Goodman Property Trust in the red after nearly 5pc revaluation

Goodman is not alone in seeing valuations push it into the red despite a lift in earnings. Photo / NZME

A $237.7 million reduction in the fair value of its properties pushed Goodman Property Trust into the red for the year ended March.

However, the New Zealand stock exchange-listed property investor increased operating earnings by 6.9 per cent to $126.5m before tax in the 12 months to March 31.

The 4.7 per cent reduction in the fair value of its assets saw its post a net loss of $135.4m, compared to a profit of $748.6m last year, which included fair value gains of $660.4m.

Goodman is not alone in seeing valuations push it into the red despite a lift in earnings.

Yesterday, Argosy Property reported a loss of $80.8m on the back of a $146.6m unrealised revaluation.

Goodman increased cash earnings 6.6 per cent to 7.1 cents per unit and lifted cash distributions 7.3 per cent to 5.9 cents per unit.

It provided guidance for a further 4 per cent and 5 per cent increase in cash earnings and cash distributions, respectively, in the 2024 financial year.

However, the trust’s manager warned “the longer-term outlook is more uncertain with a variety of downside risks likely to constrain economic activity”.

The year that’s been

Chair Keith Smith said rising interest rates impacted investment yields, but the trust’s underlying portfolio fundamentals remained strong and it continued to deliver robust operating results.

At the end of March, Goodman had a loan to value ratio of 25.9 per cent and committed gearing of 29.1 per cent.

Low gearing and only partly drawn bank facilities provided it with more than $700m of available liquidity.

Smith said prudent financial management enabled it to grow sustainably.

“A well-capitalised balance sheet adds resilience to the business and provides the funding capacity to take advantage of new investment and development opportunities that may arise.”

Attracting rents

Chief executive James Spence said the Auckland industrial market was highly constrained, with almost zero vacancy for prime space.

“It is a real estate sector that has recorded double-digit rental growth over the last 12 months, with demand for space exceeding supply in many locations across the city.”

The “positive demand dynamic” was reflected in Goodman’s own leasing results, with high occupancy levels being achieved for prime warehouse space with its portfolio.

Unitholders will receive a cash distribution of 1.4c per unit.