months ending 30 September 2012 shows a profit of 18.5 million compared to a budgeted profit of 2.4 million. Key highlights are as follows: + NPI of 8.2 million compared to budget of 8.7 million due to: o ( 0.2m) lower than budget at Barcelona mainly due to higher actual operating expenses and loss of rental on lower new leasing than forecast o ( 0.1m) lower than budget in Madrid on higher non recoverable expenses than forecast o ( 0.2m) lower than budget in Düsseldorf due to the sale in September 2012 + A realised gain of 18.5 million comprises: o o o o 18.5m on the sale of Dusseldorf 0.2m of margin on land sales completed in Val d Europe 0.9m accrual release on development in Dusseldorf. ( 1.1m) subsequent fees related to the sale of Dusseldorf + Tax accrual of 1.8 million on the profit realised on the sale of Dusseldorf + The amortisation of debt transaction costs of 3.1 million were ( 0.5m) over the budget due to the write off of the expenses of unamortised costs on Marseille and Dusseldorf upon the repayment of the respective debt facilities. Outlook As outlined in the Q2 Fund Report, the sale of Düsseldorf in Q3 and subsequent repayment of both the Düsseldorf and Marseille bank debt has helped to ease the pressure on the Fund s capital position for the medium-term. Significant levels of essential capital works at Madrid and Marseille coupled with continued NPI risk means there is an on-going requirement for continued stringent control of expenditure. Stephen Young Fund Director Goodman European Business Park Fund Goodman European Business Park Fund Quarterly Report September 2012 5
Analysis of the financial results+ Fund performance The Fund s performance to 30 September 2012 shows an ungeared return of 12.8 before any revaluations. Year to 31 Dec 2011 3 months to 31 Mar 2012 6 months to 30 Jun 2012 9 months to 30 Sep 2012 Ungeared return 3.8 1.0 2.0 12.8 Geared return (38.5) (2.5) 15.6 58.1 Distribution Distributions are not permitted under the terms of the debt refinance completed in May 2012. Property valuations The whole portfolio was externally or internally revalued in the accounts as at 31 December 2011. Investment property 30 June 2012 Capex Disposal Revaluation 30 Sep 2012 Change Change Madrid 150,435 214 - - 150,649 214 0.1 Barcelona 29,558 11 - - 29,569 11 0.0 Val d Europe 1,600 1 - - 1,601 1 0.1 Düsseldorf 22,078 - (22,078) - - (22,078) -100.0 Marseille 33,943 346 - - 34,289 346 1.0 Total 237,614 572 (22,078) - 216,108 (21,560) -9.1 In Q3, the Business Park in Düsseldorf was sold for 41.1 million, realising a gain on sale of 18.5 million. A full revaluation of the portfolio will be completed for December 2012. Goodman European Business Park Fund Quarterly Report September 2012 6
Portfolio summary+ Summary statistics Occupancy WALE Madrid 75.0 2.1 years Barcelona* 43.9 2.0 years Marseille 82.3 3.2 years Val d Europe 100 0.5 years Total 71.7 2.3 years *excludes Consortium buildings Top 10 lease expiries in next 12 months Tenant Park Surface Area Lease expiry date Surface Area Annual net rent m Time to break years Portfolio by ERV Europrop Madrid 1,694 30 Aug 2013 1.20 0.3 0.91 2.05 GTI Madrid 1,576 31 May 2013 1.12 0.2 0.67 1.51 Bayer Madrid 548 31 Dec 2012 0.39 0.1 0.25 0.76 Mitsubishi Madrid 485 31 Dec 2012 0.34 0.1 0.25 0.59 DESA Barcelona 444 03 Jul 2013 0.32 0.1 0.76 0.55 Delta Business Centre Barcelona 1,413 30 Sep 2013 1.00 0.1 1.00 0.54 PEM Industries Val d'europe 604 31 Mar 2013 0.43 0.1 0.50 0.53 Hermanos Arriscado Madrid 405 30 Nov 2012 0.29 0.1 0.17 0.52 Hors Norme Marseille 327 31 May 2013 0.23 0.1 0.67 0.45 Meta4 Spain Barcelona 449 28 Feb 2013 0.32 0.1 0.41 0.43 TOTAL 7,945 5.64 1.0 7.92 Goodman European Business Park Fund Quarterly Report September 2012 7
Retention Rate Customer, Building Asset Asset Occupancy (by area)* Weighted average lease expiry (by income)* Years 0.0 1.0 2.0 3.0 4.0 5.0 Portfolio 71.7 Portfolio WALE 2.3 Val d'europe 100.0 Val d'europe 0.5 Marseille 82.3 Marseille 3.2 Barcelona 43.9 Madrid 2.1 Madrid 75.0 0 10 20 30 40 50 60 70 80 90 100 Occpancy (by area) Barcelona 2.0 Retention (by income) Top 10 customers (by income) of Portfolio Income 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 72.0 71.0 70.7 Dimetronic, Madrid Transcom Worldwide, Madrid 5.7 9.0 70.0 Industria Turbo Propulsores, Madrid 5.6 69.0 68.0 67.0 66.0 65.0 66.0 64.9 68.4 Unilever, Barcelona Oxford University Press, Madrid Indra Sistemas, Madrid Volvo Maquinaria, Madrid 4.8 4.3 3.8 3.5 64.0 63.0 62.0 Sitel Iberica Teleservices, Madrid Mistral Services, Marseille 2.6 2.5 61.0 Q4 2011 Q1 2012 Q2 2012 Q3 2012 La Poste, Marseille 2.5 Period * Barcelona excludes Consortium buildings Goodman European Business Park Fund Quarterly Report September 2012 8
Park updates+ Contents San Fernando Business Park, Madrid 10 Viladecans Business Park, Barcelona 12 Parc Valentine Vallée Verte, Marseille 14 Val d Europe, Paris 16 Goodman European Business Park Quarterly Report September 2012 9
San Fernando Business Park, Madrid Asset summary Type Office Total area 86,078 Valuer JLL Site area 8 hectares Occupancy 75.0 Valuation 150.1 million Purchase date Dec 2004 WALE 2.1 years Valuation date 31 Dec 2011 Market Uncertainty around the economic environment in Spain continues to subdue leasing activity. The third quarter saw approximately 70,000 of transactions, 11 below the same period for 2011. Activity that is being seen is driven by occupiers who are scanning the market for availability that provides for; 1) an adjustment of space to match reduced staffing levels, 2) opportunity to take hold of the lower market rents and 3) better quality buildings. Landlords, nervous of the potential for extremely long vacant periods should their existing tenants leave, continue to offer historically attractive packages which make it hard for prospective landlords to compete and draw tenants away. In Q3, the Madrid CBD took the largest share of transactions, accounting for 45 of the take up. This is far above the average for the last five years of 17 and represents an all-time high. Legal and Consultancy firms accounted for the largest portion of transactions with IT companies coming in as a close second. Due to the virtual halt in development of new Office premises, the vacancy rate across the city fell slightly over the quarter to 14.1. The outskirts of Madrid was the only area which saw an increase in the vacancy rate. An average rental rate across the city of 15.40/m²/month was recorded for transactions during the third quarter. This represents an increase over the quarter of 16 and for the year of 7. These increases should not be interpreted as the result of positive demand pressure but rather as due to the closure of specific transactions relating to extensive space within the CBD. With no let-up foreseen in poor economic conditions for the medium term, it is likely that the close of year will continue to see competitive conditions where every new leasing opportunity is chased by a number of landlords with great vigour. It is likely that the current incentive frameworks will remain in place until such time as there is a clear recovery in demand, a scenario which is not foreseeable until beyond at least the close of 2013. Leasing performance Despite the very challenging economic circumstances, the Madrid business park is maintaining occupancy at 75, on the back of a retention rate of 68.9. A total of 25,577 of new lease and renewals has been completed for the year to date. The major leases were the renewal of the Dimetronic lease over 8,000 with a new lease extending the leased area by a further 580, and the new lease with Indra over the whole of Kenia building (4,700 ). 30 September Budget 30 September Actual Variance Exercised expiries () (2,343.5) (7,074.8) (4,731.3) Void leasing () 2,534.3 9,415.9 6,881.7 Net leasing () 190.8 2,341.1 2,150.3 Occupancy () 72.4 75.0 2.6 Goodman European Business Park Fund Quarterly Report September 2012 10
Occupancy analysis Building Area Void as at 31 Dec 2011 Net leasing in year Void as at 30 Sep 2012 Void K M 14,552 8,224 5,636 2,588 17.8 A L 71,526 15,615 (3,296) 18,910 26.4 Total 86,078 23,839 2,341 21,499 25.0 Occupancy () 72.3 75.0 Significant expiries There are currently 1.1 million of rent expiries or breaks in the period up to 30 Sept 2013. The top 10 of these expiries represent 9.7 of total park income including parking. A creative and aggressive pricing strategy will be required to attract/retain tenants, which will lead to pressure on the rental levels. The below table details the top 10 expiries at Madrid over the next 12 months. Customer Area Annual rent Next break Park Europrop 1,694 256,928 30 Aug 2013 2.89 GTI 1,576 189,185 31 May 2013 2.13 Bayer 548 95,647 31 Dec 2012 1.08 Mitsubishi 485 73,557 31 Dec 2012 0.83 Hermanos Arriscado 405 64,753 30 Nov 2012 0.73 MNI Tech on Rails 334 44,099 30 Jun 2013 0.50 Goodman Spain 283 40,804 30 Nov 2012 0.46 Nucletron 242 37,239 30 Nov 2012 0.42 Bankinter 170 34,556 31 Dec 2012 0.39 Seratel Technology 195 25,735 31 Dec 2012 0.29 TOTAL 5,932 862,501 9.70 Goodman European Business Park Fund Quarterly Report September 2012 11
Viladecans Business Park, Barcelona Asset summary Type Office Total area* 35,056 Valuer JLL Site area 3.2 hectares Occupancy* 54.2 Valuation 29.6 million Purchase date March 2004 WALE 2.0 years Valuation date 31 Dec 2011 * Includes Consortium buildings Market In the third quarter of 2012, the city of Barcelona saw a total of approximately 55,000 of leasing deals. While this figure is significantly above (57) the figures reached in Q2, the aggregate total for the year to date is still below that of the figure seen in 2011. In total, there were 52 transactions completed in the quarter, below the average seen over the last 5 years of 57. A large bulk of the leasing transactions was seen in the city centre, which accounted for 68 of the take up. With the impact of a couple of larger leased removed, the average floor size leased was 645, below the average of 800 seen since 2008. As is the case in Madrid, by far the largest sector responsible for leasing deals is the Service and IT Sectors, which accounted for 2 out of every 3 leasing deals. While vacancy across the city has remained high over the period (16.1), no real increase has been seen of late as developer activity has come to a standstill. The highest vacancy rates can be seen in the city outskirts (location of Viladecans) where the vacancy rate is 25.9 despite falling by 0.9 points over the quarter. It has now been a year without any significant new development across the city. There are two major office development projects underway, both located at 22@ and total 45,000. These developments are not foreseen to complete until 2013, therefore it is expected that the vacancy rate at the end of 2012 will remain relatively stable at 16.3. Average rentals continue to remain weak. Across the city as a whole, rentals have fallen over the last year by 13.7. When looking at just the outskirts of the city, rental levels have fallen by the largest amount, -26, to just 8.80/m²/month. Leasing performance Leasing enquiries at the Barcelona business park have been extremely quiet over the last 3 quarters. No new leases have been signed and the pipeline of potential new tenants remains weak. With the vacation over the period of tenants BRP Recreational and Care Fusion for a total of 601, occupancy for the park as a whole has fallen slightly, to 54.4, significantly lower than the budget forecast occupancy for September of 60.0. Exacerbating the issue with occupancy levels going forward is the fact that expiries over the next two years account for approximately 50 of total income. This expiry profile and the lack of new enquiries means it is crucial that every effort is used to keep the existing tenants. The positioning of Viladecans Business Park in the Barcelona market is second to none with a strong reputation built on the quality of the on-site park team as well as the asset and location. The leasing strategy will continue to be built around the flexibility of offering, quality, location and environment. It is recognised that competitive pricing will be crucial to securing transactions in the short-term but will be balanced with longer term value enhancement. The pricing and terms offered will therefore be reviewed on a case by case basis and Management is prepared to consider increased incentives, flexible lease terms or capital incentives to secure leasing that will improve value and/or disposal options. Goodman European Business Park Fund Quarterly Report September 2012 12
30 September Budget 30 September Actual Variance Exercised expiries () (814.0) (601.0) 213.0 Void leasing () 2,762.0 - (2,762.0) Net leasing () 1,948.0 (601.0) (2,549.0) Occupancy () 60.0 54.2 (5.8) Occupancy analysis Building Area Void as at 31 Dec 2011 Net leasing in year Void as at 30 Sep 2012 Void Australia 12,710 6,367-6,367 50.1 Brasil 10,326 5,949 (601) 6,550 63.4 Canada 4,892 3,140-3,140 64.2 Denmark 7,128 0 - - - Total 35,056 15,456 (601) 16,057 45.8 Occupancy () 55.9 54.2 Consortium Agreement An update on the progress of the Consortium Agreement extension is outlined below: + One of the Consortium members, Proinosa, has commenced an insolvency process and as a result, the ownership of their holding (4,000 in Canada building) is expected to be transferred to four of their lending banks. + Initial dialogue with the official Administrator for Proinosa has confirmed that at this time, they are not able to consider being part of the Rent Sharing or Commercialisation agreements. + In light of the above, Management are looking to still extend the consortium agreements for 7 years but with the following amendments: o o o Possibility to remove Proinosa ownership from the Agreements, by any of the parties at any moment; Change in share to GEBPF of 73.5 (from 65) and Bali/Vimed 26.5 in case Proinosa is removed from the Rent Share Agreement; and, Drafting of new Agreements to take into account change in structure and removal of historic references applicable to the development phase as it is now completed. + While it is the intention to execute the new Agreements before the end of 2012, Management will continue to maintain a dialogue with the Proinosa Administrator and banks with a view to them becoming party to the Agreements. + In order to make simpler the basis of the Agreements from an operational perspective, the Consortium members have requested that the legal documentation controlling the agreements is revised. Final discussions are taking place between the parties with respect to how to rewrite the document to make it simpler and maintain some of the development works and guarantees obligations from the Consortium side. Goodman European Business Park Fund Quarterly Report September 2012 13
Parc Valentine Vallée Verte, Marseille Asset summary Type Office/industrial Total area 31,127 Valuer CBRE Site area 20 hectares Occupancy 82.3 Valuation 33.0 million Purchase date Jan 2004 WALE 3.2 years Valuation date 31 Dec 2011 Market After a relatively strong first half of the year, in Q3 the Marseille area accounted for only 8,700 of office leasing transactions, representing a fall of 63 from the level of transactions seen in Q2. The slowdown was especially seen in spaces larger than 1,000, with only two transactions completed above this level in the period. Office vacancy across the city has fallen from 3.0 in late 2011 to 2.4 as at 30 September on the back of falling development completion levels which sit at 18,500 for the year to date, significantly below the 70,000 of office development completions seen in 2011. This low development environment is not foreseen to continue for long however, as current forecast new developments for 2013 are 126,000, which is likely to put pressure on the currently low office vacancy rate. Leasing performance Occupancy in the Park remained stable at 82, above the budget occupancy level for September 2012 of 80.5. While Management continues to field a number of leasing enquires, execution levels are low and as a result the first nine months of 2012 saw a marked slowdown in leasing activity with only three leases completed with Sauter, Watches connection and GFR for a total area of 877. 30 September Budget 30 September Actual Variance Exercised expiries () (159.0) - 159.0 Void leasing () 3,910.0 877.0 (3,033.0) Net leasing () 3,751.0 877.0 (2,874.0) Occupancy () 80.5 82.3 1.8 Occupancy analysis Building Type Area Void as at 31 Dec 2011 Net leasing in year Void as at 30 Sep 2012 Void Moka Activity 11,629 0 0 0 0.0 Skybury Activity 6,168 0 0 0 0.0 Bourbon Phase 1 Activity 2,215 0 0 0 0.0 Bourbon Phase 2 Activity 2,330 1,455 0 1,455 62.4 Bourbon Phase 2 Offices 8,785 4,923 877 4,046 46.1 Total 31,127 6,378 877 5,501 17.7 Occupancy 79.5 82.3 Goodman European Business Park Fund Quarterly Report September 2012 14
The completion of capital works and the resolution of tenant issues is a key focus for Management at the Park. Progress on both of these issues is outlined below: Capital Works The programme of capital expenditure across the park has continued throughout the year. The most significant works completed to date include the security improvement on the north zone with new fences and mechanical gates, the installation of speed bumps and improvement of the security guard hut. Works that are on-going include the waterproofing and reinforcement of the Moka building, Landscaping throughout the park, parking improvement works and an extensive upgrade to the Piazza. Tenant disputes Mistral Services As of 30 September, arrears relating to the tenant Mistral total 618k. Mistral is requesting immediate repair of the roof and is claiming damages as a consequence of a burglary that occurred in October 2010. As outlined prior, the roof repairs are underway and are forecast to be completed by the end of the year. A (confidential) proposal of settlement was received from Mistral in September 2012, consisting of the entrance into a new lease proposal at a slightly reduced rental and the payment of an indemnity of 250k. Management are currently studying the financial situation of Mistral before assessing the possibility of entering into a new lease and settlement. Hom & Ter As of 30 September, arrears relating to tenant Hom & Ter total 392k. The company is currently managed by an administrator and have requested a rent reduction from 282k to 192k per annum invoking financial difficulties. Management has requested that the tenant provide a business plan which proves the business is sustainable before any agreement going forward is reached. Goodman European Business Park Fund Quarterly Report September 2012 15
Val d Europe, Paris Asset summary Type Industrial/Land Purchase Date Dec 2001 Valuer Internal Building area 604 Occupancy 100 Valuation 1.6 million Land area 128,655 WALE 0.5 years Valuation date 31 Dec 2011 Asset Sales Following the sale of Techniparc A during Q2, the only completed asset remaining at Val d Europe is Techniparc B, which is currently 100 leased. In November Management signed a preliminary sale agreement for 415,000 for this unit. It is expected that this sale will settle on 31 December 2012. Restaurant GEBPF have an obligation to lease the restaurant premises at the park until June 2014. The Fund outsources the management of the restaurant to an operator, MRS, but due to low levels of activity at the park the restaurant is loss making, and the Fund is obliged to cover this loss. Negotiations have been on-going with the restaurant to lower the non recoverable costs of the operation. Initially MRS requested an extension of their contract to 5 years. Taking into account the interest of MRS in securing a longer commitment, Management has been studying the possibility to renegotiate the lease agreement and transfer it to the owners association for Val d Europe. However, on 16 November 2012, MRS formally announced that it will terminate its contract in February 2013. Management is currently reviewing its commitment to provide a restaurant to the users of the park and assessing the different alternative strategies Regus centre GEBPF has a lease with the owner of Arlington Square for 2,525 of office space until March 2016. Current annual rental for this lease is 586,970.04 p.a. ( 232.46/m² p.a.). This space is operated as a business centre by Regus under a Management agreement. The revenues received from Regus are not sufficient to cover all of the expenses of the centre. The agreement with Regus is due to expire in March 2013. The lease held by Arlington Business Centre France is not due to expire until March 2016. There is therefore a gap between the expiry of the Management agreement with Regus and the first break option in the lease on the building. Given the current vacancies and pending expiries in the immediate vicinities, an extension until March 2016 of the Regus Management Agreement under more favourable terms is considered to be the best option. Management has received a verbal proposal from Regus in the form of a subleasing agreement from January 2013 at 227,250 p.a. ( 90/m² pa) and ending in March 2016. This offer should be received in writing by Regus before the end of the year. Goodman European Business Park Fund Quarterly Report September 2012 16
Financial report+ (unaudited) Contents Summary financial information 18 Profit and loss statement 19 Balance sheet 20 Notes 21 Goodman European Business Park Fund Quarterly Report September 2012 17
Summary financial information Year to 31 Dec 2010 Year to 31 Dec 2011 3 months to 31 Mar 2012 6 months to 30 Jun 2012 9 months to 30 Sep 2012 NAV () 54,324 33,400 32,557 37,636 52,795 Ungeared return () -8.9 3.8 1.0 2.0 12.8 Geared return () -41.8-38.5-2.5 15.6 58.1 Gearing LTV () 73.2 80.3 80.4 78.5 68.5 EBITDA () 9,350 9,565 2,383 4,540 24,949 Profit/(loss) after tax () (4,931) (6,210) (1,132) 3,615 18,535 Goodman European Business Park Fund Quarterly Report September 2012 18
Profit and loss statement The profit and loss statement for GEBPF for the nine months ending 30 September 2012 shows a profit of 18.5 million compared to a budgeted profit of 2.4 million. Key highlights are as follows: + NPI of 8.2 million compared to budget of 8.7 million due to: o ( 0.2m) lower than budget at Barcelona mainly due to higher actual operating expenses and loss of rental on lower new leasing than forecast o ( 0.1m) lower than budget in Madrid on higher non recoverable expenses than forecast o ( 0.2m) lower than budget in Düsseldorf due to the sale in September 2012 + A realised gain of 18.5 million comprises: o o o o 18.5m on the sale of Dusseldorf 0.2m of margin on land sales completed in Val d Europe 0.9m accrual release on development in Dusseldorf. ( 1.1m) subsequent fees related to the sale of Dusseldorf + Tax accrual of 1.8 million on the profit realised on the sale of Dusseldorf + The amortisation of debt transaction costs of 3.1 million were ( 0.5m) over the budget due to the write off the expenses of unamortised cost on Marseille and Dusseldorf upon the repayment of the respective debt facilities. Goodman European Business Park Fund Quarterly Report September 2012 19
Balance sheet 1 Reserves include retained earnings, profit after tax for the period Q3 2012 of 14.9 million and an upside movement of 0.2 million of release of the Hedging reserve. Fund s net assets as at 30 June 2012 have increased by 15.2 million compared to 30 June 2012 due to a profit of 14.9 million during the quarter, mainly due to the sale of Dusseldorf property, and a release of 0.2 million on the Hedging reserve. As from 1st January 2011, base management fees have been invoiced but the payment has been deferred. As at the end of September 2012, the deferred base management fees amount to 2.6 million. Goodman European Business Park Fund Quarterly Report September 2012 20
Notes 1 Investment properties Investment property 30 June 2012 Capex Disposal Revaluation 30 Sep 2012 Change Change Madrid 150,435 214 - - 150,649 214 0.1 Barcelona 29,558 11 - - 29,569 11 0.0 Val d Europe 1,600 1 - - 1,601 1 0.1 Düsseldorf 22,078 - (22,078) - - (22,078) -100.0 Hilden - - - - - - 0.0 Marseille 33,943 346 - - 34,289 346 1.0 Total 237,614 572 (22,078) - 216,108 (21,560) -9.1 The whole portfolio was fully revalued in the accounts as at 31 December 2011. On September 2012, the Business Park in Düsseldorf has been sold for 41.1 million, realising a gain on sale of 18.5 million. 2 Summary of debt and interest rate swaps Facility Bank Maturity Drawn as at 30 Jun 2012 m Madrid Deutsche Pfandbriefbank Dec 2014 106.0 Barcelona Deutsche Pfandbriefbank Dec 2014 32.0 STLF Goodman/Aviva Dec 2014 21.4 Total 159.4 Net debt as at 30 September 2012 ( m) 151.5 GAV as at 30 September 2012 ( m) 221.3 Net debt as a percentage of GAV () 68.5 + The bank debt at Marseille and Dusseldorf was repaid after the sale of Dusseldorf. As a result of this, the Hedging through interest rate swaps decreased from 16.8 in Q2 2012 to nil as at 30 September 2012. + 7.9 million cash at 30 September 2012 (of which 0.3 million is restricted) Goodman European Business Park Fund Quarterly Report September 2012 21
glossary and corporate directory+ bps Basis points Capex Capital expenditure DT Deferred tax EBITDA Earnings before interest, tax, depreciation and amortisation ERV Equivalent rental value GAV Gross asset value GEBPF Goodman European Business Park Fund IRR Internal rate of return LTV Loan to value NAV Net asset value Q1 Quarter 1 Q2 Quarter 2 Q3 Quarter 3 Q4 Quarter 4 RCF Revolving credit facility Square metres STLF Short term liquidity facility VAT Value added tax WAL Weighted average lease WALLE Weighted average lease length to expiry WIP Work in progress Fund Goodman European Business Park Fund (Lux) S.à r.l. Registered office 47, Avenue John F. Kennedy L-1855 Luxembourg Grand Duchy of Luxembourg www.goodman.com Important for professional investors only. This quarterly report has been prepared by Goodman Real Estate Advisor (UK) Ltd on behalf of Goodman European Business Park Fund (Lux) S.à r.l. based on unaudited financial accounts as at 30 September 2012. The report does not constitute an offer or solicitation to deal, whether directly or indirectly, in the Goodman European Business Park Fund. Past performance is not necessarily a guide to future performance. The value of investments and any income derived from them can go down as well as up. Nothing in the report should be taken as an expressed or implied indication of performance nor warranty or guarantee as to future performance. No warranty or representation is given as to the accuracy or completeness of the report and no liability is accepted for any errors or omissions that it may contain. 2012 Goodman Real Estate Advisor (UK) Ltd. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without the prior written permission of Goodman Real Estate Advisor (UK) Ltd. Goodman European Business Park Quarterly Report September 2012 22