Page 12 - GMT and GMT Bond Issuer Annual Report 2017 v2

VALUATION OUTCOME
Strengthening property market fundamentals and sustained demand from both local and offshore investors have contributed to another strong valuation result for GMT. With an overall gain of $114.7 million, it is the second consecutive year of fair value gains of more than 5%.
The positive result re ects the quality of the Trust’s assets, rising market rentals and buoyant investment market conditions.
With continuing low interest rates, investors are competing for prime properties and paying record prices. The strength of this investment demand is demonstrated in the 0.45% rming in the portfolio capitalisation rate, to 6.50%. The positive shift in this key valuation driver also re ects a change in the composition of the portfolio with ongoing development and sales activity improving the overall quality.
Coda, Savill Link, Otahuhu
GOODMAN PROPERTY TRUST ANNUAL REPORT 2017 GMT BOND ISSUER LIMITED ANNUAL REPORT 2017
GMT’s industrial properties recorded the greatest gains. These assets were valued on
a weighted average capitalisation rate of 6.3% while the smaller of ce portfolio had a weighted average capitalisation rate of 7.5%.
The positive market dynamics and unique investment characteristics of prime Auckland industrial property mean this asset class is now valued at a premium to of ce property.
To take advantage of these market conditions the masterplan for Highbrook Business Park has been revised to incorporate a greater proportion of industrial facilities. Repurposing commercial land will expedite its development into high quality income producing industrial assets. Now over 75% completed, the $1.1 billion estate recorded an overall revaluation gain of $71.4 million or 6.8% in 2017.
SUSTAINABLE GROWTH
The buoyant investment market that is re ected in the Trust’s strong valuation result is also supporting a successful sales programme.
GMT has continued to take advantage of the strong investor demand with four asset sales, totalling $278.8 million, during the year.
The sales included the disposal of GMT’s of ce assets at 600-604 Great South Road in Greenlane for $210 million, the largest sale ever undertaken by GMT.
The Trust has also made a strategic acquisition with the conditional purchase of two adjoining industrial properties in West Auckland for $18.9 million. Close to the CBD and with direct access to SH16 from the Lincoln Road interchange, the former boat building facilities will be amalgamated into one estate and progressively redeveloped over time.
Following the 31 March 2017 balance date it was also announced that the Wynyard Precinct joint venture had conditionally acquired Bayleys House in the VXV Precinct for $62.3 million.
The recently completed, 5 Star Green Star design rated of ce building complements the joint venture’s existing Viaduct properties and
is consistent with an investment strategy that is focused on creating a high quality portfolio.
10 MANAGEMENT REPORT
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