Tag Archives | Goodman

5 new Highbrook developments include more Quest units & parking building

Goodman Property Trust’s manager announced 5 new developments for the Highbrook Business Park yesterday, worth a total $44 million.

Goodman (NZ) Ltd chief executive John Dakin said they were expected to generate around $3.7 million/year in rent, an 8.4% return on investment.

The 5 new Highbrook projects, their size, cost & expected completion date:

Quest serviced apartment expansion: 60 new apartments, $11.7 million, July 2018
The Crossing office building 6: 3006m², $4.9 million, June 2018
Multi-storey carpark building: 324 new parking spaces, $5.7 million December 2017
Warehouse on Pukekiwiriki Place: 2929m², $13.9 million, November 2017
Showroom & warehouse units on Highbrook Drive: 1730m², $7.9 million, December 2017.

Mr Dakin said: “Completing the development programme at Highbrook is a key priority, and these new projects are timed to take advantage of the positive customer demand & strong market conditions that currently exist.”

Highbrook’s current value exceeds $1 billion, making it Goodman’s largest investment asset. The 110ha estate is about 70% of the way through its planned development and contains over 40 buildings, providing over 380,000m² of warehouse & office space.

The Crossing – the commercial heart – provides accommodation, business support services, food & hospitality options and other amenity & recreational opportunities.

Mr Dakin said: “High occupancy levels at the Quest and a shortage of visitor accommodation in Auckland are the catalysts for a substantial new expansion project that will double the number of serviced apartments at The Crossing. Following the success of the recently completed Building 5, we are also commencing another new office facility and developing an adjoining multi-storey carpark.”

The trust’s industrial portfolio has a 100% occupancy rate, and the 2 new warehouse developments are aimed at continuing Goodman’s highly successful build-to-lease programme: “With most projects leasing well before completion, it’s been an effective strategy that is growing cash earnings and improving an already high quality property portfolio,” Mr Dakin said.

Attribution: Company release.

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Goodman takes syndicate units to facilitate Millennium Centre sale

The Goodman Property Trust’s manager said yesterday the trust had taken $12 million of units in the property syndicate that has bought the Millennium Centre at Greenlane (pictured) from it.

Goodman sold the 3 office properties at 600-604 Great South Rd, Greenlane, to syndicator Oyster Management Ltd for $210 million last year and settled yesterday.

Goodman (NZ) Ltd chief executive John Dakin said the trust had taken units in the syndicate to facilitate the transaction, would hold the investment for a maximum 2 years and expected to receive an annual return of 8%.

Mr Dakin said Goodman had also sold the commercial buildings & associated development land at 1 Show Place in Addington, Christchurch, for $14 million as part of its asset recycling programme. The unconditional sale to a local investor is expected to settle before the end of this month.

“An active sales programme is reducing debt and providing funding capacity for the trust’s development activity. It’s a strategy that is improving the quality of the portfolio and increasing investment in the favoured Auckland industrial market, a sector we expect to deliver superior growth,” he said.

The 2 transactions take Goodman’s total value of sales this financial year to almost $280 million.

Earlier stories:
5 October 2016: New leases lift price on Greenlane sale
14 July 2016: Goodman to sell Millennium & Yellow buildings to Oyster
1 July 2010: Goodman buys partner out of Show Place
30 May 2007: Macquarie Goodman buys 50% stake in Addington office park company

Attribution: Company release.

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New income offsets asset sales for Goodman trust

The Goodman Property Trust announced $265 million of asset sales in the first half of its financial year, but said yesterday income from new acquisitions & developments had more than offset the impact of disposals.

Trust management company chief executive John Dakin said rental growth in the underlying portfolio was modest.

For management company chair Keith Smith, the trust had achieved a strong result while it also made progress towards longer-term strategic objectives.

Highlights included:

  • Net property income $67.5 million ($67.1 million)
  • Pretax operating earnings $59.9 million ($57.1 million) or 4.7c/unit (4.64c/unit) on a weighted average issued unit basis
  • Cash distributions of 3.325c/unit, relating to the first 6 months
  • Pretax profit $73.1 million ($53.1 million), the 37.7% increase largely attributable to $19.8 million of fair value gains on certain investment properties (nothing in the first half last year)
  • After-tax profit $67.6 million ($48.4 million)
  • $264.8 million of asset disposals announced, including sales contracted but not yet settled
  • Greater balance sheet capacity with a look-through loan:value ratio of 28.8% (33.9% in March), including sales contracted but not yet settled
  • 3 development projects started, with a total project cost of $44.2 million
  • Total assets $2.544 billion ($2.476 billion)
  • Net tangible assets 122.4c/unit (120.4c/unit at 31 March)
  • Basic earnings/unit after tax 5.3c (3.93c)
  • Diluted earnings/unit after tax 5.28c (3.8c).

Mr Smith said the positive operating environment continued to facilitate a more active investment approach. The trust was able to deliver strong gains while refining its portfolio through transactions: “It is also building resilience, with a lower level of gearing. This balance sheet capacity provides Goodman with the means to progress its development programme and also secure complementary investment opportunities, should they arise.”

Mr Dakin said: “With strong property market fundamentals & low interest rates stimulating business growth, the outlook remains positive. A continuation of these conditions means Goodman is expected to deliver full-year operating earnings of around 9.5c/unit before tax, consistent with earlier guidance.”

The trust also expects to pay distributions of 6.65c/unit, representing about 100% of cash earnings (an internal measure of free cashflow that adjusts operating earnings after tax for interest costs capitalised to development land and maintenance-related capex).

Mr Dakin said steady occupier demand had continued to support positive leasing results, with 61,363m² of office & industrial space (6% of the portfolio) secured on new or revised terms in the first 6 months of the year.

Occupancy was maintained at an average 96% and extended the weighted average lease term out beyond 5½ years.

Mr Dakin said converting the trust’s landholdings into high quality income-producing assets remained a key focus and it expected to start about $100 million of new developments this financial year, including both build-to-suit & build-to-lease projects.

The trust had also made a strategic acquisition with the conditional purchase of the former Alloy Yachts premises & an adjoining industrial property in Henderson for $18.9 million. Goodman will amalgamate the properties into one estate and progressively redevelop it.

Full interim results

Attribution: Trust release.

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Goodman sells Christchurch transport property

The Goodman Property Trust has sold its Palmerston Transport property in Christchurch to a private local investor for $7.7 million.

Trust manager Goodman (NZ) Ltd’s chief executive, John Dakin, said yesterday the sale included the remaining investment asset at Glassworks Industry Park in Hornby. The price reflected a passing yield of 6.5% and was expected to settle in May 2017, once title subdivision & certain capital works are completed.

“The trust’s successful asset sales programme is reducing debt and providing the balance sheet capacity for new investment & development initiatives. It’s part of an organic growth strategy that is refining & rebalancing the portfolio, with greater investment in the Auckland industrial sector.”

It’s the third asset sale Goodman has announced since March, for a combined $265 million. Another sale, announced in March, was completed yesterday. It’s the disposal of Connect Business Park in Penrose for $40.9 million. It had been conditional on a new title being issued following a minor boundary adjustment.

Attribution: Company release.

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New leases lift price on Greenlane sale

Published 3 October 2016, additional material at foot 4 October 2016:
Goodman Property Trust’s sale of 3 office properties at 600-604 Great South Rd, Greenlane, to syndicator Oyster Management Ltd has gone unconditional, and at a slightly higher price. The sale is contracted to settle on 28 February 2017.

The properties are the 2 Millennium office estates & the Yellow HQ building.

Goodman management company chief executive John Dakin said today the price had been revised, from $206 million to $210 million – determined on a passing yield of 7.25% – to reflect new leases secured during Oyster’s due diligence period.

Mr Dakin said Goodman would provide an equity underwrite to Oyster of up to $12 million to facilitate the transaction. The underwrite will extend for a maximum 2 years, and any amount drawn will receive an annual return of 8%, consistent with other investors.

Mr Dakin added: “This is an important transaction for the trust and part of an asset recycling programme that is providing significant balance sheet capacity. With sales proceeds of around $300 million expected this financial year, the trust’s loan:value ratio is at the bottom of the target band of 30-35%. It’s part of an organic growth strategy that is focused on delivering the trust’s development programme and rebalancing the portfolio, with increased investment in the Auckland industrial sector.”

Oyster chief executive officer Mark Schiele said the funds management company intended to structure investment in the Millennium Centre as a wholesale syndication.

Earlier story:
14 July 2016: Goodman to sell Millennium & Yellow buildings to Oyster

Attribution: Company releases.

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Goodman signs Highbrook & Glassworks developments

Goodman Property Trust has secured commitments for 2 new industrial projects costing $30.6 million at its Highbrook business park in Auckland and Glassworks industry park in Christchurch.

The new facilities on a total 3ha will add 16,000m² of lettable area to the trust’s portfolio and generate over $2.1 million/year in rent.

Management company Goodman (NZ) Ltd’s chief executive, John Dakin, said on Friday specialist stationery supplier ACCO Brands Corp (ex-Pelikan Artline Ltd) had doubled its space requirement at Highbrook and committed to an 8-year lease over a purpose-built 6400m² warehouse. It’s scheduled for completion in September 2017.

At Glassworks, Goodman will develop a 9600m² facility for NZX-listed Steel & Tube Holdings Ltd (image above is the entrance to its Highbrook premises), scheduled for completion in December 2017. It’s Goodman’s fourth development for Steel & Tube since 2009, and makes the steel supplier one of the trust’s top 5 customers.

The combined total cost of $30.6 million (including land, construction costs and all management & other professional fees) reflects a yield on cost of 6.9%.

Highbrook leasing progress

Mr Dakin said strong customer demand was ensuring good leasing progress on other developments nearing completion: “With occupancy at Highbrook around 99%, we’re undertaking a mix of committed & uncommitted developments to meet demand. It continues to be a successful strategy, with just one level of office space remaining for lease at the new commercial building under construction at The Crossing. We also expect to have leased The Point, an uncommitted 2820m² industrial development on Business Parade North, before it completes in April 2017.”

Attribution: Company release.

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Goodman sells Christchurch package on top of Fanshawe St lease confirmation & Henderson project

Image above: Aerial view of the new industrial estate on the Alloy Yachts site at Henderson.

Goodman Property Trust has sold a package of industrial & office assets in Christchurch for $47.1 million.

That announcement today follows confirmation yesterday that Auckland Transport will lease the VXV20 building (ex-Vodafone building) on the corner of Halsey & Fanshawe Sts in the Wynyard Quarter, and a third announcement that the trust has acquired the former Alloy Yachts premises & an adjoining industrial property in Henderson for $18.9 million.

Trust manager Goodman (NZ) Ltd’s chief executive, John Dakin, said the Christchurch sale was to a private local investor and included the Southpark industrial estate in Middleton and 2 assets in the Show Place office park in Addington.

Mr Dakin said: “We’ve continued to take advantage of the strong investment market, with asset sales providing the balance sheet capacity for future acquisition & development opportunities. It’s a deliberate strategy that is reweighting the portfolio toward the favoured Auckland industrial sector.”

The Show Place component of the sale includes the 3800m² building leased to Ngai Tahu and an adjoining development site used for parking. The unconditional sale at a 7.7% yield is expected to settle on 30 September.

Wynyard Quarter

Auckland Transport’s intention to lease the VXV20 building was announced in May. Mr Dakin said the 6-storey 14,085m² office building would be extensively refurbished before the new 9-year lease starts in November 2017.

Mr Dakin said: “Securing a new customer commitment 7 months ahead of the expiry of the Vodafone tenancy is a great result for the business. It’s an iconic building in a superb location and we will be upgrading the office areas & building services to provide Auckland Transport with a modern & efficient work environment for its 1600 staff.”

The 12-year-old is owned by Wynyard Precinct Holdings Ltd, a 51:49 joint venture between the Goodman Property Trust and the Singaporean sovereign wealth fund GIC. Vodafone’s lease on it expires in April 2017 and it’s decided to move its whole Auckland corporate workforce into one building at Smales Farm, Takapuna.

Henderson reconfiguration

In Henderson, the 2 industrial properties Goodman has bought are on the corner of Selwood Rd & The Concourse. The 2 former boatbuilding premises have about 22,120m² of high volume warehouse space & 1250m² of associated office.

Mr Dakin said: “Acquiring the former Alloy Yachts premises & the neighbouring site, and amalgamating them into a single 4ha estate, provides the Goodman trust with a strategic opportunity in the rapidly developing West Auckland industrial market. Close to the cbd and with direct access to State Highway 16 from the Lincoln Rd interchange, this property will become one of Auckland’s best located industrial estates when the western ring route completes in 2017.”

The vacant warehouse buildings will be refurbished & reconfigured. Mr Dakin said that, fully leased, they were expected to generate a passing yield of about 7%. With significant yard areas & associated land, the estate also offered further development opportunity.

The acquisition remains conditional on Overseas Investment Office consent.

Earlier stories:
18 May 2016: Auckland Transport signs up to lease Vodafone building
11 February 2016: Goodman buys Panmure development site
28 August 2015: Goodman puts 5 Christchurch buildings on market
27 March 2015: Fletcher & Goodman sign up for new Wynyard Quarter building
7 November 2014: GIC buys into Goodman waterfront partnership

Attribution: Company releases.

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Addington refurb scores 5 star NabersNZ rating

IAG NZ Ltd & Goodman Property Trust are the first to achieve a 5 star NabersNZ whole building rating for their Christchurch office at 14 Show Place, Addington.

The sustainability-focused refurbishment of 7000m² of office space on 6 floors in 2 adjoining buildings was prompted by earthquake remediation work & a pending lease expiry.

NabersNZ measures office building energy use. Nabers – the national Australian built environment rating system – was adopted in 2013 for New Zealand. The 2 trademarks are held by the New South Wales state government and the New Zealand scheme is licensed to New Zealand’s Energy Efficiency & Conservation Authority. The NZ Green Building Council administers the programme.

Goodman portfolio manager Anna Lough said the project aimed to reduce operational costs, reduce the buildings’ carbon footprint and create a healthier environment for staff. Key sustainable features include a variable refrigerant flow (VRF) HVAC system with heat recovery, CO₂ sensors, LED lighting, daylight harvesting & occupancy sensors.

Ms Lough said: “Goodman undertook the project because we saw it as a great opportunity to work collaboratively with one of our largest office occupiers in New Zealand. We were able to refurbish and add value to our asset as well as retain a quality customer and secure them a long-term lease.”

The project was planned & designed in 3 months, and allowed 6-7 weeks to strip & complete each floor while other floors remained occupied. The entire project took 10 months to complete.

IAG’s national property & administration manager, Tim Griffith, said: “The project has shown us that energy-efficient improvements can be made in existing buildings – as an example we’ve easily retrofitted LED lighting with up to 20% savings in lighting energy, with a 2-3-year payback. Air-conditioning is always the largest component of energy use in a building, so it’s worth seeking specialist advice from engineers to ensure the correct equipment is installed and you receive the best energy efficient outcomes. We are seeing a 40% reduction in energy consumption in the building despite an increase in our workforce.”

And Green Building Council chief executive Alex Cutler said: “We’ve found that the buildings with the best energy performance are those where tenant & owner work collaboratively. Congratulations to IAG & Goodman, who have proven that working together can achieve market-leading results that benefit both parties.”

The NabersNZ rating was carried out by Vanessa McGrath from TM Consultants.
The IAG building’s NabersNZ rating was achieved while under the management of Maori Hill Property Ltd, which has managed the property following its sale to a group of investors last November.

Link: Video case study

Attribution: Green Building Council release.

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Goodman to sell Millennium & Yellow buildings to Oyster

Goodman Property Trust has entered into a conditional contract to sell 3 adjoining Greenlane office properties to syndicator Oyster Management Ltd for $206 million.

The properties are the 2 Millennium office estates & the Yellow HQ building at 600-604 Great South Rd, Greenlane.

Trust management company chief executive John Dakin said today: “This sale is a continuation of an investment strategy that is focused on organic growth. With asset disposals funding the trust’s award-winning development programme, we’re rebalancing the portfolio with greater investment in the Auckland industrial sector.”

Mr Dakin said the transaction would have a positive impact on trust debt levels, reducing its loan:value ratio by about 5%.

The sale is still conditional on Oyster’s due diligence, but is contracted to settle on 15 December.

Attribution: Company release.

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Revaluations contribute over half Goodman profit

Rising property values contributed over half the $247.9 million pretax profit the Goodman Property Trust made in the March year, lifting profit 45% over the 2015 return.

Trust management company chair Keith Smith said yesterday the $145.8 million (6.7%) revaluation gain reflected a buoyant property market, characterised by greater levels of transactional activity & record pricing, taking the trust to its strongest ever financial result.

Industrial assets were valued on a weighted average cap rate of 6.5%, and the smaller office portfolio at 7.75%.

He added: “A more active operational strategy has been pursued in recent years to take advantage of the positive economic environment and strong property market conditions that exist.”

The focus has been on maximising the performance of the trust’s $2.3 billion property portfolio, reweighting it & advancing the development programme for better returns.

Chief executive John Dakin said: “With more than $350 million of new development projects secured in the last 3 years, it’s a strategy that is transforming the trust’s landholdings into high quality, income-producing assets.”

The trust disposed of over $300 million of assets over the last 3 years – $124 million in the last year – enabling it to renew & refine its portfolio, and it has $149 million of new development projects. “Following the completion of the current work book, the trust’s land weighting will reduce to just 8.3% of total property assets, while investment in the favoured Auckland industrial & business park sectors will increase to 67.8%.”

The asset sales reduced net rental income slightly, from $134.7 million to $133.8 million, but the trust’s proportionate share of its Viaduct joint venture lifted overall rental income by 1.3% to $143.1 million.

The trust reduced its effective interest rate across all its borrowings from 6.6% last year to 6.3%, and is actually earning interest during construction of the Datacom building in the Viaduct through an agreement with Fletcher Building to finance the construction of the Datacom building. This was the main contributor to the $2 million of interest income the trust received: “It’s an innovative financing arrangement that utilises the trust’s balance sheet capacity to earn an attractive lending margin. The loan is being drawn down progressively and will be repaid when the Viaduct joint venture acquires the completed office development in 2017.”

Lower net interest costs were the main contributor to the 4.2% increase in pretax operating earnings, from $112.3 million to $117 million. On a weighted average unit basis, this equates to 9.41c/unit, up 2.7% on the 9.16c/unit last year. After tax, those earnings slipped from 7.99c to 7.88c/unit. The board expects the trust’s pretax operating earnings to increase to about 9.5c/unit in 2017. Cash distributions are forecast to be at least 6.65c/unit.

Net asset backing has risen steadily over the last 5 years, from 92.9c/unit in 2012 to 108.4c last year and to 120.4c this year.

At 31 March, the trust’s look-through loan:value ratio was 33.9%, down from the 34.2% reported last year and well below the 50% threshold permitted under its debt & trust deed covenants.

Link: Goodman Property Trust annual report

Attribution: Trust release.

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