Published 3 November 2014
Singapore’s sovereign wealth fund, GIC, has joined Goodman Property Trust in a restructured & expanded waterfront investment joint venture. It’s GIC’s first real estate investment in New Zealand.
Their joint venture, which includes Goodman’s existing $313 million of Viaduct property interests, has a mandate to grow to $500 million.
The NZX-listed Goodman trust already had a 50:50 $156.2 million joint venture, Viaduct Corporate Centre Ltd, with the developers of the Vodafone, KPMG & Microsoft/HP office buildings between Fanshawe St & Viaduct Harbour Avenue.
The developers (originally Allan Fraser & Tim Dromgool, but the interests have changed) will sell out of the joint venture company, GIC will buy into it and the stakes adjusted to 51:49. The same split will be applied to all future investments.
Goodman will also sell the Air NZ Building and the Fonterra Building (under construction), further along Fanshawe St, into the joint venture. The initial transaction remains subject to certain conditions, including Overseas Investment Office approval.
Trust manager Goodman (NZ) Ltd chairman Keith Smith said: “The benefits of Goodman Property Trust’s close relationship with Goodman Group, one of the world’s largest integrated property groups, have facilitated the introduction of GIC into the New Zealand market and a broadening of the trust’s investment strategy in the Viaduct.”
Goodman Group had a 5-year joint venture with another Singapore Government-controlled company, Ascendas Pte Ltd, the Singapore-focused A-Reit & its management company, which ended in 2008 when Goodman moved on to separate Asian ventures, notably a large & growing logistics property business in China.
Goodman Group chief executive Greg Goodman said he looked forward to extending the group’s involvement in the regeneration of the quarter. Goodman Group is developing the Fonterra Building with Fletcher Building Ltd, and also owns the Goodman trust’s manager.
GIC Real Estate president Goh Kok Huat said: “As a long-term investor, GIC looks to establish strategic partnerships with leading market players. Goodman has strong asset management expertise and has a good pulse on the New Zealand market. We believe there will be good investment opportunities that allow the joint venture to grow further, particularly in the Viaduct Quarter.”
Goodman has identified its portfolio’s location as the Viaduct Quarter, running from the outer edge of the Viaduct precinct, along the back of the Lighter Basin and continuing across Halsey & Daldy Sts, on the Fanshawe St frontage of the Wynyard Quarter, to the Air NZ Building between Daldy & Beaumont Sts.
Goodman (NZ) chief executive John Dakin said the group had set its investment strategy in the area over 8 years ago: “The Viaduct Quarter is a proven investment location that presents exciting new opportunities, with local government initiatives & private development transforming the former marine & industrial areas into a world-class, mixed-use waterfront precinct.”
After identifying the quarter as a strategic investment location, the trust acquired the Air NZ building & 50% interest in Viaduct Corporate Centre in 2006.
“The investment strategy of the new partnership will continue this commercial focus, building a portfolio of high quality, campus-style office properties, leased to major customers on long-term leases.
“Through its relationship with Goodman Group, the joint venture has options to purchase future office developments in the Viaduct Quarter and, subject to meeting strict investment hurdles, it is anticipated that the partnership’s property portfolio could grow to $500 million over time.”
Mr Dakin said the Goodman trust expected the new partnership to provide a range of benefits for it, including capacity to reinvest in a growing market segment, access to new office stock in a progressive location, increased asset & customer diversity and a greater mix of ownership tenures in an expanded portfolio.
“The introduction of a like-minded partner gives Goodman Property Trust the capacity to expand its investment in the Viaduct Quarter, enhancing the overall portfolio, without the requirement for any significant new funding.”
The trust will reduce its gearing as a result of the initial transaction and has reaffirmed its distributable earnings guidance for the 2015 financial year of 9.1c/unit before tax. Forecast cash distributions of 6.45c/unit are also unchanged.
GIC is a leading global investment company with well over $US100 billion in assets under management. Established in 1981, it manages Singapore’s foreign reserves, has investments in over 40 countries and has been investing in emerging markets for more than 2 decades.
Image above: Goodman’s Viaduct Quarter, from the trust’s website; the Fonterra building is now up to 4 storeys.
24 January 2014: World property F24Jan14 – GIC buys in New York & London
14 March 2008: Goodman sells out of Singapore joint venture
Attribution: Company release.