KEY POINTS:
Listed industrial landlord Goodman Property Trust has axed two large new buildings planned for Auckland, spooked by the state of the market.
John Dakin, chief executive of the trust's manager, told unit holders at yesterday's annual meeting in Auckland that the economy had changed rapidly so the trust had to alter its plans.
The trust has $1.6 billion of property assets and is projecting a final annual distribution of 10.25c per unit.
Dakin said Goodman wanted to build projects at The Gate in Penrose and Central Park at Greenlane, large e projects where it has vacant land.
Goodman was planning to start work before pre-leasing any space but this had proved far too risky.
"These will only start on a pre-committed basis," Dakin said of the new buildings.
A unit holder asked about threats to the trust's future, saying investors were worried about the situation.
Dakin told of a substantially worsening property market, saying tenants might begin to default on rent.
"The economy in New Zealand has basically stopped in its tracks and it appears we are in a recession. We will have some customers at the lower end of the business who will struggle and some might not be able to pay the rent.
"We don't expect that from NZ Post or Air New Zealand. But people will renew their leases instead of shifting. They might want less space, which will lead to increasing vacancies in the market and rents going down.
"The key risk is credit availability, and we will pay considerably more for our banking facilities."
Dakin said the trust was going ahead with a large new building at 604 Great South Rd at Greenlane, securing 85 per cent leasing pre-commitments.
But the real estate sector was in a state of flux.
"If there was ever a time to focus on your customers, it's right now."
