Goodman Property Trust (GMT), the NZX-listed industrial and office property owner, has continued to take advantage of the positive business environment and has delivered a half-year result consistent with earlier guidance.
Goodman (NZ), the manager of GMT, today announced profit after tax of $39.5 million in its interim result for the six months ended September 30 compared to $67.6m previously.
The group, which owns Highbrook Business Park, said the main variance is driven by the recognition of $8.4m of fair value losses on certain investment properties in this period, compared to gains of $19.8m last year.
It announced operating earnings after tax of $51.4m compared to $51m in the previous corresponding period..
Financial and operational highlights include:
- Operating earnings after tax of $51.4m or 4 cents per unit on a weighted average unit basis, compared to $51m in the previous corresponding period.
- Cash distributions of 3.325 cents per unit, relating to the first six months, representing around 94 per cent of cash earnings.
- Profit after tax of $39.5m compared to $67.6m previously. The main variance is driven by the recognition of $8.4m of fair value losses on certain investment properties in this period, compared to gains of $19.8m last year.
- Strong leasing with over 70,000 sqm of space secured on new or extended terms. Portfolio occupancy of 97 per cent and an average lease term of 5.8 years.
- The commencement of six new development projects with a total project cost of $148.7m and yield on additional spend of 8.3 per cent.
- Further sales success with $229.4m of assets contracted for sale following the trust’s interim balance date.
Improving the business
Keith Smith, chairman of Goodman (NZ) said: “The board is extremely pleased with the results achieved and the improvements being made to the composition and quality of the trust’s $2.6 billion property portfolio.”
The progression of the development programme, selective asset sales and targeted acquisitions are all having a positive impact, refining the portfolio and positioning GMT for sustainable growth.
CEO John Dakin said: “Development and transactional activity are rebalancing and repositioning the portfolio which is now over 80 per cent invested in the rapidly growing and 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.”
Further information on the financial result is provided in the trust’s interim report. The report was released today and is available from a link on the trust’s website at: www.goodman.com/nz.
Development and transaction activity raising asset quality
“Economic growth, demographic changes, technological advances and the development of online retailing, are all contributing to the strong demand for logistics and warehouse space in Auckland,” Dakin said.
The buoyant operating conditions are reflected in GMT’s leasing results with more than 70,000 sqm of space secured on new or extended terms since March 31.
“To meet current and forecast demand the trust is also undertaking a greater level of development activity,” Dakin said.
“Six substantial new industrial projects, with a total project cost of almost $150m, have been announced already this financial year. This volume of new starts is the highest it’s been since 2008.”
Asset sales are facilitating the current investment strategy, providing balance sheet capacity to fund the intensification of the trust’s development programme.
Two further sales were secured following the interim balance date. They include:
- the conditional sale of Central Park Corporate Centre for $209 million.
- the recently completed Steel & Tube development in Hornby, Christchurch for $20.4 million. The unconditional sale is due to settle in April 2018.
“The sale of Central Park is 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,” Dakin said.
With a stable business outlook, the trust is expected to deliver full year operating earnings of around 9.1 cents per unit before tax.
Cash earnings of around 7 cents per unit are forecast for the year, with cash distributions totalling 6.65 cents per unit expected to be paid.