Goodman to buy balance of Highbrook for $186m

Stock Exchange-listed Goodman Property Trust will buy the other half of Highbrook Business Park in Auckland that it does not own.

The complex deal is valued at $186.6 million. Some of the consideration will be satisfied by issuing units to the existing owners, raising $80 million of new equity, and some bank debt.

The deal has the hallmarks of a Greg Goodman arrangement. He is a director\s of Goodman (NZ), manager of the trust and largely credited with structuring the Highbrook deals.

The announcement was made today by Keith Smith, the chairman and independent director of Goodman (NZ).

It will buy out the interests of Goodman Group (an unlisted New Zealand company that holds development properties) and the Fisher estate – Highbrook was formerly the home of the late Sir Woolf Fisher and Lady Fisher when they operated it as Ra Ora horse stud.

Highbrook is owned by two entities. Highbrook Development owns 50% of Highbrook. In turn, it is owned half by listed Goodman Property Trust, 25% by Goodman Group and 25% by Fisher.

The other half of Highbrook is owned by HPBL Properties. This company is 75% owned by listed Goodman Property Trust and 25% by Fisher.

Goodman Property Trust will acquire all of the interest it does not own, which makes up 50% of Highbrook, from Fisher and Goodman Group.

Goodman Group will be paid in Goodman property Trust units for its 25% holding in Highbrook Development Issued at $1 per unit, with half of the amount deferred until 2015. It will also be paid an additional two million units to compensate for the deferred payment.

Fisher is to be paid half cash and half in Goodman Property Trust units for its 25% holding in Highbrook Development and its 25% share of HBPL Properties at $1 per unit, with a 12-month holding condition.

In addition, listed Goodman Property Trust will raise $60 million from an underwritten private placement to “institutional, wealthy and experienced investors”.

The issue price of $1.015625 represents a 4.4% discount to the volume weighted average price over the five preceding trading days. The placement is underwritten by Macquarie Securities (NZ) and Craigs Investment Partners.

Existing unitholders will be offered units up to $30 million in parcels with a value of $1000, $2500, $5000, $7500, $10,000 and $15,000.

Listed Goodman Property Trust also announced its interim result today.

For the six months ended September 30, 2012, it posted a profit after tax of $31.6 million, a $2.5 million or 9% increase from the previous corresponding period.

Net property income has increased 4.0% to $57.6 million. Distributable earnings before tax are $41 million or 4.07 cents per unit. The developed property portfolio took a marginal decline in value, while development property saw a $13 million decline.

Highbrook is a master planned Business Park that incorporates over 100ha of development land, with 40ha of parklands and esplanade reserves. It is a world-class mixed use development that brings people and industry together in an exceptional natural landscape.

It is located on the Waiouru peninsula in East Tamaki, halfway between the Auckland and Manukau CBDs. The estate is expected to support 530,000sq m of commercial space once fully developed.

It is approximately 50% complete, with 240,000sq m of space developed since 2004 and an additional 17,000sq m currently under construction.

Once complete, the businesses located with the estate are expected to employ between 10,000 and 15,000 staff.

The investment and development assets of Highbrook are valued at more than more than $650 million and when complete the estate is expected to be worth more than $1.2 billion.

c.hutch@clear.net.nz