Value increase slows for industrial property giant
New Zealand’s biggest industrial property company, Goodman Property Trust, has reported a slightly lower after-tax profit mainly because growth in the value of its properties has slowed.
About three quarters of the total $2.4 billion worth of properties it owns are in the Auckland area including Highbrook Business Park, with two industrial properties in Christchurch.
The amount of money the NZXlisted trust made from rents, resales and developments in the year ended March 2017 was $134 million. This was up from $133m in the previous financial year.
But chief executive John Dakin reported that the latest profit aftertax and other adjustments was down at $213m, compared with $233m in 2015-16, because the increase in property values was less than the year before.
Property companies and trusts are required to include movements in the value of their properties in their annual results even though they may have not sold them.
The increase in the value of Goodman Property’s properties this year was less, at $114m, compared with last year’s $145m.
When the effect of property valuations and tax is excluded, the company’s operating earnings were slightly higher than last year.
Dakin said the trust had sufficient money and bank loan agreements to fund all its current developments and provide headroom if the market turns down and property values fall.
Earlier this year Dakin said the market appeared to be at its height.
Goodman Property had reduced the amount of development land it held to just 7 per cent of assets.
The loan to value ratio was 30.6 per cent, down from 33.9 per cent last year and well below the 50 per cent threshold permitted under its debt and trust deed covenants.
However, the trust will raise $100m through a seven-year bond issue aimed at investing institutions.
Dakin said the trust was increasingly focused on Auckland.
Goodman Property was also well positioned to benefit from the increasing demand for logistics space as a result of e-commerce and online shopping.
‘‘Online shopping is increasing the requirement for distribution warehousing in many global markets,’’ he said.
‘‘It’s an emerging trend that is also adding to the attractiveness of industrial property as an investment class.’’
The occupancy rate across the portfolio increased to 98 per cent and the weighted average lease term extended to 5.8 years.
The dividend payout has been maintained at last year’s level of 6.5 cents per unit.