Archive | Goodman Group

Goodman-GIC joint venture adds Bayleys House to portfolio

The joint venture between the NZX-listed Goodman Property Trust & Singapore sovereign wealth fund GIC Pte Ltd has added Bayleys House in the Wynyard Quarter to its portfolio.

That acquisition for $62.3 million, and the $86.2 million purchase of the neighbouring Datacom Building, which settled on Friday, take joint venture company Wynyard Precinct Holdings Ltd’s portfolio to 7 buildings worth over $470 million.

The recently completed 6-storey 8106m² Bayleys House backs on to the Fonterra Centre, also in the portfolio. Fonterra at 109 Fanshawe St, and Bayleys at 30 Gaunt St, also front Halsey St in the VXV Precinct which has been developed by ASX-listed Goodman Group on leasehold land owned by Viaduct Harbour Holdings Ltd.

The 7-storey 16,735m² Datacom building is across VXV Plaza from Bayleys, on the corner of Gaunt & Daldy Sts.

John Dakin, chief executive of the Goodman trust’s manager, Goodman (NZ) Ltd, said the partnership strategy provided scale for the trust and gave it greater exposure to Auckland’s fastest-growing commercial precinct.

“Featuring large flexible floorplates and incorporating sustainable architectural elements & energy-efficient building systems, the lowrise office property is designed to a 5 green star rating. It is also expected to achieve a 5-star NabersNZ base building rating when assessed in 12 months’ time.”

Predominantly leased to real estate specialist Bayleys, technology provider IBM & law firm Mayne Wetherell, Bayleys House’s leases incorporate fixed review structures and have a weighted average term of 9 years. The ground-lease obligations are structured for a period of 15 years.

Goodman Group undertook the development on a build-to-lease basis. The purchase price reflects an initial yield of 7.6% on contract rentals, and additional fitout rent increases the passing yield to 8.8%.

The acquisition, which remains conditional on the approval of the landowner, is expected to settle in June.

On settlement, the joint venture’s portfolio will contain 88,000m² of office space for about 20 tenants. When future lease commitments are incorporated, the portfolio will have an occupancy rate of 96% and a weighted average lease term of over 9 years.

Earlier stories:
27 March 2015: Fletcher & Goodman sign up for new Wynyard Quarter building
7 November 2014: Goodman Group buys another Wynyard development block

Attribution: Company release.

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World property W20Apr16 – Goodman continues Chinese growth

Goodman opens 11ha Shanghai facility 97% leased

Sydney-based Goodman Group opened its 11ha Goodman Qingpu Centre industrial & business facility in a state-level development zone in Shanghai, the Zhangjiang Qingpu Hi-Tech Park, last Wednesday amid plentiful indications of further business.

It’s the group’s first 3-storey distribution facility in China and, by completion, it had achieved 97% occupancy with leases to 3 companies:

  • 63,130m² to e-commerce company, an existing Goodman customer in Tianjin, Kunshan & Chengdu
  • 22,602m² to Shanghai Kuichun Industry, a nationwide distributor of imported food & beverage products, and
  • 21,155m² to Japanese distributor & supply chain company Kintetsu World Express.

Goodman Group, cornerstone unitholder & manager of the NZX-listed Goodman Property Trust, manages 432 properties internationally, worth $A33.4 billion, and 41 properties worth $A7.5 billion in greater China (including Hong Kong & Taiwan).

Chief executive Greg Goodman said the group had a Chinese development work book of 17 projects totalling 800,000m²: “An increasing number of our developments are preleased, indicating the maturity of the market as more companies incorporate their future property space needs into their overall business planning. Goodman has received encouraging demand with over 60% of these projects precommitted, with a high level of inquiry on the balance of the space, from both local & international customers.”

Goodman & the Canada Pension Plan Investment Board increased their equity allocation to the Goodman China Logistics Partnership by $US1.25 billion in December to take advantage of the current operating conditions and undersupply of prime industrial space in China.

Attribution: Goodman

Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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World property Sun28Feb16 – Multiple Goodman projects in UK, London City Airport sells, Melbourne port lease

Goodman teams up to develop Anglesea UK portfolio
Canadian & Kuwaiti consortium buys London City Airport
Deal agreed to sell Melbourne port lease

Goodman teams up to develop Anglesea UK portfolio

Goodman Group & Anglesea Logistics Partnerships have leased a spec warehouse in the Derby commercial park in the English Midlands to the group that owns the global lifestyle brand Ted Baker, No Ordinary Designer Label Ltd, as Goodman lifts its production of logistics space around the UK.

Asset manager & trader Anglesea Capital 0 LLP entered a joint venture with Goodman in November 2014, and has entered into a partnership funding joint venture with Lone Star Real Estate Fund III for this partnership, while Goodman has agreed to sell 4 more logistics assets containing 220,000m² to the joint venture.

The £25 million Ted Baker building, Angle 325, is a 30,000m² high-spec warehouse including 1400m² of office. It’s being fitted out and is due for completion at the beginning of May. It will be the retailer’s pan-European distribution centre, handling all operations for its retail, wholesale & e-commerce businesses in Europe and operating 24/7.

Goodman has spent £175 million developing the 66ha Derby commercial park at Raynesway, 3km from the centre of Derby, and has just opened a 59,000m² design/build national distribution facility there for Kuehne & Nagel and Heineken. It has 2 more spec warehouses lined up for construction at Andover in Hampshire & London Medway for the Anglesea partnership.

Sydney-based Goodman is also at full stretch in Europe. It signed up in January to develop a 130,000m² facility for online fashion, shoe & accessory retailer Zalando SE.

Link: Goodman UK

Canadian & Kuwaiti consortium buys London City Airport

3 Canadian pension fund managers and a Kuwaiti infrastructure investor agreed on Friday to buy London City Airport from Global Infrastructure Partners (75%) & Highstar Capital LP (25%). They haven’t disclosed financial details. The transaction is not subject to any regulatory approvals and is expected to close on 10 March.

The airport was opened near Canary Wharf in the Royal Docks in 1987 and Global Infrastructure Partners took control of it in 2006.

The new owners are Alberta Investment Management Corp (Aimco), on behalf of its clients OMERS (originally the Ontario Municipal Employees Retirement System), the Ontario Teachers’ Pension Plan & Wren House Infrastructure Management Ltd. Wren House is the infrastructure investing arm of the Kuwait Investment Authority.

Link: OTPP release

Deal agreed to sell Melbourne port lease

The Victorian State Government & opposition coalition agreed terms on Thursday enabling the sale of the lease on the port of Melbourne.

State Treasurer Tim Pallas said the 50-year lease should be sold early next year. While he’s been kept clear of the transaction, he’d been told 4 consortiums were lined up to buy the lease.

The Labor government agreed on Thursday to an opposition demand to amend the law enabling the lease, restricting compensation for the buyer. Compensation will be payable if the Government opens a second port within 15 years and the original port hasn’t reach its agreed capacity.

The port lease law is scheduled to be passed on Tuesday 8 March.

Attribution: Goodman, Anglesea, OTPP, GIP, Victorian Government

Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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World property Sun3Jan16 – Goodman boosts China fund, Evergrande & New World trade, A-Reit buys in Sydney again

Goodman’s Chinese fund gets equity boost
Evergrande buys from New World again
A-Reit adds to Australian portfolio

Goodman’s Chinese fund gets equity boost

ASX-listed Goodman Group & the Canada Pension Plan Investment Board said on 22 December they’d lift their equity allocation to the Goodman China Logistics Partnership by $US1.25 billion on an 80:20 basis, the Canadian fund committing $US1 billion and Goodman $US250 million, consistent with the partnership’s equity structure.

They established the partnership in 2009 to own & develop logistics assets in mainland China, focusing on locations where land constraints & demand were strongest. Their initial equity was $US300 million.

Separately, the partnership will acquire 9 projects (including land) from Goodman Group, with an end buildout value over $US650 million.

Evergrande buys from New World again

Heavily indebted Chinese developer Evergrande Real Estate said on Tuesday it was acquiring 7 mainland projects from Hong Kong’s New World Group for RMB20.4 billion ($US3.15 billion). In a separate transaction, Evergrande sold $US1.5 billion in perpetual securities to New World & affiliates.

A month ago, Evergrande acquired 4 mainland residential projects from New World, taking total acquisitions from the Hong Kong company to $US5.3 billion.

In a story this week linking 3 of China & Hong Kong’s biggest property names, Michael Cole of Mingtiandi wrote that New World chair Cheng Yu-tung took a $US506 million stake in Evergrande in 2008, a year before it listed in Hong Kong.

Link: Evergrande buys $US3.2 billion in projects from Hong Kong’s New World Group

A-Reit adds to Australian portfolio

A-Reit – the Singapore-listed Ascendas Real Estate Investment Trust – said on 24 December it would acquire a Sydney logistics facility from Deka Australia One GmbH for $A76.6 million. The facility at 6-20 Clunies Ross St, Pemulwuy, is in the Greystanes industrial precinct 30km west of the Sydney cbd and leased to Australia Post and the NSW Police on triple net leases, with a weighted average expiry of 6.1 years. Australia Post has subleased its space to retailer Target Australia Pty Ltd.

Ascendas management company chief executive Tan Ser Ping said the facility would generate a net property income yield of 7.1% before transaction costs in the first year, 6.6% post. It comprises a 36,220m² high clearance warehouse and a 2359m² 2-storey office & laboratory.

A-Reit entered the Australian market in September when it bought an $A1 billion portfolio of 26 logistics properties from Singapore sovereign fund GIC & Frasers Property Australia Pty Ltd.

Earlier story: World property Sun20Sep15 – A-reit enters Australia, Greenwich regeneration

Attribution: Goodman, Mingtiandi, A-Reit

Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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World property Wed14Oct15 – LJ Hooker IPO, Goodman UK fund, Silk Road forum

LJ Hooker starts work on an IPO
Goodman forms £600 million UK partnership with Canadian & Dutch pension funds
Forum to promote new Silk Road

LJ Hooker starts work on an IPO

Australian real estate agency LJ Hooker, which also operates in New Zealand, has begun the funding round for an initial public offering which could lead to the business being floated, Australian media reported this week.

However, the Australian Financial Review’s Street Talk column said on Monday an ASX listing wasn’t likely until early next year. According to Street Talk, Hooker was looking to raise about $A20 million to make acquisitions and invest in LJ Hooker franchisees.

The Australian said yesterday the IPO could be worth $A300 million. It comes as rival agency McGrath Real Estate works towards an $A200 million float towards the end of the year.

The group which Les Hooker (eventually, Sir Les) launched in 1928 returned to family ownership in 2009 when his grandson, Leslie Janusz Hooker, bought the real estate network & mortgage broking business from Suncorp Metway Ltd for $A82 million. It has over 700 franchise offices, sold $A19 billion of property last year and increased its pool of properties under management to 130,000. The group expanded in New Zealand a year later, buying Harveys (NZ) Ltd from Ross Barraclough & Ross Hunter.

Links: Australian Financial Review, LJ Hooker in pre-IPO cash call 
11 October 2015, Property Observer: LJ Hooker readies for 2016 IPO
13 October 2015, The Australian: LJ Hooker IPO to test investor mettle

Earlier stories:
4 November 2010: LJ Hooker buys Harveys
19 October 2009: Suncorp sells Hooker to founder’s grandson

Goodman forms £600 million UK partnership with Canadian & Dutch pension funds

Goodman Group has formed a £600 million partnership with the Canada Pension Plan Investment Board & APG Asset Management NV to invest in UK logistics & industrial development opportunities.

The combined equity (£200 million each) in the Goodman UK Logistics Partnership will give it a £1 investment capacity. Goodman said last week the initial portfolio comprised 2 developments in proven logistics locations near London & Birmingham, for a combined 54,812m².

Goodman chief executive Greg Goodman said: “With a flexible strategy in place, the partnership will be able to undertake a wide range of investment styles, including development, value-add & core investment.

“We welcome APG & CPPIB into this new partnership, which continues to demonstrate our successful capital partnering approach and the strong support we have from leading global investor groups.”

Sydney-based Goodman Group has operations throughout Australia, New Zealand (through the Goodman Property Trust & separately), Asia, Europe, the UK, North America & Brazil. The Canada Pension Plan Investment Board is governed & managed independently of the Canada Pension Plan and at arm’s length from governments. It had $C268.6 billion invested at 30 June on behalf of 18 million contributors & beneficiaries.

APG Asset Management NV is a Dutch pension fund asset manager which manages €400 billion of assets for 4.5 million active & retired participants from the public & private sectors, representing over 30% of all collective pension schemes in the Netherlands.

Forum to promote new Silk Road

China’s ambition to revive the old Silk Road as a new economic route across central Asia gets a new lift this week with a 2-day forum organised in Georgia’s capital Tbilisi.

Georgian Prime Minister Irakli Garibashvili, supported by the Chinese Government, called for the forum to promote the sharing of ideas, experiences & expertise along the revived Silk Road & beyond. Georgia enjoys free trade with its neighbours & the European Union.

Topics for debate will include opportunities for enhancing trade & economic co-operation, transport & infrastructure, trade facilitation, pipelines & electricity trading across borders and investment opportunities.

Speakers will come from Georgia, the Czech Republic, Afghanistan, Kazakhstan, China’s Xinjiang Uygur autonomous region, the US, the Asian Development Bank, European Investment Bank, World Trade Organisation & United Nations Economic Commission for Europe.

Earlier story: World property T2Jun15 – Stepping stones across Central Asia

Attribution: AFR, The Australian, Property Observer, Goodman Group, Georgian Government

Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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Urban renewal lifts Goodman Group

Goodman Group sold $A1.9 billion of assets in the June year, and reinvested the lot to generate higher development returns.

It’s followed the same principle of recycling in NZX-listed Goodman Property Trust, but the potential for turning industrial sites over to urban renewal has proved far greater in Australia, where $A1.1 billion of sites had been conditionally contracted in the year to June and $A110 million settled in July.

The Sydney-based company increased operating profit 9% to $A653 million and made a $1.208 billion statutory profit million  (including property valuations, derivative & foreign currency mark-to-market and other non-cash or non-recurring items), delivering a 7.1% increase in operating earnings/security.

Group chief executive Greg Goodman said the company had taken advantage of market conditions to sell $A1.9 billion of assets and reinvest this capital into its growing $A3.1 billion development workbook, enhancing asset & income quality and generating higher investment returns at this point in the cycle.

With the current market conditions expected to continue, Goodman is forecasting earnings growth of 6% in the 2016 financial year, while further reducing gearing.

Other highlights:

  • Operating earnings/security A37.2c, up 7.1%
  • Total distribution A22.2c/stapled security, up 7%
  • Balance sheet gearing 17.3%, interest coverage ratio 6.0 times
  • Net tangible assets/security up 20% to $A3.46, with a significant contribution from urban renewal projects
  • Group liquidity at $A1.8 billion, weighted average debt maturity 4.7 years
  • Total assets under management $A30.3 billion, up 13%, reflecting increased valuations
  • Development work in progress $A3.1 billion across 76 projects in 11 countries, 65% precommitted & 71% presold to third parties or managed partnerships, generating a forecast yield on cost of 8.8%

Attribution: Company release.

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World property Sun14Jun15 – Big US lease for Goodman, Wanda targets India

Goodman’s US subsidiary leases near-complete first logistics centre
Chinese developer plans $US10 billion project near New Delhi

Goodman’s US subsidiary leases near-complete first logistics centre

ASX-listed Goodman Group’s North American subsidiary, Goodman Birtcher, has leased its new $US150 million 148,000m² logistics centre at Rancho Cucamonga, about 70km from Los Angeles into the hills of Southern California’s Inland Empire, to Georgia-Pacific LLC one month before completion.

Georgia-Pacific, based in Atlanta, Georgia, manufactures & markets paper products including bath tissue, paper towels & napkins, tableware, paper-based packaging, office papers, cellulose & specialty fibres, nonwoven fabrics, building products & related chemicals.

A third-party management company will operate a distribution facility at the logistics centre from August to support Georgia-Pacific’s consumer products business.

Goodman Birtcher has a programme to roll out a 1.4 million m², $US1.5 billion development pipeline in 8 logistics markets over 3 years. Its next 2 developments in the Inland Empire, at Fontana & Eastvale, will have a total 400,000m² of floorspace.

Chinese developer plans $US10 billion project near New Delhi

Wang Jinlian talking asset light in Shenzhen.

Wang Jinlian talking asset light in Shenzhen.

The innovative chairman of China’s Dalian Wanda Group Corp Ltd, Wang Jianlin, took his Indian hosts by surprise last week when he told them he was seeking 3600ha, maybe more, for a new town at Gurgaon, 30km south of New Delhi.

Mr Wang envisages Dalian Wanda could spend $US10 billion in India over the next decade. He met Indian prime minister Narenda Modi on Tuesday, then told Haryana state government officials he wanted the large land area to set up an integrated industrial township.

According to the Times of India, Mr Wang told state officials he didn’t want to go through the land acquisition process and was looking for a readily available parcel – something the officials said wasn’t available in one block.

The development ideas include an international airport, although New Delhi’s Indira Gandhi international airport sits between the 2 urban areas, and a power plant.

Mr Wang took the Wanda group in a new direction 2 years ago when he launched the 50 billion yuan ($NZ9.9 billion) 540ha Qingdao Oriental Movie Metropolis film & television industry project. In April, he explained in a speech to the Shenzhen Stock Exchange how the group would transform its performance by switching from asset heavy to asset light. It had 109 malls at the end of last year and 26 planned for this year, but under the asset light model he is targeting 1000 malls in China by the year 2025.

Asset light is where other investors pay for development, and it’s envisaged those investors will onsell in 5-7 years, possibly to real estate investment trusts, which are only now being considered in China. Dalian Wanda is also looking at how to run a finance business online, which could supplant the reit model. Wanda would still manage development & the business.

Links: Mingtiandi, 11 June 2015: Wang Jianlin meets Modi, Wanda plans to invest $US10 billion in India
Times of India, 11 June 2015: Chinese giant seeks 9000 acres for township

Attribution: Goodman Group, Mingtiandi, Times of India

Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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World property Sun10May15 – Bright Ruby buys Sydney Hilton, Henderson exits global venture, Greenland starts on UK renewal, renewal works for Goodman

Hilton sells Sydney hotel to Chinese-owned commodities trader
Henderson splits from joint venture with US fund after year
Greenland starts ₤600 million London development
Urban renewal a big bonus for Goodman Group

Hilton sells Sydney hotel to Chinese-owned commodities trader

Hilton Worldwide Holdings Inc has sold the 579-room Hilton Sydney hotel (pictured above) to Chinese-owned Singapore commodities trader Bright Ruby Resources Pte Ltd for $A442 million.

Hilton was pleased with its price, but who is the buyer, Bright Ruby? Various media have described the company as being controlled by “the Du family of Shandong, China”. Du, I’ve read, is the 47th most common surname in China – and in the village where Du Shuanghua came from, everyone carried the surname Du.

Du Shuanghua, founder & major shareholder of Rizhao Steel in Shandong Province, was most recently ranked at 263 on Forbes magazine’s list of wealthy Chinese with assets of $US670 million. In 2009 he backed 30% of his steel company shareholding into a Hong Kong-listed industrial investment holding company, Kai Yuan Holdings Ltd, getting a 5.54% stake in the listed company in exchange, and also affording himself some official protection just ahead of an unusual steel industry bribery case (see the Sydney Morning Herald story by John Garnaut below for all the implications of that).

Du Shuanghua began investing in Sydney in 2013. Spreading himself around, Mr Du’s Bright Ruby spent over $S1 billion buying the Grand Park Orchard Hotel & Knightsbridge retail podium on Singapore’s Orchard Rd and he lent Kai Yuan $US280 million to help it buy the Paris Marriott Hotel Champs-Elysees for €344.51 million.

Mr Du incorporated Bright Ruby in 2009 and reports on its previous property investments indicate it has attracted considerable investor support in China for its purchases.

Bright Ruby made his 2013 Singapore purchase for $S1.15 billion, which the Straits Times calculated was at a price of $S1.4-1.5 million/room (based on $S102-108,000/m² retail), well above the previous high of $S1.1 million/room, and at a net yield just over 4%.

A JLL report last year put the price in American dollars at $US921 million, of which $US595 million was for the 6875m² retail at $US86,545/m², thus pricing the 308 hotel rooms at $US1.06 million/room (current conversion rate $S1.41 million).

In Sydney, Bright Ruby bought 2 cbd office buildings in 2013, one at 231 Elizabeth St for $A201 million, but it appeared to be against stiff competition for the Hilton.

Hilton Worldwide president & chief executive Christopher Nassetta said the sale was “at attractive pricing in a tax-efficient manner”. It was sold at a multiple of 15 times adjusted ebitda, on a yield of about 6%. He said Hilton expected to use the sale proceeds to reduce long-term debt.

Hilton looked for interest in its Sydney hotel early this year and revealed the sale down in the smallprint of its quarterly results announcement on 29 April. It was the only hotel Hilton owned as well as managed in Australia, and it will continue to manage it under a 50-year agreement.

In its quarterly results, Hilton said it increased earnings/share by 25% to US15c, net income by 22% to $US150 million, adjusted ebitda by 18% to $US599 million and the adjusted ebitda margin by 320 basis points, system-wide comparable revpar (revenue/available room) by 6.6% on a currency-neutral basis, management & franchise fees by 18% to $US391 million, and reduced long-term debt by $US225 million.

Hilton opened 8000 rooms during the quarter and approved 23,000 for development, growing its development pipeline to 1432 hotels & 240,000 rooms.

Links: Australian Financial Review, 3 May 2015: Bright Ruby buys Sydney Hilton
Mingtiandi, 17 June 2014: Controversial China steel magnate linked to $US468 million Paris hotel deal
JLL, 2 April 2014: Asia’s shopping centres entice investors
Australian Financial Review, 25 September 2013: Bright Ruby spends $A975 million on Singapore hotel gem
Sydney Morning Herald, 17 April 2010: Bribery pays: court reveals iron ore corruption
South China Morning Post, 18 June 2014: Hong Kong-listed Kai Yuan buys Paris Marriott Hotel Champs-Elysees hotel

Henderson splits from joint venture with US fund after year

US investment fund TIAA-CREF (Teachers Insurance & Annuity Association – College Retirement Equities Fund) has bought out its partner in the year-old TIAA Henderson Real Estate Ltd (TH Real Estate) joint venture for £80 million.

TIAA-CREF, based in New York, had 60% and Henderson Global Investors Ltd 40% of the partnership, which managed $US26 billion of assets in Europe, Asia & North America. TIAA-CREF injected its European real estate business into the joint venture, while Henderson injected its European & Asia Pacific-based real estate businesses. TIAA-CREF continued to manage its own North American real estate business, and also provided investment management services for the new venture.

The company had its headquarters in London and James Darkins, Henderson’s property managing director, became the chief executive. During the joint-venture year TH Real Estate made 67 acquisitions worth $US3.7 billion, raised $US1.3 billion of new equity mandates and secured $US3.6 billion in capital recommitments from closed-end fund investors.

Henderson chief executive Andrew Formica said TH Real Estate would continue to sub-advise the Henderson UK Property OEIC (open-ended investment company – unit trust).

Australian insurance company AMP Ltd bought UK investor Henderson in 1998 and introduced the Henderson name to its investment businesses until 2003, when Henderson Group plc was relisted as a public company in London & Australia, with Henderson Global Investors Ltd as its property arm. AMP Capital Investors (NZ) Ltd was called AMP Henderson Global Investors (NZ) Ltd at that time.

TH Real Estate chief executive James Darkins, who’d emigrated to Wellington in the 1980s, joined Henderson in 1998 as head of property in New Zealand, then moved to the Sydney head office of AMP and back to London in 2001 as Henderson’s property managing director. He’s maintained a link to Wellington throughout, as a director of private company The Property Group Ltd.

Greenland starts ₤600 million London development

Chinese state-owned developer Greenland Group has broken ground on its first UK project, the ₤600 million residential Ram Quarter redevelopment of the Ram Brewery site in Wandsworth, London.

661 homes are envisaged for the 9ha, including a mix of luxury apartments, affordable housing & commercial facilities. The refurbished brewery will have 5200m²of retail space.

Greenland also has a major Canary Wharf project due to start in London, is developing apartments in Sydney and unveiled the $US666 million 52ha Tebrau Bay Waterfront City in Malaysia’s Johor state, across the water from Singapore, in January.

Michael Cole, of the Mingtiandi website, said at least 7 Chinese developers had Johor projects, worth billions of dollars in projected investment values.

Links: Greenland Group breaks ground on $922 million London housing project
Greenland’s $US666 million project to bring snow & opera to Malaysian seaside

Urban renewal a big bonus for Goodman Group

Changing land use in Sydney & Melbourne is proving a highly profitable bonus for ASX-listed Goodman Group, which now has an urban renewal pipeline exceeding 35,000 apartments in the 2 cities.

Full story: Urban renewal a big bonus for Goodman Group

Attribution: Hilton Worldwide, JLL, Straits Times, Singapore Business Review, Mingtiandi, Australian Financial Review, Sydney Morning Herald, Forbes, Kai Yuan, South China Morning Post

Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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Urban renewal a big bonus for Goodman Group

Changing land use in Sydney & Melbourne is proving a highly profitable bonus for ASX-listed Goodman Group, which now has an urban renewal pipeline exceeding 35,000 apartments in the 2 cities.

Group chief executive Greg Goodman said this week in a quarterly review of global operations: “Positive planning outcomes are being achieved on a number of sites and Goodman is working through its current urban renewal pipeline, which has been maintained at in excess of 35,000 apartments in Sydney & Melbourne. This is expected to increase meaningfully over time as urban renewal precincts continue to evolve and new sites are identified.

“Goodman has $A700 million of sites conditionally contracted in Sydney, reflecting the strong demand for zoned residential sites. Sale proceeds are expected to be realised over the next 2 years, providing capital over the longer term to fund opportunities for the group & partnerships.

“Asset revaluations for the full year are also estimated to be worth $A700 million, which includes $A300 million recognised in the first half. Urban renewal remains significant, contributing over 50% of revaluations.”

Along with gains from the change of use for traditional industrial sites, Goodman has secured new relocation projects on behalf of the displaced industrial customers.

That’s just one face of the Sydney-based Goodman, the largest ASX-listed industrial property group and one of the largest listed specialist fund managers of industrial property & business space globally.

Across the globe, at the 2015 transport logistic fair in Munich, Goodman Group said on Wednesday its assets under management in Germany would exceed 3 million m² once all current construction projects are complete. It has 83 logistics properties in Germany and has started several new industrial development projects there. This year’s completions will take facilities for online retailers in Germany over 1 million m².

Globally, Goodman Group completed $A1.8 billion of development in the March quarter. Supported by cap rate compression & currency movements, that’s taken total assets under management to $A30.3 billion.

Mr Goodman said: “Our ongoing focus in the current low-growth, low-interest rate environment is on improving the quality of our assets & income, by selectively recycling assets across the group & our partnerships and reinvesting capital into higher quality assets from Goodman’s development activities and selective investment opportunities to drive higher long-term returns for our partners.

“The group’s North American strategy is focused on the build-out of its land bank, with $A260 million of projects currently underway in the Inland Empire West market in Southern California. Planning continues to progress on sites in New Jersey & Pennsylvania and, with available capital, the North American portfolio is positioned to grow to $A2 billion.”

Other operational highlights from the third quarter for the group & partnerships:

  • Leased over 2.5 million m², representing $A284 million/year of rental income
  • Occupancy maintained at 96%, weighted average lease expiry 4.3 years
  • Asset rotation improved portfolio quality – $A1.4 billion of assets sold, with capital recycled into development activities, driving higher returns
  • $A3 billion of development work in progress on 71 projects, with a forecast yield on cost of 8.8%
  • 92% of all development completions presold and capital recycled into new projects
  • External assets under management increased to $A25.4 billion, up $A3 billion from 30 June, reflecting development completions, rising valuations & currency movements
  • Partnerships have significant uncalled capital, proceeds from asset sales funding growth opportunities.

Attribution: Company updates.

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Fletcher & Goodman sign up for new Wynyard Quarter building

Fletcher Building Ltd subsidiary Fletcher Construction has entered into a conditional agreement to build a 7-storey office building in the Wynyard Quarter which it will sell to the joint venture between Goodman Property Trust & Singapore sovereign wealth fund GIC, Wynyard Precinct Holdings, for $86.2 million.

The 16,735m² building on the corner of Gaunt & Daldy Sts, next to the linear park that will link Victoria Park to the Wynyard Quarter, will have a retail ground floor, 6 office levels & 152 parking spaces. It’s been substantially leased to IT service provider Datacom. 15,328 m² will be commercial, 1407 m² retail. Datacom has committed to a 15-year lease on 5 floors, representing 80% of the total rentable area.

It’s been designed to a 5 star green star certified rating standard and is scheduled for completion in March 2017.

Goodman (NZ) Ltd chief executive John Dakin the acquisition was expected to provide a yield on cost of around 8.5% once fully leased & income producing. The estimated value, once fully leased, was forecast to be $90 million.

Goodman Property Trust will also finance the construction by way of a funding arrangement with Fletcher Building, to be repaid on settlement of the completed building.

Mr Dakin said no fees would be paid to Goodman Group by the joint venture or Goodman Property Trust as part of the purchase. However, Fletcher Building has separately engaged Goodman Group to provide development management services on the project.

Earlier stories:
30 January 2015: Goodman’s GIC deal gets regulatory approval
16 November 2014: Mixed Goodman trust result moves focus to GIC
7 November 2014: GIC buys into Goodman waterfront partnership

Attribution: Company releases.

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