Archive | Securities – overseas

Goodman & Canadian board ramp up their Chinese investment

Published 29 August 2018
Sydney-based Goodman Group and the Canada Pension Plan Investment Board (CPPIB) have lifted their investment in their Chinese logistics property partnership by 54% and given them the capacity to double the portfolio to 5 million m².

The duo committed an extra $US1.75 billion of equity to the Goodman China Logistics Partnership last week, increasing their total equity commitment to $US5 billion.

Both the new equity & total equity are on an 80:20 basis – the Canadian board adding $US1.4 billion to make its total investment $US4 billion, and Goodman adding $US350 million for a total $US1 billion.

They established the partnership in 2009, to invest in high quality logistics properties in prime locations around mainland China. The development-led strategy centred on major gateway cities, and the partnership has organically grown to a portfolio of 33 properties comprising 2.5 million m² of modern logistics space. Current occupancy is 99%.

Goodman’s Greater China chief executive, Kristoffer Harvey, said when the extra equity was announced last Thursday: “We currently have a number of acquisition opportunities in due diligence. The equity commitment increase provides us with significant firepower to capitalise on these & other opportunities. It also enables us to develop the partnership’s land bank and to grow the portfolio to more than 5 million m² in the medium term.”

Goodman Group chief executive Greg Goodman said: “With its growing middle class, significant e-commerce activity & rapid advancements in technology, China is a core growth area for our business. Our increased commitment alongside our long-term partner in CPPIB will provide sufficient equity to leverage opportunities in the market.”

The pension board’s head of real estate investments in Asia, Jimmy Phua, said: “The fundamentals of the Chinese logistics sector remain compelling, driven by domestic consumption growth in China, including e-commerce which underpins the strong demand for prime logistics facilities. CPPIB’s additional equity reflects the success of the partnership to date and an opportunity to expand our longstanding global partnership with Goodman.”

The pension board’s Asia Pacific head & senior managing director, Suyi Kim, said: “Since 2008, when we established a local Hong Kong office, Asia has been a key investment market for the board. With $C28 billion invested in China today, we are committed to further increasing our exposure over the long term. The board is well positioned as a strong investment partner in the Asia-Pacific region, given our long-term focus & our local team of experienced investment professionals.”

Links:
Goodman Group
Canada Pension Plan Investment Board
Goodman China Logistics Partnership

Attribution: Company release.

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World property W12Sept18 – zero emissions, student accommodation portfolio

GPT brings Australian office zero emissions target closer
Singaporean media-based company buys UK student accommodation portfolio

GPT brings Australian office zero emissions target closer

The GPT Wholesale Office Fund (GWOF) has set a target to achieve net zero carbon emissions from its $A7.5 billion office portfolio by the end of 2020.

Image above: Australia Square, Sydney.

That portfolio comprises 18 of the most notable office buildings in Sydney, Melbourne & Brisbane.

The Fifth Estate news website put the GPT decision in context: Other portfolio fund managers have set a range of dates to eliminate emissions, but this is the earliest target.

GPT also manages the $A4.9 billion GPT Wholesale Shopping Centre Fund.

Link: The Fifth Estate, 11 September 2018: The race is on: GPT flags net zero by 2020

Singaporean media-based company buys UK student accommodation portfolio

Unite Group plc, the UK’s leading manager & developer of student accommodation, said on Monday it had unconditionally exchanged contracts to sell 14 buildings to Singapore Press Holdings Ltd for £180.5 million, of which Unite’s share is £84.7 million.

10 of the properties are freehold, the other 4 leasehold.

The price reflects a net initial yield of 6.3% and is marginally below book value. Settlement is scheduled for this month.

The portfolio, comprising 3436 beds, is a combination of properties in Plymouth, Huddersfield, Sheffield, Birmingham, Bristol & London which are wholly owned by either of 2 funds. The sale means Unite will no longer have a presence in Plymouth or Huddersfield, but it said the efficiency & quality of its remaining portfolio had been enhanced.

Unite Students chief executive Richard Smith said the transaction was in line with Unite’s strategy to recycle capital through the disposal of assets with lower than average growth prospects, and reinvest into developments increasingly focusing on high- & mid-ranked universities, which have the best long-term growth prospects.

The group’s pro forma loan:value ratio will fall to 25% following the sale, providing capacity for the group to add further developments or university partnerships to its pipeline, while high & mid-ranked universities will account for 90% of the remaining portfolio.

Unite Students, founded in 1992, was the UK’s first private provider of purpose-built student accommodation.

Singapore Press Holdings chief executive Ng Yat Chung said: “The rising demand for purpose-built student accommodation is driven by an increase in first-year, international & postgraduate students enrolling for higher education in the UK. At the same time, in England, a record 27.9% of the 18-year-old population have been accepted for higher education this year, with enrolment projected to grow by 23% by 2030”.

It will boost our real estate asset management portfolio, establish us as an overseas owner of purpose-built student accommodation in the UK, and allow us to pursue other growth opportunities in this sector.”

Links:
Unite Students
Singapore Press Holdings

Attribution: GPT, The Fifth Estate, Unite Students, Singapore Press Holdings

Regular leads: Europe Real Estate, Mingtiandi, Planetizen

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Goodman Group holds course to lift profit 9%

ASX-listed industrial property specialist Goodman Group lifted its operating profit for the June year by 9% to $A845.9 million, and lifted operating earnings/share by 8.3% to A46.7c.

Goodman Group owns the NZX-listed Goodman Property Trust’s management company and is the cornerstone investor in the trust.

The Sydney-based group said in its announcement on Friday its statutory profit was up 41.1% to $A1.1 billion (A778 million).

Its forecasts for the 2019 financial year are for a 7.9% increase in operating profit to $A913 million and 7.1% increase in operating earnings/share to A50c.

The group has also increased its development work in progress, reduced its gearing and substantially increased its weighted average debt maturity.

Group chief executive Greg Goodman said: “This positive result reaffirms our long-term strategy to own, develop & manage high quality industrial properties in gateway cities around the world.

“The portfolio performance continued to be the key driver of the operational result, with property fundamentals steadily improving in the 2018 financial year. By having the right properties in the right locations to meet our customers’ needs, we have achieved like-for-like net property income growth of 3.2% & 98% occupancy across the portfolio, contributing to an increase in global valuations of $A2.8 billion.

“Our partnerships are continuing to deliver strong results, achieving an average total return of 15% for the year. External assets under management are also up 15% to $A35.1 billion, with total assets under management of $A38.3 billion, up 11%. Revaluations & net investment, predominantly through our development activity, will support further growth.”

Mr Goodman said advances in technology, the growth of e-commerce, changes in consumer behaviour & modernisation of supply chains remained significant drivers of customer demand globally.

“This continues to have a positive impact on our development workbook, with work in progress increasing to $3.6 billion. Having land in key locations is critical to providing the opportunity & flexibility for our customers to have modern facilities developed in a manner that is both timely & meets their own customer service standards. Goodman’s global development pipeline of over $A10 billion is concentrated in key markets and is designed to cater to that demand.

“Intensification of land use & competition for scarce sites from residential, e-commerce & data centres in urban locations continues to drive rents & land prices upwards. We will maintain our disciplined approach to investment, while being proactive with our customers in providing flexible solutions to cater to these changing market conditions.”

Financial highlights:

  • Operating profit, up 9% to $A845.9 million ($A776 million)
  • Operating earnings/share, up 8.3% to A46.7c (A43.1c)
  • Total distribution, up 8.1% to A28.0c/stapled security (A25.9c)
  • Net tangible assets/security, up 10% to $A4.64 ($A4.206)
  • Statutory profit, up 41.1% to $A1.1 billion ($A778.1 million)
  • Gearing, down 13.6% by strong cashflows to 5.1% (5.9%), lookthrough gearing at 16.3% & interest cover ratio of 16.2 times (9.5 times)
  • Weighted average debt maturity, 6.9 years (3.7 years)
  • Liability management exercises have lowered weighted average cost of debt to 2.4%, with $A3.4 billion of liquidity available at 30 June, predominantly in cash.

Operational highlights:

  • Total assets under management, up 10.7% to $A38.3 billion ($A34.6 billion)
  • External assets under management, up 15.1% to $A35.1 billion ($A30.5 billion), driven by valuation increases and development completions
  • Valuation uplift of $A2.8 billion across the group & partnerships
  • Continued strength in property fundamentals resulting in occupancy at 98%, weighted average lease expiry of 4.8 years, net property income growth of 3.2%
  • Development work in progress, up 2.9% to $A3.6 billion ($A3.5 billion) across 80 projects in 12 countries with a forecast yield on cost of 7.2%
  • Partnership average total return, 15%

The group had $A3.4 billion in cash & available lines of credit at 30 June, while the partnerships had $A12.1 billion of liquidity available to participate in future growth opportunities.

Link:
Full detail

Attribution: Company release.

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Greenland & Golden Horse start 1400-apartment job on old Goodman industrial site

Chinese state-owned developer Greenland Group & Golden Horse Group of Hong Kong turned the first sod on Thursday for a 6.9ha 1400-apartment joint-venture project at Erskineville in Sydney’s inner-west, on a former industrial site which Goodman Group sold to Golden Horse in 2014.

Construction partner for stage 1 of the Park Sydney development is local family-owned builder Richard Crookes Constructions Pty Ltd, which has worked on several Greenland projects.

Image above: Park Sydney masterplan, highlighting amenities.

The masterplanned residential community will be developed in 5 stages and will ultimately feature 9 development blocks ranging in height from 2-8 storeys.

Park Sydney, 4km from Sydney’s cbd, will have a 7446m² public park, a supermarket & specialty shops, a fresh food precinct, eat street, medical centre & childcare centre.

Greenland Australia managing director Sherwood Luo said: “Together with Golden Horse Australia, we’ve been planning Park Sydney since 2016, so it’s particularly exciting to see major projects of this scale starting to take shape and watching how they transform the local area.

“We are converting this large former industrial precinct into an engaging & inclusive residential community that will ultimately become home to some 3000 residents.”

The value to Goodman of its exit

Golden Horse Group expanded into Australia in 2013 and bought the former industrial site in Erskineville from Goodman Group the next year. For Goodman (owner of NZX-listed Goodman Property Trust’s management company & cornerstone investor in the trust), that deal was among many as the group sold $A1.9 billion of mostly industrial assets in a year, and reinvested the lot to generate higher development returns.

Builder with long list of staff support programmes

On a different tack, the builder on this project has a lot to say about how it treats its staff – an eye-opener at a time the New Zealand construction sector has been grumbling about contract arrangements, and this government (like the last one) is talking about increasing training for & numbers in the construction industry.

Richard Crookes Constructions says on its careers page: “RCC believes the success of every project depends on the ability of their personnel and the synergy of the project teams… RCC’s business is based on maintaining long-term relationships with clients, partners & subcontractors.”

It also lists a number of staff-supporting views that I’m sure would be novelties if espoused in New Zealand:

  • We build a talent pipeline
  • We expect our staff to engage in the business and be part of its success, growth & evolution. In return we invest in their growth & development. We give people autonomy, support & the resources they need to perform at their best
  • We maintain a flat management structure with an open door policy and an honest & collaborative culture
  • Fitness passport gives individuals & families access to multiple facilities (gyms, swimming pools) which allows you to go as often as you like
  • Exercise incentives, health assessments, mindfit programme, access to trainers, $A100 annual rebate & annual flu vaccinations
  • RCC offers corporate rates with BUPA to all employees in an effort to encourage healthy lifestyles
  • Every employee receives one day off every 6 months – employees are encouraged to use the leave for engaging in health & wellbeing activities, spending time with family & friends or to relax
  • Each employee has the ability to purchase an additional 2 weeks of annual leave/year
  • Maternity & paternity leave is offered when members of the RCC family start or expand their own families
  • We would like your salary to work as hard as possible; for this reason, we offer salary packaging options such as novated leases (a lease arrangement, usually for a vehicle, where the employer takes on the obligations of the lessee to the financier, which ceases if the employee leaves the job)
  • Our staff can access a range of discounts from partnering retailers
  • RCC has a financial advisor in-house who is available to meet with staff one on one
  • We believe in & support females at RCC; one of the programme offerings is our women’s leadership lunch & learns
  • We offer an array of learning & development for our employees through coaching sessions, formal mentoring programmes, external training, role-specific technical training & leadership development programmes across all levels.

Links:
Park Sydney
Greenland Australia
Golden Horse Australia
Richard Crookes Constructions

Earlier story:
17 August 2015: Urban renewal lifts Goodman Group

Attribution: Joint venture release, Greenland, Golden Horse & Richard Crookes websites.

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Goodman Group sets up Brazilian logistics investment partnership

ASX-listed Goodman Group, which manages the Goodman Property Trust in New Zealand, has established a $US700 million ($NZ1 billion) Brazilian logistics partnership to invest in Sao Paulo & Rio de Janeiro.

One of those projects is Goodman’s proposed 27,000m² flagship development 20km from São Paulo, provisionally named ABCD1 (pictured), near 2 highways & the Mario Covas ring road, providing easy access to Santos Port, the largest port in Latin America.

Goodman Brazil chief executive Cesar Nasser said on Wednesday the Goodman Brazil Logistics Partnership would invest in prime logistics & industrial assets in the 2 gateway cities, starting with a $US250 million investment in existing assets & work in progress.

He said the partnership would allow Goodman to invest alongside its global capital partners, the Dutch pension funds manager APG Group NV, the Canada Pension Plan Investment Board, First State Super of Australia and the Singaporean sovereign wealth fund GIC Pte Ltd, who shared the same investment horizon & confidence in the Brazilian market.

“The partnership has been established with about $US270 million (1 billion real, $NZ390 million) of existing assets & work in progress that can be developed to deliver over 1 million m² of high quality logistics space. With the Brazilian market experiencing under-supply of modern, high quality space, we have an opportunity to expand our global platform in Brazil for the benefit of our customers.”

Goodman Group entered the Brazilian property market in 2012, owning, developing & managing modern high quality logistics & industrial properties.

The group has built up a $US28.3 billion global operating platform of 375 properties in 16 countries. It has 17.3 million m² under management.

Links:
APG Group
Canada Pension Plan Investment Board (CPPIB)
First State Super
GIC

Attribution: Company release.

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2 new Blackstone funds have $US9.4 billion to invest in Asia

US fund manager Blackstone Group LP closed investment in 2 Asian funds this week – its first Asian private equity fund, Blackstone Capital Partners Asia, on Tuesday, and its second Asian opportunistic real estate fund, Blackstone Real Estate Partners Asia II, on Wednesday.

At $US2.3 billion, the private equity fund is comparatively small – the real estate fund has $US7.1 billion of capital commitments. But the whole of Blackstone’s private equity business has $US111 billion of assets under management.

Coupled with associated commitments from its global buyout fund, Blackstone’s capital partners fund has a minimum of $US3.8 billion of equity to invest in Asia.

Blackstone’s global head of private equity, Joe Baratta, said: “The region continues to experience strong growth compared to other major markets, presenting compelling investment opportunities across sectors.”

Blackstone Real Estate global co-head Ken Caplan said the real estate fund was the largest it had ever dedicated to real estate investing in Asia. He said it gave Blackstone flexibility to pursue a range of opportunities and commit capital with speed & scale.

Blackstone’s real estate business has about $US120 billion in investor capital under management. Its portfolio includes hotel, office, retail, industrial & residential properties in the US, Europe, Asia & Latin America. It also operates a real estate finance platform, including management of the publicly traded Blackstone Mortgage Trust.

Link: Blackstone Group

Earlier stories:
18 May 2018: Goodman & Singapore fund sell VXV portfolio to Blackstone
2 February 2018: Blackstone’s Arena Living buys Mt Eden Gardens
17 February 2016: Blackstone buys Lendlease’s NZ retirement villages

Attribution: Company releases.

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Unibail-Rodamco completes Westfield deal

Unibail-Rodamco SE completed the acquisition of Westfield Corp Ltd at the end of last week to create an owner of 102 shopping centres in 13 countries – including some offices & convention spaces, a €62 billion ($NZ104 billion) portfolio.

It doesn’t include the former Westfield mall assets in Australia & New Zealand, moved to the Scentre Group in 2014.

The enlarged mall-owning entity based in Amsterdam & Paris, Unibail-Rodamco-Westfield, describes itself as “the premier global developer & operator of flagship shopping destinations”.

88% of its portfolio is in retail, 7% in offices and 6% in convention & exhibition venues. 56 of its malls are flagships in Europe & the US.

Links:
UnibailRodamco
Westfield

Earlier stories:

25 May 2018: One last step for UnibailRodamco takeover of Westfield
13 December 2017: Unibail-Rodamco strikes deal to buy Westfield

Attribution: Company release.

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One last step for UnibailRodamco takeover of Westfield

Westfield Corp Ltd securityholders voted overwhelmingly on Thursday to approve the mall owner’s acquisition by UnibailRodamco SE and the demerger of OneMarket Ltd.

The vote to proceed won support from 97.55% of shares, 93.85% of securityholders. UnibailRodamco shareholders voted 95% in favour on 17 May.

The whole process is due to culminate in implementation of the takeover on Thursday 7 June, but the deal remains subject to final court approval of the acquisition scheme of arrangement. That’s due back in the New South Wales Supreme Court next Tuesday, and the entire deal is scheduled to go through in Australia on Wednesday.

Unibail-Rodamco will acquire all Westfield’s securities for $US2.67 cash plus 0.01844 new Unibail-Rodamco stapled shares per Westfield security, which by default are to be issued in the form of Unibail-Rodamco-Westfield CDIs (Chess depositary interests), listed on the Australian Securities Exchange, and will be fully exchangeable with the new group’s stapled securities listed in Amsterdam & Paris.

Westfield will simultaneously demerge retail technology offshoot OneMarket Ltd on the basis of one OneMarket share for every 20 Westfield securities held.

Trading in the new CDIs will open on the ASX next Thursday, and trading in OneMarket shares will open on a deferred settlement basis on Thursday.

Westfield Corp has its headquarters in Sydney but all its 35 malls, worth $A35 billion, are in the US & UK. When Westfield Group split in 2014, the Australia-New Zealand part of it went into SCentre Group Ltd. That’s outside this deal.

Unibail-Rodamco & a newly created Dutch real estate investment trust (reit) holding Westfield’s US operations will become stapled entities.

Adding Westfield’s $A35 billion portfolio to UnibailRomdamco’s €43 billion gives a portfolio value of $NZ110 billion. UnibailRomdamco has 67 malls, plus 13 office buildings and 11 convention & exhibition centres totalling 4.6 million m² of gross lettable area.

Image above: Westfield’s 175,000m² Stratford City mall, which is also to have 1200 apartments. In the background is London Stadium, built for the 2012 Olympics and now home to West Ham United football club.

Links:
UnibailRodamco
Westfield

Earlier story:
13 December 2017: Unibail-Rodamco strikes deal to buy Westfield

Attribution: Company releases.

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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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Singapore reit manager ARA buys 19.5% Cromwell stake

Singapore-based real estate fund manager ARA Asset Management Ltd has agreed to buy the bulk of a 23% stake in ASX-listed Cromwell Property Group from a Johannesburg investor, Redefine Properties Ltd.

The transaction is subject to approval of the Australian Foreign Investment Review Board.

Cromwell manages $A11.2 billion of assets and operates in Australia, New Zealand & 10 European countries. In New Zealand, Cromwell owns 50% of syndicator & funds manager Oyster Property Group Ltd.

ARA has agreed to buy 19.5% of Cromwell for $A405.87 million at $A1.05/share, leaving Redefine with 3.06% of the Australian company.

Redefine chief executive Andrew Konig said: “For us, it is about optimising capital efficiency while still benefiting from future distributions & the redevelopment of certain quality assets in Australia.”

ARA manages $S40 billion of assets and recently embarked n a global expansion programme, establishing platforms in Europe & Japan.

Chief executive John Lim said: “Asia Pacific remains a focus for ARA even as the company expands its footprint globally. We entered Australia in 2015 and have been steadily increasing our investments in the market over the last 3 years. Australia continues to offer strong investment & capital-raising opportunities to support the growth of our funds platforms.

“We are attracted to the strength & depth of Cromwell’s platforms, track record of pursuing value-enhancing real estate strategies & strong corporate governance.”

ARA is one of the largest real estate investment trust managers in Asia ex-Japan, managing 5 listed reits – Fortune, dual-listed in Singapore & Hong Kong; Suntec & Cache Logistics Trust, listed in Singapore; and Hui Xian & Prosperity, listed in Hong Kong. The group also manages 6 privately held reits in South Korea and 9 private funds investing in Asian real estate, and provides property management services and convention & exhibition services, including managing the Suntec Singapore Convention & Exhibition Centre.

Links:
ARA Asset Management
Redefine

Attribution: Cromwell, ARA, Redefine, Mingtiandi, Straits Times.

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