New Zealand’s leading industrial property provider, Goodman Property Trust (“GMT”), has announced new equity initiatives seeking to raise $165 million. The new equity will provide additional balance sheet capacity that will be used to fund current commitments and future investment and development opportunities in the supply constrained Auckland industrial market.
In addition to the equity initiatives, GMT has also announced the commencement of five new development projects, with a total cost of $74.9 million, and a preliminary portfolio revaluation of over 6%.
New Equity Initiatives
A $150 million Placement is being undertaken today and a trading halt has been granted by the NZX to facilitate the equity raising.
The price of the Placement units is fixed at $2.10 per unit. The new units will be allotted on 24 September 2019 and will rank equally with existing units.
Keith Smith, Chairman and Independent Director of Goodman (NZ) Limited said, “The $150 million of new equity being sought through the Placement will reduce GMT’s committed gearing to just 21.2%1. It’s a prudent level that provides the balance sheet capacity to fund GMT’s future development pipeline, and any strategic acquisitions, while remaining within the Board’s preferred gearing range of 25% to 35%”
With around $215 million of projects under construction, a continuation of the current development-led growth strategy remains the priority.
John Dakin, Chief Executive Officer of Goodman (NZ) Limited said, “Completing the build-out of GMT’s greenfield land and activating the value-add opportunities within the portfolio, remain the primary investment objectives. It’s a disciplined approach that we expect to underpin the growth of the business.”
The Board has reaffirmed its earnings guidance for the current financial year and cash distributions totaling 6.65 cents per unit are expected to be paid.
GMT will also undertake a Retail Unit Offer targeting $15 million of additional equity (with the ability to accept oversubscriptions of up to $10 million at the Manager’s discretion).
Details of the offer, which allows New Zealand resident Unitholders to subscribe for up to $50,000 of new units in GMT, will be sent to all eligible Unitholders on or around 26 September 2019. The closing date for applications is 18 October 2019. The new units are expected to be allotted on or around 24 October 2019.
John Dakin said, “We’ve made rapid progress with the development programme in recent years with more than $780 million of new project commencements since 2014. GMT’s portfolio is full, and with no vacant warehouses available, these new build-to-lease projects will provide much-needed new supply.”
The five new projects, which have a total project cost of $74.9 million, will add 26,600 sqm of warehouse and office space to GMT’s portfolio of high-quality Auckland industrial property.
With the addition of these new projects GMT now has over $215 million of development work in progress. Most of this activity is at Highbrook Business Park in East Tamaki. On completion of current projects, GMT’s largest estate will be over 90% developed, with a value in excess of $1.5 billion.
Interim Portfolio Revaluation
Preliminary valuation advice indicates that GMT’s property portfolio will record a gain of over 6% at 30 September 2019. The positive result is expected to lift the value of the portfolio to more than $2.8 billion.
John Dakin said, “Strong real estate fundamentals across the Auckland industrial market, have contributed to the forecast gain of around $170 million. Lower interest rates over the last six months have also fuelled investor demand for prime assets. It’s a continuation of the positive trends that have driven GMT’s strong operating results and record profits over the last five years.”
The revaluation remains subject to completion of the independent property valuations and finalisation of GMT’s interim financial statements. GMT will report its interim result (for the six months ended 30 September 2019) on 14 November 2019.
About Goodman Property Trust:
GMT is an externally managed unit trust, listed on the NZX. It has a market capitalisation of around $2.8 billion, ranking it in the top 20 of all listed investment vehicles. The Manager of the Trust is a subsidiary of the ASX listed Goodman Group, Goodman Group is also the Trust’s largest investor with a cornerstone unitholding of 22%.
GMT is New Zealand’s leading industrial space provider. It has a substantial property portfolio, with a current value of $2.8 billion. The Trust holds an investment grade credit rating of BBB from Standard & Poor’s.
This release may not be distributed in the United States.
This release does not constitute an offer to sell, or the solicitation of an offer to buy, any GMT units in the United States or in any jurisdiction in which such an offer would be illegal. None of the GMT units to be offered and sold in the Placement and the Retail Unit Offer have been, or will be, registered under the U.S. Securities Act of 1933 (“U.S. Securities Act”), or under the securities laws of any state or other jurisdiction of the United States. The GMT units to be offered and sold in the Retail Unit Offer may only be offered and sold outside the United States.