Goodman Property Trust, the NZX-listed commercial and industrial property investor, saw first-half profit drop more than 40 percent as valuations fell on its investment properties.
Net profit was $39.5 million in the six months ended Sept. 30, down from $67.6 million a year earlier, impacted by the shift to an $8.4 million loss in the fair value of investment property compared to a $19.8 million gain a year earlier, the Auckland-based company said in a statement. Pre-tax operating earnings dipped to $59.8 million from $59.9 million.
The trust reiterated its previous expectations for full-year pre-tax operating earnings of around 9.1 cents per unit, down from 9.51 cents per unit in 2017. It expects to make the same annual cash distribution of 6.65 cents per unit.
Goodman's investment property was valued at $2.3 billion as of Sept. 30 versus $2.1 billion a year earlier. The occupancy rate across the portfolio increased to 96.8 percent from 96 percent in the prior year and the weighted average lease term extended to 5.8 years versus 5.7 years.
Chair Keith Smith said the board was extremely pleased with the results, and "the progression of the development programme, selective asset sales and targeted acquisitions are all having a positive impact, refining the portfolio and positioning Goodman for sustainable growth."
More than 80 percent of Goodman's property portfolio is now invested in the Auckland industrial sector, one which chief executive John Dakin said is rapidly growing and supply constrained. The trust has announced six new projects this year, cumulatively worth almost $150 million, which Dakin said was the highest volume of new starts since 2008 and necessary to meet current and forecast demand.
Goodman sold Central Park Corporate Centre, in Auckland's Greenlane, for $209 million in the first half, though that's dependent on Overseas Investment Office approval. It also sold the Steel & Tube development in Christchurch for $20.4 million, a deal which is due to settle in April 2018.
The trust had a look-through loan-to-value ratio of 32.4 percent compared to 28.8 percent in the previous period, but said this gearing would reduce to 25.8 percent once both property sales are completed. It had $260 million in undrawn bank facilities as of Sept. 30, bolstered by its $100 million bond offer in May, and said this would increase to over $500 million if both sales go through.
The units fell 1.5 percent to $1.30, and have gained 8.3 percent this year.
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