Thursday 14th July 2016
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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 $300 million of assets and signalling more than $350 million 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 percent. As of March 31 this year, Goodman's look through loan-to-value ratio, which incorporates its 51 percent stake in Wynyard Precinct Holdings, was 33.9 percent, down from 34.2 percent 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 Dec. 15. The sale price has been based on an initial 7.25 percent yield for the buildings which could increase if additional new leasing is secured before Sept. 30, the company said.
In May, Goodman reported a 4.2 percent 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 1.5 percent to $1.32 and have gained 5 percent so far this year.
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