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Goodman seeking industrial-sized returns

NZN 27/07/2016 Sophie Boot

Goodman Property Trust, New Zealand's second-largest listed property investor, says it believes the best returns will be delivered through industrial and business park properties in Auckland.

At the company's annual meeting on Wednesday, John Dakin, the chief executive of Goodman NZ which manages the trust, said it was "refining and renewing" its portfolio with greater investment in the city's industrial sector.

"The re-balancing is a deliberate capital allocation decision that reflects the positive investment characteristics of industrial property and the stronger economic drivers in New Zealand's largest city," Dakin said. "Around 68 per cent of the portfolio is now invested in industrial and business park property and we expect this weighting to increase further over time."

Earlier this month, the trust announced it would sell three of its Auckland offices for $206 million to reduce debt, which Dakin said was a continuation of its investment strategy and would reduce its loan-to-value ratio by about 5 per cent.

The Auckland focus is due to the anticipated 50 per cent household and labour force growth in the city by 2043, as well as its "consistent outperformance" as an investment market, Dakin said. Goodman Property Trust is currently developing 8 hectares of land, which it expects will deliver about a 7.2 per cent yield on a cost of $84.1 million when completed.

In May, the trust reported a 4.2 per cent increase in annual pretax operating earnings to $117 million as it benefited from lower interest costs. That didn't include a $145.8 million gain in the value of its investment property portfolio.

The units rose 0.4 per cent to $1.335 and have gained 7.4 per cent so far this year.

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