RESULTS PRESENTATION MIRVAC INDUSTRIAL TRUSTcdn2.blocksassets.com/assets/mirvac-funds/mirvac-industrial-trust-s… · RESULTS PRESENTATION MIRVAC INDUSTRIAL TRUST . FY12. Mirvac Industrial

Mirvac Industrial Trust Results FY12 1

RESULTS PRESENTATIONMIRVAC INDUSTRIAL TRUST

FY12


AGENDA

6510 AND 6558 WEST 73RD STREET, BEDFORD PARK, IL

> FY12 ACHIEVEMENTS> FY12 FINANCIAL RESULTS> CAPITAL MANAGEMENT> PORTFOLIO METRICS> ACHIEVEMENTS POST 30 JUNE 2012> MGFL FACILITY AMENDED POST 30 JUNE 2012 > OUTLOOK> GUIDANCE> APPENDICES


FY12 ACHIEVEMENTS

3602 NORTH KENNICOTT AVENUE, ARLINGTON HEIGHTS, IL6000 WEST 73RD STREET AND 7200 SOUTH MASON AVENUE, BEDFORD PARK, IL


2727 WEST DIEHL ROAD, NAPERVILLE, IL3602 NORTH KENNICOTT AVENUE, ARLINGTON HEIGHTS, IL

> MIX capital structure successfully stabilised – weighted average debt expiry of 3.6 years and weighted average cost of debt of 4.60 per cent− CJF1 refinanced on 1 July 2011 via a new US$64 million ING facility, cross secured against CJF2 and CJF3

− Completed the transfer of all CJF4 properties to KTR

− CJF4 released from its obligation to repay US$144.1 million at maturity; and

− US$5 million paid to CJF4 by KTR

− MGFL facility repaid from US$14.1 million at 1 July 2011 to US$4.8 million at 30 June 20121

> Strategic and non-core asset sales undertaken to enhance balance sheet and improve portfolio− 21705-21707 West Mississippi Street, Elwood, Illinois and 27413 South Baseline Road, Elwood, Illinois 24.7 per cent

premium to combined book value2 at 31 December 2010

− 9700 Harlem Avenue, Bridgeview, Illinois 25.0 per cent premium to 31 December 2010 book value2

> Significant leasing milestones achieved− HA Industries – 4507 Columbia Avenue, Hammond, Indiana – FY13 expiry renewed for 12.5 years

− APL Logistics – 6600 River Road, Hodgkins, Illinois – Two year extension to existing lease through to 30 June 2016

− DC Tricor – 3145 Central Avenue, Waukegan, Illinois – New lease for 5.5 years across 110,000 sqf of previously vacant space

− Portfolio vacancy rate of 12.2 per cent versus a market rent of 9.7 per cent at 30 June 2012

> Significant unit price improvement from 3.8 cents at 30 June 2011 to 11.0 cents at 30 June 2012 recognition of MIX as a stabilised Trust

1 Facility amended on 21 August 2012 and further reduced, refer page 16.2 Assets held for sale at 30 June 2011.

FY12 ACHIEVEMENTS


FY12 FINANCIAL RESULTS

3602 NORTH KENNICOTT AVENUE, ARLINGTON HEIGHTS, IL6510 AND 6558 WEST 73RD STREET, BEDFORD PARK, IL


YEAR ENDED30 JUNE 2012

YEAR ENDED30 JUNE 2011

Statutory profit/(loss) (A$m) (7.8) 30.8Statutory earnings CPU (2.15) 8.51Operating profit1 (A$m) 6.7 6.4Operating earnings1 (CPU) 1.86 1.76Net property income (US$m) 18.8 29.4NTA (CPU) 19.0 20.0FX rate (A$/US) 1.0191 1.0739Closing market price (A$) 0.110 0.038Gearing (%) 65.5 78.6Debt service cover ratio (x) 2.51 1.50

1 Operating profit/earnings is a financial measure which is not prescribed by Australian Accounting Standards (“AAS”) and represents the profit under AAS adjusted for specific non-cash and significant items. Its calculation is consistent with the Trust’s product disclosure statements. The Directors consider operating profit to reflect the core earnings of the Trust. This has not been subject to audit or review. Please refer to page 20 for the reconciliation between net loss after tax and operating profit.

> Operating earnings1 1.86 cents per unit, exceeding guidance range of 1.65-1.80 cents per unit− Outperformance primarily driven by foreign exchange

movement through the period – average for the year budget A$1.0706 versus average for the year actual A$1.0319

> Gearing reduced to 65.5 per cent

> NTA of 19.0 cents per unit at 30 June 2012

> No distributions paid during FY12

FY12 FINANCIAL RESULTS


CAPITAL MANAGEMENT

3602 NORTH KENNICOTT AVENUE, ARLINGTON HEIGHTS, IL


CAPITAL MANAGEMENTCAPITAL STRUCTURE SUCCESSFULY STABILISED

> Weighted average debt expiry 3.6 years – up from 1.0 year at 30 June 2011

> Weighted average cost of debt 4.60 per cent – down from 5.30 per cent at 30 June 2011

> No LTV or ICR covenants

DEBT PROFILE AT 30 JUNE 2012 BALANCEUS$m

DEBT(%)

COST(%)

MATURITY

FIXED

ING Facility – CJF1 LLC 62.5 41.3 4.30 1 Mar 16



TOTAL FIXED 146.8 96.9 4.41FLOATINGMirvac Group Finance Limited 4.8 3.1 10.23 30 Sep 12

TOTAL FLOATING 4.8 3.1 10.23

TOTAL FIXED AND FLOATING 151.6 100.0 4.60 3.6 years


PORTFOLIO METRICS

1445–1645 GREENLEAF AVENUE, ELK GROVE VILLAGE, IL


> Chicago industrial market vacancy has dipped below 10 per cent, nearing the level prior to the commencement of the GFC in 2008, however there remains a significant variance between specific sub-markets

> Coupled with strong absorption, rental rates have stabilised across the board

> Rents are increasing for large, modern distribution facilities in logistic focussed corridors where MIX is not represented

> Flow on demand and rental growth to B and C grade assets across the broader market is not expected to occur in the short-term

PORTFOLIO METRICSSNAPSHOT

PORTFOLIO SNAPSHOT AS AT 30 JUNE 2012Number of assets 30

Book value (US$m)1 216.7

Occupancy (%) 87.8

WALE (years) 4.6

Security 29 assets

Unencumbered2 1 asset

1 Based on audited book values at 30 June 2012, including assets held for sale, totalling A$212.6 million at an FX rate of 1.0191.

2 3145 Central Avenue, Waukegan, IL, which is being held for sale as at 30 June 2012.


PORTFOLIO METRICSACTIVE ASSET MANAGEMENT – MAJOR LEASING MILESTONES ACHIEVED

1 Since inception.2 Weighted by area.3 Weighted by income.

> Occupancy improved 2.9 per cent during the year to 87.8 per cent> 13 leases totalling approximately 1.3 million sqf (15.8 per cent of the portfolio) were executed during FY12

− New leases – 0.3 million sqf, comprising 6 transactions

− Renewals – 1.0 million sqf, comprising 7 transactions

> Key leases executed at:− HA Industries – 4507 Columbia Avenue, Hammond, Indiana – FY13 expiry renewed for 12.5 years

− APL Logistics – 6600 River Road, Hodgkins, Illinois – Two year extension to existing lease through to 30 June 2016

− DC Tricor – 3145 Central Avenue, Waukegan, Illinois – New lease for 5.5 years across 110,000 sqf over previously vacant space

> Tenant retention remains strong at 75.3 per cent1

30 JUNE 12 30 JUNE 11

− Occupancy (%) 87.8 84.9

− FY13 expiry2 (%) 8.2 6.9

− Weighted average lease expiry3 (years) 4.6 4.5

− Tenant retention1 (%) 75.3 75.0

− Portfolio passing rent (US$/sqf) 2.71 3.23

− Portfolio market rent (US$/sqf) 3.03 3.31


1 Source CBRE.2 By area.3 By area at 30 June 2012.

PORTFOLIO METRICSIMPROVING LEASE EXPIRY PROFILE AND WALE

> Ongoing asset management focus during FY12 to reduce vacancy and expiry risk through a combination of leasing and divesting non-core assets, where appropriate− Leases executed at 4507 Columbia Avenue,

3145 Central Avenue and 6600 River Road− Divested 9700 Harlem Avenue to owner occupier

> Portfolio vacancy at 30 June 2012 was 12.2 per cent versus market vacancy of 9.7 per cent1

LEASE EXPIRY PROFILE3

EXPIRIES 30 JUNE 12 30 JUNE 11

FY13 8.2% 6.9%

FY14 10.7% 12.2%

FY15 8.1% 10.7%

FY16 11.0% 6.1%

LEASE EXPIRIES2


100 WEST WHITEHALL DRIVE, NORTHLAKE, IL

PORTFOLIO METRICSVALUATIONS REMAIN STEADY

> 15 assets, or 45.9 per cent of the portfolio1, were externally valued at 30 June 2012> Asset valuations2 increased US$0.5 million3

− 4 of the 294 valuations performed saw a firming of capitalisation rates with the remaining 25 remaining unchanged

> Valuations remain stable – weighted average cap rate is 8.58 per cent3

> 90 per cent of the portfolio was externally valued through FY12

1 Weighted by book value.2 Including independent and directors’ valuations.3 On a like-for-like asset basis, excluding 3145 Central Avenue, Waukegan which was held for sale at 30 June 2012.4 Excluding 3145 Central Avenue, Waukegan, IL, which is being held for sale as at 30 June 2012, at the sale price.5 Based on audited book values at 30 June 2012 totalling A$210.1 million at an FX rate of 1.0191 and 31 December 2011 audited book values

totalling A$210.4 million at an FX rate of 1.0156.

KEY VALUATION METRICS 30 JUNE 12 31 DECEMBER 11

Book value (US$m)3,5 214.1 213.6Capitalisation rate (%)3 8.58 8.61

Market rent (US$/sqf)3 3.03 2.99


ACHIEVEMENTS POST 30 JUNE 2012

3602 NORTH KENNICOTT AVENUE, ARLINGTON HEIGHTS, IL6751 SOUTH SAYRE AVENUE, BEDFORD PARK, IL


ACHIEVEMENTS POST 30 JUNE 2012 SALE


> Sale of 3145 Central Avenue, Waukegan, Illinois− Asset held for sale at 30 June 2012 and forecast to close in January 2013

− Sale to an owner occupier, on a deferred settlement basis, of an unencumbered asset for a total of US$2.55 million (before costs)

− Completion is conditional on seller achieving environmental clearance from the State of Illinois

− Purchaser has entered into a lease across a vacant portion of the asset (112,000 sqft) on an expenses only basis pending sale

− Alleviates Trust of non-core asset, with high vacancy in a particularly weak sub-market and with capital expenditure requirements in the near future


MGFL FACILITY AMENDED POST 30 JUNE 2012


> MGFL facility amended to operate as a line of credit− Maturity date extended to 30 September 2013

− Facility limit fixed at US$4.8 million (balance at 21 August 2012 (US time) will be US$2.8 million)

− Interest rate calculation remains unchanged

− Amortisation and net proceeds from asset sales requirements have been waived

> Current intention is to pay the balance of the MGFL facility down to nil by 30 September 2012, pending further redraw as required− Repayment of facility reduces the Trust’s interest costs

− Provides the Trust with flexibility to fund capital expenditures, including base building and leasing related expenses and costs associated with the sale of non-core assets as markets improve


OUTLOOKPOST CAPITAL STABILITY, FOCUS RETURNS TO IMPROVING PORTFOLIO


> MIX capital base now successfully stabilised and downside risks mitigated− CJF1, CJF2 and CJF3 LLC debt facilities refinanced without the need to raise equity− Weighted Average Debt Expiry 3.6 years at an “all in” average interest cost of 4.60 per cent− MGFL facility substantially reduced to US$2.8 million1 and to be operated as a line of credit (limit US$4.8 million) to assist in

funding capital expenditures, including base building and leasing related expenses and costs associated with the sale of non-core assets as markets improve

− Intent to pay the MGFL facility down to nil by 30 September 2012

> Portfolio operations de-risked− Weighted Average Lease Expiry at 4.6 years− Portfolio vacancy rate of 12.2 per cent against market rate of 9.7 per cent− Continue with our three-pronged strategy – active asset management, disciplined portfolio management and prudent

capital management to enhance and improve the underlying portfolio and associated income streams

> Economic environment stable but remains constrained− Rental growth for B and C grade assets not expected to occur in the short term− Transactional momentum for B and C grade assets not expected in the short term, as evidenced by static valuations− Limited but positive divestment opportunities are present as evidenced by sales undertaken through FY12− Focus on further divestment opportunities of non-core assets within the portfolio as markets improve to achieve a core

Chicago-centric, core B grade, industrial portfolio with stable earnings− Continue to monitor economic conditions, impacts on the portfolio and resulting opportunities

1 At 21 August 2012 (US time).


GUIDANCE

> FY12 operating earnings1 of 1.86 cents per unit versus operating earnings guidance range of 1.65 to 1.80 cents per unit− Outperformance primarily driven by foreign exchange impacts

− Assumed annual average foreign exchange rate for FY12 of A$1.0706 versus actual of A$1.0319

> FY13 operating earnings1 guidance range of 1.85 to 2.00 cents per unit subject to no material adverse changes in market conditions, noting FY13 operating earnings is sensitive to certain key assumptions− Assumed average FX rate of A$1.0104 - each 5 cent movement in the annual average foreign exchange rate has a

corresponding impact to earnings of approximately 13 basis points

− Non-core asset sales - no asset sales forecast in FY13 except 3145 Central Avenue, Waukegan in January 2013.

− No significant changes in the macro-economic environment assumed – slow and steady recovery expected but benefits to MIX limited in the short-term

− Management expect the guidance range provides enough latitude to compensate for all but extreme circumstances , however, changes to the above may materially impact operating earnings

> In line with our conservative capital management approach the Board of MFML anticipates that no distributions will be paid in FY13, however, this position will be assessed as the year progresses taking into account changes in market conditions, capital expenditure requirements including base building and leasing related expenses and costs associated with any further non-core asset sales



APPENDICES

A RECONCILIATION BETWEEN NET LOSS AFTER TAX AND OPERATING PROFIT

B SUB-MARKET KEY STATISTICSC VALUATIONS

− INDEPENDENT

− INTERNAL

D MARKET UPDATE – US ECONOMYE MARKET UPDATE – CHICAGO INDUSTRIAL MARKET

1445–1645 GREENLEAF AVENUE, ELK GROVE VILLAGE, IL


APPENDIX ARECONCILIATION BETWEEN NET LOSS AFTER TAX AND OPERATING PROFIT

ITEM 30 JUNE 12A$’000

30 JUNE 11A$’000

Profit/(loss) attributable to unitholders (7,780) 30,841

Specific non-cash items

– Straight-lining of lease revenue (596) (823)

– Net gain on fair value of derivative financial instruments and associated foreign exchange movements – (43)

– Net (gain)/loss on fair value of investment properties 2,938 (28,259)

– Amortisation 1,057 1,368

Significant items

– Provision for default costs – 3,306

– Net loss on sale of investment properties 11,117 –

Operating profit (profit before specific non-cash and significant items)1 6,736 6,390



APPENDIX BSUB-MARKET KEY STATISTICS – AS AT 30 JUNE 20121

1 Excludes 3145 Central Avenue, Waukegan, which is being held for sale at 30 June 2012.2 Weighted by 30 June 2012 book values.3 Based on audited book values at 30 June 2012 totalling A$210.1 million at an FX rate of 1.0191.

SUB-MARKET NUMBER OFPROPERTIES

GLA BOOK VALUE30 JUN 12

PORTFOLIOWEIGHTING

MIXVACANCY RATE

NET PASSINGRENT

WACR2

(SQFT) (US$M) (%) (%) (US$/SQFT) (%)

City South 1 531,460 6.5 3 37.4 2.20 9.00

Far West Suburbs 3 702,027 32.8 15 – 4.35 7.98

Kenosha/Racine Counties 2 186,762 8.5 4 – 3.57 8.25

Lake County 2 177,924 6.5 3 38.9 3.92 8.48

McHenry County 2 1,830,927 32.1 15 7.5 1.93 9.65

Milwaukee 3 470,764 21.3 10 36.2 4.91 8.40

North DuPage County 1 48,230 3.5 2 – 8.37 8.50

Northeast Cook County 1 300,791 11.5 5 22.6 5.44 8.75

Northwest Cook County 1 94,300 5.3 2 – 4.50 8.25

Northwest Indiana 2 523,562 7.9 4 6.6 2.79 9.72

O'Hare 3 307,506 11.2 5 19.1 1.90 8.58

South Suburbs 2 655,466 14.2 7 6.8 1.54 8.16

Southwest Suburbs 6 1,836,088 52.9 25 6.0 2.44 8.34

TOTAL 29 7,665,807 214.13 100.0 11.6 2.76 8.58


APPENDIX CINDEPENDENT VALUATIONS – AS AT 30 JUNE 2012

ASSET SUB-MARKET LLC GLA VALUATION30 JUN 12

BOOK VALUE31 DEC 11

VARIANCE CAP RATE30 JUN 12

CAP RATE31 DEC 11

(SQFT) (US$M) (US$M) (US$M) (%) (%)

1020 Frontenac Road Far West Suburbs CJF2 99,684 3.53 3.50 0.0 8.25 8.25

13040 South Pulaski Avenue South Suburbs CJF2 395,466 7.47 7.70 (0.2) 8.75 8.75

1796 Sherwin Avenue O'Hare CJF2 98,879 4.10 4.00 0.1 8.25 8.25

1850 Greenleaf Avenue O'Hare CJF2 58,627 2.13 2.40 (0.3) 8.50 8.50

308 South Division Street McHenry County CJF1 1,331,727 22.60 22.40 0.2 9.75 9.75

3602 North Kennicott Avenue Northwest Cook County CJF1 94,300 5.25 5.40 (0.2) 8.25 8.25

3841-3865 Swanson Court Lake County CJF2 100,000 2.96 2.70 0.3 8.75 8.75

5110 South 6th Street Milwaukee CJF2 58,500 2.10 2.10 – 9.00 9.00

5990 West Touhy Avenue Northeast Cook County CJF2 300,791 11.50 13.70 (2.2) 8.75 8.75

6558 West 73rd Street Southwest Suburbs CJF2 301,000 8.70 9.10 (0.4) 8.25 8.25

6751 South Sayre Avenue Southwest Suburbs CJF2 242,690 7.10 6.50 0.6 8.50 8.50

800-850 Regency Drive North DuPage County CJF1 48,230 3.50 3.60 (0.1) 8.50 8.50

8200 100th Street Kenosha/Racine Counties CJF2 148,472 6.50 6.30 0.2 8.25 8.25

900 E. 103rd Street City South CJF1 531,460 6.50 6.40 0.1 9.00 9.00

EC VI-4507 Columbia Avenue Northwest Indiana CJF3 256,595 4.40 2.70 1.7 10.00 10.00


APPENDIX CINTERNAL VALUATIONS – AS AT 30 JUNE 2012

ASSET SUB-MARKET LLC GLA VALUATION30 JUN 12

BOOK VALUE31 DEC 11

VARIANCE CAP RATE30 JUN 12

CAP RATE31 DEC 11

(SQFT) (US$M) (US$M) (US$M) (%) (%)

11601 South Central Avenue South Suburbs CJF2 260,000 6.70 6.53 0.2 7.50 7.50

1445-1645 Greenleaf Avenue O'Hare CJF1 150,000 5.00 5.00 – 9.00 9.00

1750 South Lincoln Drive McHenry County CJF2 499,200 9.50 9.80 (0.3) 10.00 10.00

1880 Country Farm Road Far West Suburbs CJF2 162,000 6.70 6.60 0.1 7.75 7.75

2727 West Deihl Road Far West Suburbs CJF1 440,343 22.60 22.70 (0.1) 8.00 8.00

28170 North Keith Drive Lake County CJF1 77,924 3.50 3.40 0.1 8.25 8.25

525 West Marquette Avenue Milwaukee CJF2 112,144 4.10 4.40 (0.3) 8.75 8.75

6000 West 73rd Street Southwest Suburbs CJF2 148,091 5.20 5.20 – 8.00 8.00

6510 West 73rd Street Southwest Suburbs CJF1 306,552 8.30 8.30 – 8.75 8.75

6600 River Road Southwest Suburbs CJF2 630,410 15.80 15.80 – 8.25 8.25

7200 Mason Avenue Southwest Suburbs CJF1 207,345 7.80 7.70 0.1 8.25 8.25

8100 100th Street Kenosha/Racine Counties CJF2 38,290 2.00 2.00 – 8.25 8.25

EC VI-4531 Columbia Avenue Northwest Indiana CJF3 266,967 3.50 2.60 0.9 10.00 10.00

W165 M5830 Ridgewood Drive Milwaukee CJF1 300,120 15.10 15.10 – 8.25 8.25


APPENDIX DMARKET UPDATE – US ECONOMY1

> Real US GDP increased at an annual rate of 1.5 per cent in the second quarter of 2012, down from 2.0 per cent in the first quarter of 2012

> High frequency indicators suggest the economy may continue to expand at a moderate pace in the second half of the year:− Industrial production, which has been expanding since early in 2010,

was 4.7 per cent higher than a year earlier

− The unemployment rate was down at 8.3 per cent in July 2012, compared to over 9.0 per cent a year earlier

− Retail trade which continued to expand sedately in June 2012 and weak job creation, portrayed a softer economic backdrop

> The IMF expects the US economy to expand by 2.0 per cent in 2012 and a further 2.3 per cent in 2013, although it acknowledges downside risk to this forecast due to a tightening of fiscal policy and weak European activity

1 Sources: Bureau of Economic Analysis, Boards of Governors of the Federal Reserve System – Economic Research and Data, US Bureau of Labor Statistics; US Census Bureau News and the International Monetary Fund.


APPENDIX EMARKET UPDATE CHICAGO – PREPARED BY NAI HIFFMAN

> The vacancy rate dropped to 9.7 per cent by mid-2012, more than a full percentage point below the 10.8 per cent recorded a year ago, and 2.4 per cent below the peak of 12.1 per cent recorded two years ago

> During the two years since the vacancy rates peaked, vacant space has been steadily absorbed at an average rate of 3.2 million sqf per quarter

> To date, 25.6 million sqf of vacant space has been absorbed through leasing and sales activity, about 87 per cent of the vacant space added to the market due to the effects of the recession

> Average lease rates have begun to rise throughout the market, particularly among the more active and historically in demand sub-markets

> Construction activity, particularly of build-to-suit projects, but also recently including speculative developments, has increased but remains well below the 22-year average of 14 million sqf per year

> While the overall Chicago industrial market vacancy rate is only months away from returning to pre-recession levels, the recovery hasn’t been equally distributed among each of the area’s sub-markets

CHICAGO INDUSTRIAL VACANCY & ABSORPTION BY QUARTER


The information in this presentation is provided by Mirvac Funds Management Limited (ABN 78 067 417 663 AFSL 220 718), Level 26, 60 Margaret Street, Sydney NSW 2000 in its capacity as the responsible entity of Mirvac Industrial Trust (ARSN 113 489 624). The information made available through this presentation and appendices, including any expression of opinion or forecast, has been obtained from or based on sources believed by Mirvac Funds Management Limited to be reliable.

The information contained in this presentation is of a general nature and does not constitute financial product advice. This presentation has been prepared without taking account of any person’s objectives, financial situation or needs. Each person should before acting on this presentation consider its appropriateness having regard to their own objectives, financial situation and needs. Mirvac Funds Management Limited does not warrant the accuracy, reliability or completeness of the information contained in this presentation or that the information is suitable for your intended use. The information contained in this presentation should not be relied upon by you in substitution of you obtaining independent advice. You should consult a professional investment adviser before making any decision regarding a financial product.

Except insofar as liability under any statute cannot be excluded, Mirvac Funds Management Limited, its related entities and their respective directors, employees and consultants will not be liable for any inaccuracies, omissions or errors in the content nor for any loss or damage(whether direct, indirect, consequential or otherwise) arising from reliance on or use of the information contained in this presentation. Past performance is not an indicator of future performance.

Documents

RESULTS PRESENTATION MIRVAC INDUSTRIAL TRUSTcdn2.blocksassets.com/assets/mirvac-funds/mirvac-industrial-trust-s… · RESULTS PRESENTATION MIRVAC INDUSTRIAL TRUST . FY12. Mirvac Industrial