Archive | Goodman Property Trust

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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Goodman-GIC joint venture settles Bayleys House purchase

The joint venture between the NZX-listed Goodman Property Trust & Singapore sovereign wealth fund GIC Pte Ltd has settled its $62.3 million purchase of Bayleys House in the Wynyard Quarter.

The deal was announced on 12 May.

The acquisition of Bayleys House and the $86.2 million purchase of the neighbouring Datacom Building, which settled in May, take joint venture company Wynyard Precinct Holdings Ltd’s portfolio to 7 buildings worth over $470 million.

The 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.

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%.

Earlier story:
14 May 2017: Goodman-GIC joint venture adds Bayleys House to portfolio

Attribution: Company release.

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Whole $100 million of Goodman bonds taken up

Subscribers have taken up the whole $100 million of Goodman+Bonds in the Goodman Property Trust’s issue of 7-year fixed-rate senior secured bonds, which closed on Friday.

Goodman offered $75 million of bonds, with the ability to accept up to $25 million in oversubscriptions.

The interest rate was set at 4.54%/year, reflecting a margin of 1.55%/year over the underlying 7-year swap rate.

Trading in the bonds will open on the NZX Debt Market on Thursday 1 June. They’re expected to have an investment grade issue credit rating of BBB+ from Standard & Poor’s. The Goodman trust’s current corporate credit rating is BBB.

Earlier story:
21 May 2017: Goodman opens 75+25 bond issue

Attribution: Trust release.

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Goodman gives steer on development direction after solid year

The Goodman Property Trust’s net annual earnings dropped both before & after tax in the year to March, the result of a smaller fair-value gain on its portfolio.

[In my story on Friday, after a cursory look at the results, I wrote that pretax returns were “steady”. This article gives you a better look at performance.]

The trust’s investment portfolio made a $145.8 million fair-value gain last year, but that input dropped 21.3% to $114.7 million this year.

The 6.7% valuation gain in 2016 was a record, and the 2017 gain was 5.4%, lifting the investment portfolio 1.3% to $2.326 billion ($2.297 billion).

Pretax net profit fell 11.1% to $220.5 million ($247.9 million in 2016) and, after tax, it fell 8.3% to $213.8 million ($233.1 million).

Operating earnings rose 4% pretax to $121.7 million ($117 million) and, after tax, rose 8.1% to $106 million ($98.1 million).

Operating earnings/unit rose 1.1% to 9.51c (9.41c) pretax and 5.1% after tax to 8.28c (7.88c).

Net tangible assets rose 8.3% to 130.4c/unit (120.4c), the loan:value ratio was reduced by 10.6% to 29.3% (32.8%) and the look-through loan:value ratio was reduced to 30.6% (33.9%). The management expense ratio was trimmed by 6.4% to 0.44% (0.47%).

Management company Goodman (NZ) Ltd’s chair, Keith Smith, said on Thursday the most important features of the 2017 operating performance were the refinements to the portfolio and realisation of longer-term strategic objectives.

“The progression of the development programme, significant asset sales & selective acquisitions are all having a positive impact on the trust, lifting the quality of the portfolio and adding to its financial strength.”

Chief executive John Dakin said: “With more than $535 million of new projects since 2012, the trust’s development programme is transforming the portfolio. Funded through asset sales, it is a sustainable business activity that is investing in the latest building technologies in some of Auckland’s best locations.

“The increasing capital allocation to the Auckland industrial sector is a deliberate strategy that reflects the strong growth profile of the city and the positive investment characteristics of industrial property. It also positions the trust to benefit from the increasing demand for logistics space as a result of e-commerce.

“Online shopping is increasing the requirement for distribution warehousing in many global markets. It’s an emerging trend that is also adding to the attractiveness of industrial property as an investment class.”

Refining the portfolio

The trust managers secured 154,000m² of new customer lease commitments, representing 16% of the total rentable area, in the last 12 months, increasing the occupancy rate from 97% to 98% and extending the weighted average lease term from 5.7 to 5.8 years.

Mr Dakin said sustained customer demand was also facilitating an intensification of the trust’s development programme: “The trust has been able to accelerate the build-out of its land bank in recent years. With Highbrook Business Park now more than 75% complete, we have made substantial progress in the trust’s development programme.”

Completion of current projects will increase the trust’s investment in the preferred Auckland industrial & business park sector to 77% of total property assets and reduce its land weighting to just 7%.

Mr Smith said: “These favourable operating conditions are expected to continue over the short to medium term and the board believes the existing strategy, with its focus on portfolio quality & development-led growth, remains appropriate.”

Goodman is forecasting 9.0c/unit pretax operating earnings for the 2018 financial year. The reduction from this year’s 9.51c reflected the impact of asset sales & balance sheet deleveraging. Mr Smith said the trust should maintain cash distributions at 6.65c/unit.

Link: Goodman Property Trust annual report

Earlier story:
19 May 2017: Goodman profit steady

Attribution: Trust annual report, release.

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Goodman opens 75+25 bond issue

Goodman Property Trust opened a $75 million bond issue on Thursday, with the ability to accept up to $25 million in oversubscriptions.

The 7-year fixed-rate senior secured Goodman+Bonds will have a maturity date of 31 May 2024 and are expected to have an investment grade issue credit rating of BBB+ from Standard & Poor’s. The Goodman trust’s current corporate credit rating is BBB.

The indicative issue margin range is 1.55-1.70%/year. The issue margin & interest rate will be set following a bookbuild process on Friday 26 May. The bonds are expected to be issued on 31 May.

Attribution: Trust release.

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