Sunday, February 25, 2024

GMT delivers interim pre-tax profit of $570m

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An artist’s impression of the new development for New Zealand Blood and Organ Service in Highbrook. Photo supplied

Goodman Property Trust (GMT), New Zealand’s leading warehouse and logistics space provider which owns Highbrook Business Park, has reported a profit of $570 million before tax for the six months to September 30, compared to $186.4m previously.

The latest half-year figures include investment property valuation gains of $504.7m ($140.2m previously).

Chair of Goodman (NZ) Keith Smith, said the first six months of FY22 have been positive for GMT, with strong customer demand continuing despite the reintroduction of Covid-19 alert level restrictions.

“While the (Goodman) Trust has recorded a substantial increase in profit, it has been the resilience of the business and the strength of the underlying operating result that have been the most pleasing aspects of the year to date,” said Smith.

Significant new leasing, high occupancy levels, sustained rental growth, further development progress and strategic acquisitions have all contributed to the 7.5 per cent increase in operating earnings before tax to $60.2m.

CEO John Dakin said with its $4.3 billion industrial property portfolio exclusively invested in Auckland’s urban logistics market, GMT is benefitting from a heightened level of customer demand for well-located warehouse and logistics facilities.

Supported by a rapidly growing digital economy and other structural changes, demand for distribution space close to consumers is exceeding supply in many locations across the city.

The growth in e-commerce has accelerated with Covid-19, as consumers increasingly choose the safety and convenience of online shopping and contactless delivery.

“These positive market dynamics are expected to continue, and the board has reaffirmed its full year guidance. cash earnings of at least 6.5 cents per unit are forecast and cash distributions totalling 5.5 cents per unit are expected to be paid,” Dakin said.

“Businesses are adapting to a growing online marketplace with many incorporating e-commerce fulfilment functions into existing warehouse operations. Disruption in global supply chains is also forcing local businesses to maintain higher inventory levels, creating additional demand for warehouse space.”

GMT’s recent leasing results reflect these trends, with 133,897 sqm of existing space (13.2 per cent of the stabilised portfolio) secured on new or revised terms since March 31 this year. The increased demand is also contributing to significant growth in rental income, with 5.1 per cent average annual growth on a like-for-like basis.

At September 30, 2021, the portfolio had an occupancy rate of almost 100 per cent and a weighted average lease term of more than five years.

As to sustainable development-led growth, the strong leasing market has also been positive for the Trust’s development programme.

GMT has more than $350 million of development work underway across 10 projects. Encompassing more than 87,000 sqm, the new facilities are expected to generate around $19.4m of annual rental income once completed.

“With the development workbook almost 80 per cent committed and with good levels of new enquiry, the strength in demand from warehouse and logistics customers indicates their confidence about the future,” Dakin said.

GMT’s development capability has been an important contributor to its growth, with around 90 per cent of the core portfolio developed since 2004.

“These new facilities have provided high-quality property solutions for customers and generated strong investment returns,” Dakin said.

The trust’s development pipeline has been extended with the conditional acquisition of 34 hectares of light industrial zoned development land in Māngere.

Adjoining the Villa Maria winery, and close to the airport and other freight and transport infrastructure, the $75m acquisition is expected to support the development of up to 120,000 sqm of new warehouse and logistics space over time.

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