Data centres are a target for Goodman Property Trust, an NZX-listed vehicle which does not own any of these properties so far. Photo / 123rf
Data centres are a target for Goodman Property Trust, an NZX-listed vehicle which does not own any of these properties so far. Photo / 123rf
An NZX-listed industrial landlord has announced plans to internalise its management via a $272.4 million payout to the manager, A$54 billion ASX-listed Goodman Group, as well as a $2b expansion in New Zealand, partly to develop and own data centres which are not currently in its multibillion-dollar portfolio.
Goodman PropertyTrust unitholders will meet next month to vote on the proposals, which would see Goodman Group increase its ownership of the trust from 25 per cent to just under 31.8 per cent.
Unitholders will meet to vote on the internalisation proposal on March 26.
Jarden analysts Arie Dekker and Vishal Bhula said the trust had outperformed the NZX REIT index, successfully transitioning its portfolio into its existing shape focused on prime Auckland industrial with a diversified pipeline of development opportunities.
Their analysis in reaction to the plans, out today, was headlined: “GMT gets a chance to build its own platform, with GMG on board”.
That referred to the trust (GMT) expanding, with the ASX-listed giant’s (Goodman Group) financial support.
The trust’s strategy had seen it grow the asset base with $1b in investment through development and acquisition during the last five years, they noted.
But without some change, Goodman might have been forced to raise capital.
“A period of low cap rates supported the growth without the requirement for significant equity raisings over the period. The environment has changed, and while Goodman has outperformed its peers and trades with the narrowest discount to net tangible asset of our NZ-listed property vehicle coverage, growth from here will likely require more frequent capital raises,” they said in reaction to today’s news.
James Spence is the chief executive of the trust. Photo / Goodman Property Trust
The Jarden analysts recently said they saw a pending equity raise from the trust as a possibility.
The internalisation cost appeared broadly in line with peer comparisons, notably Precinct Properties’, the analysts said.
Goodman Group’s 31.8 per cent ownership and the co-operation agreement should ensure the Australian business was committed to supporting the trust in its future success, they indicated.
Investors would likely be looking for as much confidence as possible that the Goodman Property Trust/Goodman Group combination could successfully get both the capital and find opportunities to deliver a platform of scale, they said.
The aim would be to grow cash earnings.
Goodman announced more details of its proposed changes today.
Subject to internalisation going ahead, the New Zealand business would seek to establish a funds-management platform anchored by a new Auckland logistics property fund, it said.
The trust would initially invest up to $100m, with up to $200m from Goodman Group.
The trust also expects to use Goodman Group’s global investor relationships to secure further third-party capital, it said.
It envisages a new $2b vehicle after three to five years. That business would invest in data centres.
James Spence, the trust’s chief executive told the Herald: “[Investment in] data centres is a big deal around the world, but not in New Zealand. Characteristics of data centres are not too dissimilar from logistics buildings.”
The trust had 50ha of development sites in South Auckland, “and that’s something we’re actively investigating, whether data centres are good for us. Demand for them is massive”, he said.
John Dakin, chairman and non-executive director, said overseas investors were keen to buy properties in New Zealand, “and those investors want industrial properties and data centres”.
Goodman Property Trust chief executive John Dakin.
In 2021, the Herald reported how Microsoft had bought land on Kakano Rd off Fred Taylor Dr, Westgate to develop its first New Zealand data centre.
Microsoft has about 100 data centres worldwide but has never had one here, so its choice of site is significant.
Last year, the Herald reported two Crown ministers in the previous Labour government had granted Microsoft consent to buy sensitive New Zealand land to create a $180m data centre staffed by 50 fulltime employees and 300 temporary jobs for its construction.
Ministers approved the American giant’s purchase of 6.5ha at a location which was not identified in the Overseas Investment Office clearance.
Units in the trust are trading up on the NZX, around $2.15 today.
Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.
