GMT’s Auckland industrial strategy delivers $220.5m pre-tax profit

A recently completed office building at The Crossing, Highbrook Business Park owned by Goodman Property Trust. Photo supplied

Goodman Property Trust (GMT), the stock exchange-listed company which owns Highbrook Business Park, has reported its 2017 annual result, recording a net profit after tax (npat) of $213.8 million.

The result is 8.3 per cent lower than the npat of $233m at the same time last year due to a strong but reduced property revaluation the previous year.

Although GMT recorded a strong portfolio revaluation of $114.7m, it was less that the record revaluation gain of $145.8m last year.

Chief executive officer John Dakin said that with operating earnings up $4.7m to $121.7m, it’s a strong result for the real estate investment trust company.

“A positive portfolio revaluation of $114.7 m was less than the record $145.8 m achieved last year meaning (pre-tax) profit was lower but still a substantial $220.5m, the second highest profit reported by the trust,” Mr Dakin said.

Chairman and independent director Keith Smith, said the progression of the development programme, significant asset sales and selective acquisitions are all having a positive impact on GMT, lifting the quality of the portfolio and adding to its financial strength.”

GMT has $2.4 billion of industrial park, business park and office properties located mostly in Auckland. Its main asset is the Highbrook Business Park where it has a substantial land holding for future development.

Goodman Property Trust’s chief executive officer John Dakin. Photo supplied

They said the benefits of a high quality property portfolio and an investment strategy focused on the Auckland industrial market continues delivering impressive financial results for Goodman Property Trust.

“With more than $535m of new projects completed since 2012, GMT’s development programme is transforming the portfolio and delivering essential business infrastructure into a growing city,” said Mr Dakin.

The increasing capital allocation to the Auckland industrial sector, currently 77 per cent of GMT’s $2.4b property portfolio, is a deliberate strategy that reflects the strong growth profile of the city and the positive investment characteristics of modern industrial property.

It also positions GMT to benefit from the increasing demand for logistics space as a result of e-commerce.

“GMT has continued to take advantage of the buoyant investment market with asset sales of $278.8 million during the year,” he said.

“Strong investor demand has also contributed to a portfolio revaluation of more than 5 per cent, or $114.7 million.”

At March 31, 2017 GMT’s look through loan to value ratio was just 30.6 per cent, a reduction from 33.9 per cent last year.

“With significant balance sheet capacity and only partly-drawn debt facilities, GMT has the necessary liquidity to fund all its current development objectives,” said Mr Dakin.

Meanwhile Mr Smith said capital management and treasury initiatives have made the business more resilient. “An extension to the Goodman+Bond programme, with a new offer of 7 year bonds launched yesterday, will further improve the capital structure of the Trust,” he said.

“Positive operating conditions are expected to continue over the short-to-medium term and the board believes that the current strategy, with its focus on portfolio quality and development-led growth, remains appropriate.”

The progression of the trust’s development programme is expected to support underlying cash earnings in 2018, consistent with the prior year. Distributions will be maintained at 6.65 cents per unit.