Company firing on all cylinders: Goodman chief
Commercial property fund Goodman Property Trust has reported a record annual profit and its strongest year for development since the 2008 downturn.
The trust's net profit rose 72 per cent after tax to $134.1 million, on the back of an improving economy and tenant demand.
It was boosted by a $23.8 million gain in asset revaluations, and additional rent from its expanding Highbrook Business Park and other acquisitions.
However, unit holders received 6.25c per unit, the same cash distribution they have received since 2012.
"We pay out about 80 per cent of our earnings, but we've been retaining some to fund our development activities," said John Dakin, chief executive of the trust's manager, Goodman New Zealand.
Dakin said the company was "firing on all cylinders", starting 15 new building projects during the year.
"There's no question that demand has picked up across the board."
The cost of carrying land when demand was weak was one of the negatives for property firms, "but in times like this it is a massive advantage".
To fund the work, the trust sold its Gateside Industry Park in Auckland for $37.2m to Port of Tauranga, raised $100m in bonds, refinanced $600m through its bank, and received $20.5m from its shareholder reinvestment plan.
With the climate for asset sales improving, Dakin said the distribution reinvestment plan would be suspended later in the year. Local and foreign buyer interest in good commercial property was strong and the trust had tagged another $100m to $150m of assets for sale over the coming year.
It had already sold a Newmarket office block for $26.2m to a local buyer "and I wouldn't be surprised if some of the larger sovereign wealth funds invest in New Zealand real estate this year".
This was partly because of New Zealand's economic outlook, partly because Australian real estate was now looking expensive and partly because Auckland was seeing itself as a global city, Dakin said.
"At the moment, there's more demand for assets than there are assets for sale."