Goodman joins with Singapore for Viaduct development

An impression of the new Fonterra headquarters, to be built and owned by Goodman Property Trust.

Singapore's sovereign wealth fund has made its first New Zealand real estate investment, buying a half stake in some of Auckland's newest commercial buildings in the Viaduct Quarter.

Goodman Property Trust, the country's largest listed property investor by market capitalisation will retain a 51 per cent stake in the portfolio valued at $313 million, and Singapore's GIC will own the rest.

The partnership expects the portfolio grow to $500 million over time. GIC is a global investment firm with over US$100 billion assets under management.

Goodman has been looking for a joint venture partner to build its Viaduct Corporate Centre, on Auckland's waterfront, having bought the Air New Zealand building and a 50 per cent interest in the corporate centre in 2006. The development grew when Goodman bought the new Fonterra building, which it is developing with Fletcher Building.

"The introduction of a like-minded partner gives Goodman the capacity to expand its investment in the Viaduct Quarter, enhancing the overall portfolio without the requirement for any significant new funding" said Goodman chief executive John Dakin.

The deal is pending approval from the Overseas Investment Office and certain approvals from the free hold land owner of the Air NZ and Fonterra buildings.

A photograph showing the properties in the transaction

Units of Goodman rose 1.4 per cent to $1.115 and have gained 12 per cent this year.

Shane Solly, Auckland-based director, portfolio manager and research analyst with institutional investor Harbour Asset Management, questioned the value of the deal to investors.

"It's a little disappointing that there is no increase in earnings, dividends or net asset backing for Goodman unit holders as a result of the proposed GIC transaction," he said.

Matt Goodson, Salt Funds Management managing director, also expressed disappointment saying the trust's managers, ASX listed Goodman Group gained far more than the New Zealand investors in the NZX listed trust.

"It's clearly a good deal for Goodman Group. Whether it's a good deal for the trust is less clear," Goodson said.

He also questioned the price paid.

"It's disappointing to only get a slightly dated book value in what is a very hot property market where investors are willing to look through the risks of land leasehold. It appears likely investors will get less than NTA because there is very likely that a disposal fee is payable. Clearly, it's a win-win for Goodman Group but not so positive - or material - for Goodman Property Trust," Goodson said.

- with Anne Gibson

See the Goodman -Singapore GIC deal announcement here: