Goodman Property Trust, the NZX-listed commercial and industrial property investor, saw profit fall in 2018 as it focused on pivoting to the Auckland industrial market, due largely to smaller revaluation gains in the latest year.
Net profit was $194 million in the year ended March 31, from $213.8 million a year earlier, due largely to a smaller fair value gain in the property portfolio of $83.8 million, compared to $114.7 million a year earlier. The company's preferred measure of pre-tax operating earnings was $119.1 million, or 9.25 cents per unit, from $121.7 million a year earlier. That means the company exceeded its expectation for annual pre-tax operating earnings of around 9.1 cents per unit, though that's still down from 9.51 cents in 2017.
Goodman's total property portfolio was worth $2.7 billion as of March 31 from $2.46 billion a year earlier, including $238.6 million worth of property contracted for sale and $114.3 million in joint ventures. Post balance date, the trust agreed to sell a further $323.9 million of its assets, via divesting its 51 percent interest in the VXV Portfolio, owned within its Wynyard Precinct joint venture, to US private equity firm Blackstone for $635 million. That deal is still dependent on approval from the Overseas Investment Office and the freehold landowner.
Assuming that sale goes ahead, 99 percent of the trust's assets will be in industrial land and buildings in Auckland, and its portfolio will be worth $2.2 billion. It says it expects industrial property to benefit from e-commerce and immigration trends and its assets are in key locations close to consumers. The company has increased its exposure to logistics firms with a focus on storage and distribution, with its top 10 customers including New Zealand Post, DHL and Fliway Transport.
To get to that point, Goodman has sold almost $1.2 billion in assets over the past five years, with 73 percent of that coming from selling Auckland office space and 19 percent from assets in Christchurch.
