GMT
12/11/2014 08:52
HALFYR
REL: 0852 HRS Goodman Property Trust
HALFYR: GMT: GMT Delivering on Strategy
Goodman (NZ) Limited, the manager of Goodman Property Trust ("GMT" or
"Trust") is pleased to announce the Trust's interim result for the six months
ended 30 September 2014.
Additional revenue from completed development projects, a lift in portfolio
occupancy and modest rental growth, together with fair value gains on certain
property assets have been the main contributors to the Trust's strong
financial performance.
Financial and operational highlights include:
? A 4.9% increase in net rental and related income to $66.2 million.
? Distributable earnings before tax of $55.5 million or 4.53 cents per unit
on a weighted average issued unit basis, compared to 4.18 cents per unit
recorded in the previous period.
? Profit before tax of $65.3 million, compared to $70.1 million previously.
The variance is mainly attributable to a decrease in the value of the Trust's
interest rate swaps.
? New development and infrastructure projects totalling $77.9 million.
? An active sales programme with three asset sales, totalling $45.2 million
sold during the period.
? Gains of $18.0 million from asset sales and the revaluation of certain
investment and development properties.
? Net tangible assets of 102.1 cents per unit, compared to 100.4 cents per
unit at 31 March 2014.
Keith Smith, Chairman and Independent Director of Goodman (NZ) Limited said,
"The Board is extremely pleased with the progress that has been achieved in
the first six months of the year. Pursuing a more active property strategy
and refinements to the governance and management structures are business
enhancements that reinforce GMT's position as New Zealand's leading
industrial and business space provider."
A proven development capability has contributed to the growth of GMT into one
of the country's largest listed entities, over the last 10 years.
A focus on development led growth, as the economy continues to expand, is
realising the value in the Trust's strategic land investments and improving
an already high quality property portfolio.
John Dakin, Chief Executive Officer of Goodman (NZ) Limited said, "A
successful asset sales programme is funding an increasing volume of
development activity. It is delivering strong profits and sustainable
earnings growth for GMT."
Converting the Trust's land holdings into income producing assets is an
important business objective that is contributing to the growth in GMT's
distributable earnings.
Distributable earnings before tax have increased in-line with earlier
guidance to 4.53 cents per unit on a weighted average issued unit basis. The
8.4% increase from the 4.18 cents per unit recorded in the previous period
reflects greater net rental income and lower cash expenses following
refinements to the management fee structure.
Unitholders voted overwhelmingly in support of a revised fee structure at the
annual meeting in August. The new base fee arrangement features;
? a rebate equivalent to the fee incurred on development land; and
? the issue of GMT units as consideration for the payment of the fund fee,
for a period of up to five years.
Further information on the financial result, including the reconciliation
between profit and distributable earnings, is provided in the appendix of
this announcement.
The financial statements for the six months ended 30 September 2014 are
presented in the Trust's interim report. The report was released today and
can be viewed at http://interim.goodmanreport.co.nz/.
Portfolio overview
A growing economy is continuing to have a positive impact on customer demand
with increasing levels of development activity and positive leasing outcomes
supporting the Trust's strong operating result.
Summary highlights include:
? New development and infrastructure projects adding over 35,000 sqm of
rentable area and 600 covered car parks to the portfolio. These projects are
expected to generate $6.2 million of annual income once completed.
? A successful asset recycling programme with $45.2 million of sales
contributing $4.3 million of gains to the interim result.
? Leasing transactions securing 71,000 sqm of office and industrial space on
new or revised terms.
? Portfolio occupancy of 97% and a weighted average lease term of 5.5 years
across the portfolio.
John Dakin said, "We've refined the strategy of GMT to take advantage of
current market conditions. A focus on organic growth is enhancing the quality
of the portfolio and delivering strong investment returns for the Trust."
The value of GMT's development activity is reflected in the fair value gains
of $14.5 million recorded at 30 September 2014. The gains, which result from
the valuation of certain development projects, have contributed to the 1.7%
uplift in net tangible assets since 31 March 2014.
John Dakin, said "Advancing the development programme and growing cash
earnings has been a real focus over the last 18-24 months. The benefit of
this effort is reflected in the increased volume of projects currently
underway and the valuation gains that this activity is generating."
With continuing demand from new business customers it is expected that GMT
will commence more than $100 million of new development projects this
financial year.
Asset recycling
A buoyant investment market, as local and offshore investors compete for
prime stock, has resulted in asset sales being the preferred source of
funding for new development projects.
GMT has taken advantage of the strong demand by selling three assets, for a
total of $45.2 million, during the period. A further $18.9 million of
unconditional sales were contracted shortly after the Trust's interim balance
date.
John Dakin, said "Financing new development and investment activity through
asset recycling is facilitating the Trust's business growth while preserving
its balance sheet capacity."
GMT's loan to value ratio was 36.5% at 30 September 2014, well within the
Board's targeted band of 35% to 40%.
New investment initiative
A more active strategy has been further demonstrated with the announcement on
3 November 2014 that GMT is partnering with GIC, a leading global investment
firm which manages Singapore's reserves, to co-invest in Auckland's rapidly
developing Viaduct Quarter.
Keith Smith, said "Partnering with a sovereign wealth fund to broaden the
Trust's investment strategy in the Viaduct signals an important new direction
for GMT. It endorses the quality of the portfolio while increasing the range
of capital options available for future investment opportunities."
The joint venture, which includes GMT's existing Viaduct property interests,
will own a portfolio of assets valued at $313 million with a mandate to grow
to around $500 million over time. To facilitate the transaction the Trust is
selling a 49% interest in two of its existing Viaduct assets:
? The Air New Zealand Building, which was originally acquired by GMT in 2006
for $55.0 million, is being sold into the joint venture at its March 2014
valuation of $64.0 million.
? The Fonterra Building, which was acquired ahead of its completion by GMT
for $92.6 million, is being sold into the joint venture for $93.2 million.
GMT's current joint venture partner is also selling its 50% interest in the
Vodafone, KPMG, Microsoft and HP buildings at its March 2014 valuation of
$156.2 million.
GMT will have a 51% interest in the expanded joint venture which will
continue the Trust's strategy in the Viaduct, investing in high quality,
campus style office properties, occupied by major customers on long term
leases.
The new partnership is expected to provide a range of benefits for GMT
including,
? Capacity to reinvest in a growing market segment
? Access to new office stock in a progressive location
? Increased asset and customer diversity
? Greater mix of ownership tenures in an expanded portfolio
John Dakin, said "The introduction of a strongly aligned capital partner will
enable GMT to extend and diversify its Viaduct portfolio, maintaining a long
term investment of around $250 million."
Outlook and guidance
A growing economy is continuing to generate strong customer demand for high
quality, well located business space. With a stable economic outlook, the
market expectation is that current levels of activity will be maintained and
that the strong property market fundamentals will continue.
Keith Smith said, "We have refined our business and implemented new
initiatives that have enhanced the Trust. We have also adapted our business
strategy, adopting a more active operational approach that is focused on
delivering strong profits and sustainable long-term earnings growth."
The Board has reiterated its distributable earnings guidance for the 2015
financial year of around 9.1 cents per unit before tax. Cash distributions
totalling 6.45 cents per unit are expected to be paid.
For further information please contact:
John Dakin
Chief Executive Officer
Goodman (NZ) Limited
(09) 375 6063
(021) 321 541
Andy Eakin
Chief Financial Officer
Goodman (NZ) Limited
(09) 375 6077
(021) 305 316
Keith Smith
Chairman
Goodman (NZ) Limited
(021) 920 659
End CA:00257517 For:GMT Type:HALFYR Time:2014-11-12 08:52:47
