Goodman Property Trust will sell three of its Auckland offices for $206 million to reduce debt.
New Zealand's second-biggest listed property investor will sell its two Millennium office estates on Great South Road in Greenlane, which house businesses such as Mighty River Power, Bridgestone and American Express International, and the adjoining Yellow HQ building to local investor Oyster Management.
Goodman has been overhauling its portfolio, selling more than $300m of assets and signalling more than $350m of new development projects over the past three years, which it says will deliver the biggest return to unitholders.
In a statement to the NZX, John Dakin, the chief executive of Goodman NZ which manages the trust, said the sale was a continuation of its investment strategy and would reduce its loan-to-value ratio by about 5 per cent.
As of March 31 this year, Goodman's look through loan-to-value ratio, which incorporates its 51 per cent stake in Wynyard Precinct Holdings, was 33.9 per cent, down from 34.2 per cent a year earlier.
"With asset disposals funding the trust's award-winning development programme we're rebalancing the portfolio with greater investment in the Auckland industrial sector," Dakin said.
The sale is conditional on Oyster Management's due diligence and is due to settle on December 15. The sale price has been based on an initial 7.25 per cent yield for the buildings which could increase if additional new leasing is secured before September 30, the company said.
With asset disposals funding the trust's award-winning development programme we're rebalancing the portfolio with greater investment in the Auckland industrial sector
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In May, Goodman reported a 4.2 per cent increase in annual pre-tax operating earnings to $117m as it benefited from lower interest costs. That didn't include a $145.8m gain in the value of its investment property portfolio.
The units rose 1.5 per cent during trading to $1.32 and have gained 5 percent so far this year.