The Goodman Property Trust’s manager, Goodman (NZ) Ltd, said last week it expects the trust’s interim financial result to 30 September will include a revaluation of about $170 million.
It was one facet in a flurry of positive news for the NZX-listed industrial property trust.
Goodman (NZ) chief executive John Dakin also outlined 5 new projects expected to generate $4.6 million of annual rental income.
A $150 million placement to support development was announced last Wednesday and closed fully subscribed on Thursday.
Details will go to unitholders this Thursday for a retail offer to raise $15 million of new equity – and up to $10 million more in oversubscriptions – at $2.10/unit, the same price as the placement. NZ-resident unitholders will be able to subscribe for up to $50,000 of new units.
The closing date for retail offer applications is 18 October and the new units are expected to be allotted around 24 October.
The revaluation includes a change in value of the leasehold right of use asset, net of lease liability, at the Westney Industry Park in Mangere.
The expected valuation gain of over 6% would lift the value of the portfolio above $2.8 billion and add about 13c/unit to the trust’s net tangible asset backing of 157c/unit at 31 March.
Vacancy falls below 2%, rents up 5.6%
In its placement presentation, Goodman said the Auckland industrial property market was nearing capacity as its vacancy rate fell to just 1.9%. Along with that tightening of space, JLL said prime industrial rents had grown by 5.6% in the year to June.
Mr Dakin said: “Strong real estate fundamentals across the Auckland industrial market, including historically low vacancy rates & new rental benchmarks, have contributed to the forecast gain. Lower interest rates over the last 6 months have also fuelled investor demand for prime assets. It’s a continuation of the positive trends that have driven Goodman’s strong operating results & record profits over the last 5 years.”
Mr Dakin said the capitalisation rate across the portfolio had strengthened by about 30 basis points to 5.4% on a like-for-like basis since March.
The revaluation remains subject to completion of the independent property valuations & finalisation of the trust’s interim financial statements. Goodman will announce its interim result on 14 November.
The 5 new industrial developments
The 5 new industrial developments have a total project cost of $74.9 million. They’re expected to generate $4.6 million/year rental income once fully leased & income-producing. Goodman will develop them on the build-to-lease basis which it’s successfully used before.
Mr Dakin said: “Historically low vacancy levels & a lack of appropriately zoned development land means the Auckland industrial market is supply constrained. Businesses are at capacity, and those that require additional warehouse & logistics space have very few options. The Goodman trust’s own portfolio is full and, with no vacant warehouses available, these new build-to-lease projects will provide much-needed new supply.”
- Highbrook Business Park, East Tamaki, Island units – a 7-unit development providing 4265m² of warehouse/showroom space on Underwood St & Business Parade South
- Highbrook, Waiouru Point – overlooking the Tamaki River on Waiouru Rd, the adjoining developments will provide a combined 4359m² of office & warehouse space
- Manukau, M20 Business Park, Plunket Rd – positioned at the front of the business park, the development includes a 9130m² warehouse with 500m² of office
- Mangere, Westney Industry Park, Timberley Rd – 4970m² of warehouse & office
- Westney, 68 Westney Rd – 3377m² warehouse extension to an existing facility.
Highbrook will be 90% developed
Goodman has $140.7 million of projects underway, so these 5 new projects will take the total underway to $215 million, mostly at Highbrook.
On completion of current projects, Highbrook will be over 90% developed, with a value in excess of $1.5 billion.
Mr Dakin said: “We’ve made rapid progress with the development programme in recent years, with more than $780 million of new project commencements since 2014. It’s added to the quality of the portfolio and contributed to the record profits achieved by the trust. Following completion of all current projects, the trust’s development land weighting is expected to reduce to less than 2% of portfolio value.
“The development programme has always included a combination of design-build & build-to-lease projects. It’s a proven strategy, with the 15 warehouses developed on an uncommitted basis last year being leased either before completion or shortly after.
“Including the new projects, the trust has 50,664m² of uncommitted space now under development. This represents just 4.5% of the trust’s total portfolio.
“These new facilities will provide customers with another option for their space requirements. They are of a size & design that is likely to appeal to a wide range of occupiers and we expect them to lease quickly.”
Attribution: Company release.