Goodman conquers overseas markets
‘We bought these sites that could be urban redevelopments about 10 years ago and now we are selling them and using that cash to buy sites which can be sold in another 10 years.’ Greg Goodman Goodman Group chief executive
GOODMAN GROUP has $1.8 billion worth of conditional sales from its urban development pipeline with the cash being used to conquer more overseas markets.
Chief executive Greg Goodman said the group was focused on improving the quality of the properties and income in this part of the cycle, by rotating assets and reinvesting in the strength of the development business.
Goodman Group is an industrial property developer and investor in its own right, and sometimes sells developments into its NZX-listed subsidiary company Goodman Property Trust.
The trust has a substantial property portfolio in Auckland and Christchurch worth more than $2.1b.
In the first-quarter results for the 2016 financial year, Goodman said the demand for warehouses for e-tailing operations was very strong across all its businesses in Europe, Britain, Asia and Australia.
Brazil was on the radar but ‘‘it’s down the track’’, he said.
However, the group was taking advantage of the high demand for urban renewal land, particularly in Sydney and Melbourne.
‘‘Goodman is working through its current urban renewal pipeline and continues to benefit from the ongoing evolution of urban renewal precincts and identification of new sites across its portfolio.’’
The urban renewal pipeline, in Sydney alone, stood at about 35,000 apartments, which was in addition to the sale of 10,000 apartment sites completed or conditionally contracted to date, he said.
Analysts speculated other sales could occur at sites at Moorebank and South Sydney and higher density achieved at North Ryde.
‘‘We bought these sites that could be urban redevelopments about 10 years ago and now we are selling them and using that cash to buy sites which can be sold in another 10 years, although we expect they will be used for something then.’’
In the first quarter, $121 million of sites in the $1.8b pipeline were settled and further settlements will occur over the next three years, providing a substantial long-term source of capital to fund opportunities across the group and its joint venture partners.
Separately, higher valuations from certain Goodman urban renewal sites are expected to contribute significantly to overall first-half 2016 asset revaluations.
Macquarie Equities analysts said Goodman’s global diversity continued to underpin a growing development pipeline which was being well matched with wholesale capital. These factors were combining to deliver stable growth in the overall business.
‘‘Positive tailwinds for the stock include residential conversion opportunities, deployment of balance sheet capacity, and Goodman’s ability to raise equity from wholesale investors.’’
The rise of online shopping and demand for the ‘‘last mile’’, where stores promise one-hour delivery, will see Goodman look for smaller sites close to city centres.
Goodman said companies globally were looking for costefficient supply chain management for their e-tailing firms and the group was working with them to provide the properties.
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