James Spence (left) and Mike Gimblett in one of the new warehouses at Goodman Property Trust's new Roma Rd development. Photo / Jason Oxenham
James Spence (left) and Mike Gimblett in one of the new warehouses at Goodman Property Trust's new Roma Rd development. Photo / Jason Oxenham
Listed landlord Goodman Property Trust recorded a massive $564.9 million net after tax loss due to $478.4m property devaluations and a $290m internalisation deal.
But it said property income or revenue was up 14 per cent and the trust’s internalisation had positioned it for the next phase of growth.
Goodman’s results for the year to March 31, 2024 showed last year’s $237.7m devaluations shot up to $478.4m in the latest year.
That sliced into the bottom-line figure, showing how hard even this sector has been hit by the recession and its effects on property.
The trust owns and leases around $4.5b of real estate, mainly in Auckland in the popular logistics and warehouse sector where vacancies are extremely low.
It owns Highbrook Business Park and has developed the ex-Foodstuffs North Island headquarters on Roma Rd in Mt Roskill into a four-building logistics hub in a project worth around $250m.
The company said it had strong balance sheet capacity with a loan-to-value ratio at only 31.45 per cent and $760m available.
But even with relatively low debt-to-asset ratios, interest costs shot from $29.5m last year to $46.7m this year.
The business also finished four fully leased development projects adding an extra 79,452sq m of warehouse and logistics space and has a further $209.7m work under way.
Unit-holders will get a 6.20 cents per unit distribution, up 5 per cent on last year and representing 83 per cent of underlying cash earnings.
Goodman is forecasting 6.5 cents per cent per unit payout in the 2025 year, up nearly 5 per cent on 2024.
“We have achieved our leasing targets over the last 12 months and have continued to refine the portfolio, progressing development projects and investing in new building technologies to meet customer demand for greater efficiency, supply chain resilience and more sustainable property solutions,” chief executive James Spence said.
James Spence, Goodman Property Trust chief executive. Photo / Jason Oxenham
Customer demand was moderating but the positive leasing dynamic created by a highly constrained industrial market supported strong revenue growth, he said.
On devaluations, he said the fall in the past 12 months reflected the impact of higher interest rates on investment yields.
“We take a longer-term view on value creation and note that a net $670m of fair value gains from property valuations have been recognised in Goodman’s statutory results over the last five years.”
Market rents for prime industrial space had increased and the potential reversion to market within the portfolio remains substantial at around 23 per cent.
Net property income had grown to more than $200m, with rent reviews and new leasing contributing to growth of 6.5 per cent, Spence said.
“The significant under-renting within the portfolio is also expected to drive future earnings growth, as rents are reviewed to market levels and new leases are secured at these higher rates.”
The company said Greenfield sites within the portfolio provide future opportunities.
“These sites are expected to support the development of almost 400,000sq m of urban logistics space over the next 10 to 15 years,” Spence said.
One of those sites is the ex-Villa Maria vineyard near Auckland Airport where Goodman plans a $500m warehouses and storage building project.
Goodman is a managed investment scheme with a market capitalisation of around $3.4 billion, ranking it in the top 20 of all listed investment vehicles.
The trust said it re-weighted its investments towards Auckland and out of other areas in the past few years.
