Tag Archives | Goodman

Fair value turnaround disguises similarity of Goodman half-year earnings as trust sets up new development pipeline

A turnaround in fair value gains lifted the Goodman Property Trust’s half-year profit 47% above the interim result a year earlier.

The trust made $66.4 million pretax ($45.3 million a year earlier) in the September half, including $16.8 million in fair value gains on certain investment properties.

In the September 2017 half, the trust had a fair value loss of $8.4 million, principally from a $12.7 million deduction in land value (no change this time) & $5.4 million deduction for stabilised properties (also no change this time). The difference was a $25.2 million turnaround for September 2018.

The valuation effect contributed heavily to the 50.1% after-tax profit rise to $59.3 million ($39.5 million in 2017), but in terms of adjusted operating earnings the 2 years were very similar – up 0.5% this year to $60.1 million ($59.8 million) pretax, up 0.6% to $51.7 million ($51.4 million) after tax, in both years representing 4c/unit.

Cash earnings/unit rose 2.3% to 3.61c (3.53c). Cash earnings is a non-GAAP financial measure that assesses free cashflow/unit after adjusting for borrowing costs capitalised to land and expenditure related to building maintenance.

The big change this time round that will have a strong bearing on future performance is the reduction in debt, from $836 million representing a 32.4% loan:value ratio, to $406 million, representing a ratio of only 17.5%.

The trust had strong operating results – portfolio occupancy 98.4% & a weighted average lease term of 5.5 years.

It also had $210 million of development work in progress, and expects to start another $75-100 million of new projects this financial year. Committed gearing will still be only 25.8%.

The chair of trust manager Goodman (NZ) Ltd, Keith Smith, said in announcing the result last week: “The focus on Auckland industrial property [now 99% of the portfolio] is contributing to strong financial results and positioning the trust for sustainable growth over the long term.”

Chief executive John Dakin said underlying economic drivers remained strong and customer demand for high quality industrial property continued to exceed supply.

Goodman has $210 million of development projects scheduled for completion over the next 8 months, with over 50% lease commitment, expected to rise to 70% as deals already well progressed are concluded.

Mr Dakin said the low gearing would give the trust greater financial flexibility. The priority is to reinvest, completing development of the trust’s remaining 22ha of landholdings.

In addition, Goodman wants to replenish its development pipeline with acquisitions that offer longer-term opportunity through intensification of use or redevelopment, starting with its $93 million purchase of the Foodstuffs distribution centre at Roma Rd in Mt Roskill, located at the northern end of State Highway 20 near the Waterview Tunnel.

“The population within a 20-minute delivery truck radius is estimated to be almost 700,000 people. With warehouse space already supply constrained, the surrounding consumer catchment makes this an ideal location for fulfilment & logistics companies.”

Links:
Interim report
Investor briefing presentation

Attribution: Company release.

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Goodman settles Mt Roskill acquisition

The Goodman Property Trust has settled its $93 million purchase of Foodstuffs (North Island) Ltd’s distribution centre in Mt Roskill.

The 13.1ha property at 58-60 Roma Rd has 36,977m² of warehouse & office space, plus yard & parking areas.

Goodman has acquired the distribution centre on a leaseback arrangement and will refurbish & reconfigure the facilities when Foodstuffs’ lease expires in 2021.

Site coverage of less than 30% & a light industrial zoning offer the longer-term opportunity through intensification of use or redevelopment that Goodman has specialised in.

Earlier story:
12 September 2018: Goodman buys Foodstuffs centre for future intensification

Attribution: Company release.

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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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Goodman buys Foodstuffs centre for future intensification

The Goodman Property Trust has bought Foodstuffs (North Island) Ltd’s distribution centre in Mt Roskill for $93 million.

The unconditional acquisition, which reflects a passing yield of about 5%, is expected to settle next month.

Goodman has acquired the distribution centre on a leaseback arrangement and will refurbish & reconfigure the facilities when Foodstuffs’ lease expires in 2021. It has site coverage of less than 30% & a light industrial zoning, thus offering the longer-term opportunity through intensification of use or redevelopment that Goodman has specialised in.

Located at 58-60 Roma Rd, the 13.1ha property has 36,977m² of warehouse & office space, plus yard & parking areas.

John Dakin, chief executive of the trust’s manager, Goodman (NZ) Ltd, said today: “Acquiring this asset extends our investment in the buoyant Auckland industrial market. The size of the property and the strategic location make it one of the city’s best industrial opportunities.”

The property is near the Waterview tunnel in Mt Roskill and offers direct access to the motorway systems north, south & west. It’s at the northern end of State Highway 20, still near the central city & port, and Mr Dakin said it would complement Goodman’s existing portfolio, which is predominantly in South Auckland.

“The population within a 20-minute delivery truck radius is estimated to be almost 700,000 people. With purchasing power of $21.3 billion, the surrounding consumer catchment makes it the ideal location for fulfilment [getting goods from warehouse to the customer] & logistics companies.

“With warehouse & logistics space already supply constrained, the growth of the city and the expansion of e-commerce is expected to drive future demand in this location.”

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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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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