Archive | Goodman Property Trust

Oyster goes unconditional on Central Park purchase

The Goodman Property Trust’s $209 million sale of the Central Park Corporate Centre to a joint venture led by property fund manager Oyster Property Group Ltd has gone unconditional.

The trust’s manager, Goodman (NZ) Ltd, announced the sale last November, when one condition remained – Overseas Investment Office approval. Oyster is 50% owned by the ASX-listed Cromwell Property Group.

Settlement is scheduled for 29 June.

Goodman (NZ) chief executive John Dakin said in November the sale represented a significant milestone in the repositioning of the Goodman trust, marking the last of its major identified asset sales.

The property fronts Great South Rd beside the Southern Motorway at the Ellerslie-Panmure roundabout in Auckland.

Earlier stories:
17 November 2017: One condition left on Central Park sale, and Air NZ extends at Fanshawe St
10 November 2017: Big property sale follows first-half profit setback for Goodman

Attribution: Company release.

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Goodman upbeat as it forges ahead with repositioning

The Goodman Property Trust produced a very upbeat annual report on Monday, although every shift on the performance summary – apart from net asset backing – was downward.

Once again, half the profit came from revaluations (as projected in March), which many listed entities have highlighted over the years to bolster otherwise ordinary returns. Goodman, however, tends to work its properties much harder, rather than sitting back waiting for the cyclical valuation windfall.

The trust’s manager, Goodman (NZ) Ltd, has been busily building & filling space at its Highbrook business park in East Tamaki, and (post-balance date) has just sold out of the VXV office precinct between Fanshawe St & the lighter basin on the downtown Auckland waterfront for a $323.9 million share of the $635 million sale.

Goodman has also been repositioning its portfolio. It sold 3 properties for $243.9 million during the year, leased 200,000m² of space and began 7 new development projects, including 24 new warehouse facilities, with a total project cost of $164.8 million.

5 years of disciplined growth, says chair

Management company chair Keith Smith said: “We have pursued a disciplined growth strategy over the last 5 years, selling assets to fund the trust’s development projects. It has rebalanced the portfolio and deleveraged the balance sheet, transforming the trust and positioning it for sustainable long-term growth.”

Once current development projects & contracted sales are completed, the trust’s $2.2 billion portfolio will be 99% invested in Auckland industrial property.

Chief executive John Dakin said: “We’re divesting our remaining office assets and developing high quality estates such as Highbrook. It is a deliberate strategy that reflects the positive investment characteristics of this type of property and the strong growth profile of the country’s largest city.”

On the balance sheet, it’s meant a 12.6% cut in the loan:value ratio to 25.6%, or an 18.3% cut in the ratio to 25% on a look-through basis.

In Goodman Group terms that’s high gearing – the ASX-listed Goodman Group, owner of the NZX-listed company’s manager, has kept its gearing below 20% for 5 years, and had it down at 5.9% in 2017.

The New Zealand trust’s pretax statutory profit was $207.2 million (including look-through[1] valuation gains of $106.3 million), compared to $220.5 million (including look-through valuation gains of $114.7 million) in 2017.

After tax, operating earnings fell 4.2% to $101.6 million ($106 million).

  1. Look-through valuation is a non-GAAP measure that includes the trust’s proportionate share of Wynyard Precinct Holdings Ltd, the joint venture with GIC that owns the VXV portfolio, which has been sold to Blackstone Group LP funds, subject to Overseas Investment Office & freehold landowner approval.

Links:
Goodman Property Trust
Annual report, operational highlights

Earlier story:
29 March 2018: Goodman looking at record portfolio revaluation

Attribution: Company release, annual report, Goodman Group.

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Goodman & Singapore fund sell VXV portfolio to Blackstone

The joint venture between the Goodman Property Trust & Singapore sovereign wealth fund GIC has sold its VXV office portfolio along Fanshawe St in the Auckland cbd to funds managed by US asset manager Blackstone Group LP for $635 million.

The gross sale price of $635 million – $165 million above the estimated value after 2 buildings were added to the portfolio last June – reflects a passing yield of 6.6%.

GIC entered the joint venture, Wynyard Precinct Holdings Ltd, in 2014, making its first investment in New Zealand property. Goodman held 51% and GIC 49% of the venture.

The VXV commercial precinct is on the Victoria Park end of the Wynyard Quarter, which has turned a former industrial & port district into a smart & upmarket office, café & residential precinct. The VXV portfolio comprises 7 lowrise office buildings containing about 88,000m² of space.

John Dakin, chief executive of the Goodman trust’s manager, Goodman (NZ) Ltd, said today: “This is a defining transaction for our business as it completes a repositioning programme that has established the Goodman Property Trust as the country’s leading provider of high quality industrial space. Following this & other contracted sales, Goodman’s $2.2 billion portfolio will be almost 100% invested in the Auckland industrial market.

“We have made tremendous progress with our development programme over the last 5 years, with more than $670 million of new projects improving an already high quality portfolio. The $1.2 billion of asset sales funding this development activity have also deleveraged the balance sheet. With an expected loan:value ratio of below 20% following this sale, we have substantial capacity for future development & investment opportunities.”

The transaction, which remains subject to Overseas Investment Office & freehold landowner approval, is expected to settle late in the 2019 financial year (in the first quarter of next calendar year) and will add about 2.5c to the trust’s pro forma net asset backing. The settlement timing means the sale is not expected to have a material impact on earnings or distributions for the 2019 financial year.

Earlier stories:
2 February 2018: Blackstone’s Arena Living buys Mt Eden Gardens
27 June 2017: Goodman-GIC joint venture settles Bayleys House purchase
14 May 2017: Goodman-GIC joint venture adds Bayleys House to portfolio
>17 February 2016: Blackstone buys Lendlease’s NZ retirement villages

27 March 2015: Fletcher & Goodman sign up for new Wynyard Quarter building
7 November 2014: Goodman Group buys another Wynyard development block
7 November 2014: GIC buys into Goodman waterfront partnership

Attribution: Company release.

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Goodman scores 2 new projects

The Goodman Property Trust has announced 2 new industrial projects for its Savill Link industrial estate & Highbrook Business Park in Auckland totalling $54.1 million, including $14.6 million for land value allocation.

Trust management company Goodman (NZ) Ltd’s chief executive, John Dakin, said today the preleased facilities would occupy almost 4ha of development land, add 19,467m² of rentable area to the portfolio and generate over $3.3 million/year income once completed.

Those 2 new commitments will take Goodman’s current development workload to $233 million. Mr Dakin said the new projects continued the strong momentum of the last 18-24 months and further progressed the rapid build-out of the trust’s strategic landholdings.

The new projects:

  • A 14,050m² design-build warehouse facility for Australasian packaging specialist NCI Holdings Pty Ltd at Savill Link in Otahuhu, and
  • A 5417m² warehouse expansion for national carrier & existing customer Move Logistics Ltd at Highbrook.

Excluding land allocations, Mr Dakin said the 2 projects would require additional investment of $39.5 million.

Mr Dakin said: “Regional growth & the impact of online retailing is driving demand for well located industrial & business space facilities across Auckland. With portfolio occupancy of 99% we are effectively at capacity. To alleviate the supply shortfall we are intensifying our development programme with a combination of build-to-lease & design-built facilities.”

The current project list:

Attribution: Company release.

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Goodman looking at record portfolio revaluation

The Goodman Property Trust’s property portfolio has been revalued upward by over 4%, or $110 million, to about $2.7 billion.

Trust manager Goodman (NZ) Ltd’s chief executive, John Dakin, said yesterday draft valuation reports from independent valuers indicated the record annual gain for the year ending this Sunday, 31 March.

Mr Dakin said: “It’s a significant revaluation that reflects the quality of our repositioned portfolio. We have achieved outstanding leasing results over the last 12 months, with strong growth in market rental rates across our assets. Sustained investor demand has also driven further cap rate compression, which has contributed to the uplift.”

“The gain is expected to add around 9c/unit to the trust’s net tangible asset backing, which was $1.30 at 30 September 2017.”

The trust’s unit price was steady this week on $1.33, down from a $1.36 high reached twice this month.

The revaluation remains subject to finalisation & independent audit. The trust will announce its annual result on 17 May.

Attribution: Company release.

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Goodman launches $100 million bond issue

The Goodman Property Trust launched a $100 million bond issue on Monday ($75 million + $25 million in oversubscriptions).

The 5.5-year fixed-rate senior secured bonds (Goodman+Bonds) will mature on 1 September 2023.

Goodman expects they will have an investment grade issue credit rating of BBB+ from Standard & Poor’s. The trust’s current corporate credit rating is BBB.

The indicative issue margin range is 1.20-1.30%/year, subject to a minimum interest rate of 4.00%/year. The issue margin & interest rate will be set following a bookbuild process on Friday. The offer will close on Friday and the bonds will be issued on Thursday 1 March.

Attribution: Trust release.

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Goodman sells in Christchurch, signs another addition to Highbrook

The Goodman Property Trust announced 2 transactions yesterday – a new industrial development at Highbrook Business Park in Auckland and the sale of a commercial building at 7 Show Place in Christchurch.

Management company Goodman (NZ) Ltd’s chief executive, John Dakin, said: “We’re executing a development-led growth strategy that’s converting the trust’s landholdings into high quality, income-producing properties. Funded through asset sales, it’s repositioning the portfolio and focusing our investment in the Auckland industrial sector.”

Goodman will develop the new 7300m² industrial facility at Highbrook for Plytech International Ltd, a manufacturer & supplier of plywood-based products, which is doubling its space requirements to facilitate its business growth.

The development has a forecast total cost of $11.4 million (construction, and excluding land allocation) and is expected to be completed in November 2018.

“This new project adds to the $107 million of development work currently underway at Highbrook. The volume of activity reflects the strong demand that exists for prime industrial space in Auckland and the unique attractions of this world-class business park,” Mr Dakin said.

The sale of 7 Show Place for $14.5 million continues the sales programme funding Goodman’s development work book. The 3-level 3037m² office building in the Show Place Office Park in Addington, has been sold to a local syndicator.

The transaction is expected to settle in January.

Mr Dakin said completion of all current developments & contracted sales would result in Goodman’s Auckland industrial weighting increasing to almost 85% of its total portfolio, while strategic landholdings represent less than 5%.

Attribution: Trust release.

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One condition left on Central Park sale, and Air NZ extends at Fanshawe St

Goodman Property Trust manager Goodman (NZ) Ltd said yesterday its sale of Central Park at Greenlane had all but gone unconditional, with only Overseas Investment Office approval still required.

The trust has also secured a new long-term lease commitment from Air NZ on its Fanshawe St headquarters.

Goodman (NZ) chief executive John Dakin said yesterday the $209 million Central Park sale to a joint venture led by New Zealand property fund manager Oyster Property Group Ltd represented a significant milestone in the repositioning of the Goodman trust, marking the last of its major identified asset sales.

“Following settlement of the property, the trust’s portfolio will be almost 90% invested in its preferred Auckland industrial sector and will have a value of $2.4 billion.

“With over $850 million of asset sales since 2012, we have positively rebalanced the trust’s portfolio, improving the quality & growth profile of the assets. It’s a disciplined strategy that is focused on the delivery of the industrial development pipeline and building a portfolio of unrivalled quality.”

Air NZ’s headquarters at 185 Fanshawe St.

The VXV precinct

The Goodman trust’s office investment is now focused in the VXV precinct of the Auckland waterfront Wynyard Quarter. The trust jointly owns the portfolio of 7 buildings with GIC Pte Ltd, the sovereign wealth fund of Singapore. The portfolio has a value of $488.4 million and Goodman’s proportionate share is $249.1 million.

Air NZ’s head office at 185 Fanshawe St is in that precinct. Trans Tasman Properties Ltd began development of the 6-level building in 2005, putting a $60 million value on it, but sold the development part-built to what was then the Macquarie Goodman Property Trust, with Air NZ as the incoming tenant.

Air NZ has renewed its lease for 10 years. Mr Dakin said that, and the Central Park sale, would increase Goodman’s portfolio occupancy to 98% extend the office portfolio’s weighted average lease term to 10.6 years and the overall lease term to 6.2 years.

Earlier story:
10 November 2017: Big property sale follows first-half profit setback for Goodman

Attribution: Company release.

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Big property sale follows first-half profit setback for Goodman

A $28.2 million turnaround in the fair value of investment property took the Goodman Property Trust from a $67.6 million profit in the September half last year to a $39.5 million interim profit this year.

Perhaps more importantly, the trust has continued its repositioning since September with 2 more asset sales, conditionally selling the Central Park Corporate Centre (pictured) in Auckland and unconditionally selling a Christchurch property.

Main financial details (September 2016 in brackets):

  • Pretax operating earnings $59.8 million ($59.9 million)
  • After tax operating earnings $51.4 million ($51.0 million)
  • Fair value movement, down $8.4 million (up $19.8 million)
  • Pretax profit $45.3 million ($73.1 million)
  • After tax profit $39.5 million ($67.6 million), down 41.6%
  • Pretax operating earnings/unit 4.65c (4.7c)
  • After tax operating earnings/unit 4c (4.01c)
  • Look-through loan:value ratio 32.4% (28.8%)
  • Unchanged cash distributions of 3.325c/unit represent about 94% of cash earnings.

Management company chair Keith Smith said yesterday Goodman leased over 70,000m² of space on new or extended terms, the average lease term was 5.8 years and portfolio occupancy was 97%.

The trust announced 6 new industrial projects totalling $148.7 million in August, covering over 10ha of development land and providing almost 60,000m² of rentable area on completion, at an 8.3% yield on cost.

Since September, the trust has contracted to sell $229.4 million of property:

  • Central Park Corporate Centre, conditionally, for $209 million, and
  • the recently completed Steel & Tube development in Hornby, Christchurch, unconditionally for $20.4 million, due to settle in April 2018.

Board likes composition & quality

Mr Smith said the board was pleased with the overall improvement to the composition & quality of its $2.6 billion portfolio: “The progression of the development programme, selective asset sales & targeted acquisitions are all having a positive impact, refining the portfolio and positioning the trust for sustainable growth.”

Chief executive John Dakin said the portfolio which is now over 80% invested in “the rapidly growing & supply constrained” Auckland industrial sector.

“This investment focus reflects the positive return characteristics of industrial property and the stronger economic drivers of New Zealand’s largest city.

“Economic growth, demographic changes, technological advances & the development of online retailing are all contributing to the strong demand for logistics & warehouse space in Auckland.”

Mr Dakin said the sale of Central Park was a significant transaction for the trust: “It is the last of the planned major asset disposals and its successful conclusion would complete a substantial rebalancing of the portfolio, focusing investment in the Auckland industrial sector.”

He said the trust was also in a much stronger investment position following its asset sales, with gearing at 32.4%, well below the 50% maximum allowed under its debt & trust deed covenants.

The completion of the $100 million Goodman+Bond offer in May improved the trust’s liquidity & debt diversity, and at 30 September it had $260 million of undrawn bank facilities.

Assuming settlement of both conditional & unconditional sales, that gearing ratio will fall to 25.8% and the undrawn bank facilities will increase to over $500 million.

Assuming a stable business outlook, the trust expected to deliver full-year pretax operating earnings of about 9.1c/unit, cash earnings of about 7c/unit, and cash distributions totalling 6.65c/unit.

Attribution: Company release.

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Goodman settles Henderson purchase

The Goodman Property Trust has settled its $18.9 million acquisition of the Concourse Industry Park in Henderson.

The trust announced its purchase of the former Alloy Yachts premises & an adjoining industrial property on the corner of Selwood Rd & The Concourse, Henderson, last September.

The 2 former boatbuilding premises have about 22,120m² of high volume warehouse space & 1250m² of associated office.

Management company Goodman (NZ) Ltd’s chief executive, John Dakin, said last year the trust intended to amalgamate the 2 sites into a single 4ha estate: “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 [and it’s just opened].”

Mr Dakin said the vacant warehouse buildings would be refurbished & reconfigured. Fully leased, they were expected to generate a passing yield of about 7%. The estate also offered 2ha of further development opportunity.

Image above: Goodman’s map showing its Concourse site.

Earlier story:
15 September 2016: Goodman sells Christchurch package on top of Fanshawe St lease confirmation & Henderson project

Attribution: Company release.

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