INVESTMENT MANAGEMENT
At Goodman, we’ve long known our investment partners are particularly attracted to three things about us: our specialist industrial offering, our ability to create long-term value, and focus on delivering strong ongoing total returns.
During the year, we worked hard on all three, and our average total return was more than 20% across a managed Partnership platform that has $29.3 billion of assets under management (up 16% on 30 June 2015). This figure was achieved thanks to significant development completions, as well as continued market strength in asset pricing, which has also led to our Partnership properties achieving higher market valuations.
We remained strategic in our approach to the sale of assets. Selective sales of $1.9 billion worth of properties improved our overall portfolio quality and safeguarded our income stream. At the same time, we were able to continue offering our investment partners access to growth opportunities in prime locations that the open market can’t readily access.
New capital raised
Our investment partners showed their confidence in our business, with $2.3 billion of new equity raised for the UK, China and Japan. $2.4 billion of debt was raised and refinanced over the last year, lengthening our debt maturity profile, with an average debt expiry of 4.5 years.
The total investment capacity across our Partnerships at 30 June 2016 was $10.3 billion in cash and undrawn debt and equity. This is a strong figure and ensures our investment partners can participate in the range of growth opportunities offered by both the Group and wider market.
A year of major initiatives
There were numerous major initiatives completed over the last year. E-commerce and domestic consumption in China meant continued demand for quality logistics space, particularly in our gateway cities of Greater Shanghai and the Beijing region. As a result, Canada Pension Plan Investment Board (CPPIB) built on its existing relationship with Goodman by committing a further US$1 billion of equity to Goodman China Logistics Partnership (GCLP). This was done in line with the Partnership’s equity structure on an 80/20 basis, with US$250 million coming from Goodman, for a total commitment of US$1.25 billion.
Additionally, GCLP acquired a portfolio of logistics estates from Goodman Group, with an end build-out value in excess of US$570 million. For 2017, GCLP will continue its focus on key locations, where land constraints and demand are strongest.
In 2016, we also launched the £1 billion Goodman UK Logistics Partnership between Goodman, CPPIB and APG Asset Management. Each partner committed £200 million for a one third interest respectively. The resulting combined initial equity commitment of £600 million provides investment capacity in excess of £1 billion. This will be used to secure high quality UK logistics and industrial development opportunities. The Partnership’s initial portfolio comprises two developments in proven logistics locations close to London and Birmingham, totalling 55,000 sqm of new space.
There were numerous other success stories across our Partnerships. Goodman Japan Core Partnership finalised new equity commitments for US$200 million, while the terms of the Goodman Australia Development Partnership and Goodman European Partnership (GEP) were extended by five and ten years respectively.
In Europe, GEP successfully priced an inaugural €500 million Eurobond issue on a five year term, with proceeds used to repay existing debt facilities. Separately, in New Zealand, Goodman Property Trust (GMT) successfully completed a US Private Placement debt issue, securing US$120 million of long-term funding with a weighted average term of 12.3 years, to increase the diversity and tenor of its debt facilities. GMT also extended its retail bond programme, issuing a new NZ$100 million senior, secured seven year bond.
