10 Nov 2022

Goodman Property Trust posts significant drop in first-half profit

1:45 pm on 10 November 2022

Strong commercial occupancy levels have supported Goodman Property Trust's balance sheet in the first-half of the year. File photo. Photo:

Diversified property developer, Goodman Property Trust, has delivered a strong underlying performance with surging demand for Auckland industrial property.

The company's first half profit for the six months ended September was significantly down on the year earlier at $41.1 million, in the absence of valuation gains on its portfolio.

The year earlier's net profit of $555m, included a near $505m gain in the value of is portfolio, currently estimated at $4.9 billion.

Key numbers for the 6 months ended September compared with a year ago:

  • Net profit $41.1m vs $555m
  • Revenue $104.6m vs $94.1m
  • Property income $88.2 vs $78.5m

Chief executive John Dakin said strong commercial occupancy levels had underpinned demand.

"The industrial sector does remain extremely resilient amidst what is a very uncertain economic climate that we have today," Dakin said.

Rental growth was leading to a positive balance sheet as the company continues to develop land into industrial warehousing near customers.

"In terms of the portfolio, it's largely full at 99.6 percent. There is a very strong level of leasing activity of 140,000 sqm."

"If you went back three or four years ago that would probably be in the range of 50,000 to 70,000 sqm. "

Dakin said the most pleasing aspect of the interim result was the 7.4 percent increase in cash earnings.

There was no change to Goodman's full year guidance for cash earnings of four percent, likely reflecting some pressure from higher interest rates.

The strength of current leasing demand has also underpinned two new developments at the Trust's Savill Link and Roma Road Estates in Ōtāhuhu and Mt Roskill.

With expected future demand, two smaller build-to-lease warehouses were also being developed at Roma Road.

"These four new projects will see our development programme grow to over $635 million," Dakin said.

The new warehouses were 93 percent pre-committed, with an average lease term of 13.7 years, he said.

It will add almost 150,000 sqm of high-quality warehouse and logistics space to Goodman's portfolio over the next few years.