Goodman Property Trust, the NZX-listed commercial and industrial property investor, saw first-half profit drop more than 40 per cent as valuations fell on its investment properties.
Net profit was $39.5 million in the six months ended September 30, down from $67.6m a year earlier, impacted by the shift to an $8.4m loss in the fair value of investment property compared to a $19.8m gain a year earlier, the Auckland-based company said in a statement. Pre-tax operating earnings dipped to $59.8m from $59.9m.
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 September 30 versus $2.1b a year earlier. The occupancy rate across the portfolio increased to 96.8 per cent from 96 per cent 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 per cent 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 $150m, 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 $209m in the first half, though that's dependent on Overseas Investment Office approval. It also sold the Steel & Tube development in Christchurch for $20.4m, a deal which is due to settle in April 2018.
The trust had a look-through loan-to-value ratio of 32.4 per cent compared to 28.8 per cent in the previous period, but said this gearing would reduce to 25.8 per cent once both property sales are completed. It had $260m in undrawn bank facilities as of September 30, bolstered by its $100m bond offer in May, and said this would increase to over $500m if both sales go through.
The units fell 1.5 per cent to $1.30, and have gained 8.3 per cent this year.