GMT’s Industrial Strategy Delivering Results
Level 2, 18 Viaduct Harbour Avenue, Auckland | PO Box 90940, Victoria Street West, Auckland 1142
Tel +64 9 375 6060 | www.goodman.com/nz
nzx release+
GMT Result Announcement
Results for announcement to the market
Name of issuer Goodman Property Trust (“GMT”)
Reporting Period 12 months to 31 March 2019
Previous Reporting Period 12 months to 31 March 2018
Currency New Zealand dollars
Amount (000s) Percentage change
Revenue from continuing operations $155,200 -2.7%
Total Revenue $155,200 -2.7%
Net profit/(loss) from continuing operations $319,500 64.7%
Total net profit/(loss) $319,500 64.7%
Final Dividend
Amount per Quoted Equity Security $0.01662500
Imputed amount per Quoted Equity Security $0.00316730
Record Date 6 June 2019
Dividend Payment Date 20 June 2019
Current period Prior comparable
period
Net tangible assets per Quoted Equity
Security
$1.570 $1.389
A brief explanation of any of the figures
above necessary to enable the figures to be
understood
-
Authority for this announcement
Name of person
authorised to make this
announcement
Andy Eakin
Contact person for this announcement Andy Eakin
Contact phone number (09) 375 6077
Contact email address andy.eakin@goodman.com
Date of release through MAP
15 May 2019
Level 2, 18 Viaduct Harbour Avenue, Auckland | PO Box 90940, Victoria Street West, Auckland 1142
Tel +64 9 375 6060 | www.goodman.com/nz
Notes
1. This announcement is extracted from the annual financial statements of Goodman Property
Trust. A copy of the annual financial statements together with the independent auditor’s report
on the annual financial statements is attached to this announcement.
---
Making space for
greatness
Goodman Property Trust Annual Report 2019 GMT Bond Issuer Limited Annual Report 2019
Goodman team members in one of the new Gateway Warehouses at Highbrook Business Park, East Tamaki.
From left to right: Shaun Ward, Brady Page, Amber Kelly.
It’s not enough to simply
wish for greatness.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Greatness is not a singular pursuit,
nor is it one that is easy to reach.
At Goodman our vision is to make it
a possibility for everyone by making
space for it in everything we do.
It’s not enough to simply
wish for greatness.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Premium Apparel — one of the 100 customers at Highbrook Business Park.
Space for the world’s
greatest ambitions.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Space for the world’s
greatest ambitions.
We give our customers the
space they need to succeed,
by providing high-quality property
solutions in strategic locations.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
This document comprises the Annual Reports of
Goodman Property Trust and GMT Bond Issuer
Limited for the year ended 31 March 2019 and
contains the information required to be disclosed
pursuant to the Listing Rules.
+ The Units in Goodman Property Trust are listed
on the NZX with the code of GMT.
+ Bonds issued by GMT Bond Issuer Limited, a
wholly-owned subsidiary of Goodman Property
Trust, are listed on the NZDX with the codes of
GMB020, GMB030, GMB040, and GMB050.
This is Goodman
06 Our approach
08 Customer stories
Good to great
14 Result overview
16 Chairman’s report
20 Management report
24 Our assets
28 Our people
Sustainability at Goodman
32 Our framework
34 People and community
06Contents1430
Highbrook Business Park, East Tamaki
GMT's largest estate and an exceptional work environment for the businesses and staff located here.
PAG E S
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Nau mai,
Haere mai
Financial
38 Financial summary
43 Goodman Property Trust
Financial Statements
85 GMT Bond Issuer Limited
Financial Statements
Other information
96 Corporate governance
104 Investor relations
106 Glossary
1 0 7 Business directory
3895
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
We invest in industrial property because of its
return characteristics, the depth of the market
and its unique growth drivers.
Our $2.6 billion property portfolio is now
exclusively located in Auckland
(1)
. We’ve
deliberately focused on the country’s biggest
city because urbanisation and the growth in
e-commerce is increasing demand for logistics
and warehousing facilities close to consumers.
It’s a global trend that we expect to drive our
future performance.
(1)
After all contracted sales, including post balance date transactions.
Around 85% of the portfolio has been developed
since 2004, creating a modern industrial
portfolio of unrivalled quality. Our development
programme is concentrated in key Auckland
locations where supply is constrained. It is
creating high-quality facilities that provide
customers with tailored property solutions
to help their businesses prosper.
We have around $195 million of projects
currently under development. It’s a large
volume of work that is supported by a low
vacancy rate and strong market fundamentals.
DEVELOPOWN
H
ig
h
-quality in
ustrial
To meet
eman
Goodman Property Trust is New Zealand’s
largest listed property investor by market
capitalisation. It is a high-quality business built
around a substantial portfolio, a wide customer
base and a proven development capability.
This is Goodman
Customer
06
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Directly managing all our business functions
differentiates Goodman and enables us to focus
on the things that matter to our customers.
While we pride ourselves on how we manage
both our customer relationships and property
portfolio, equal focus is given to the fiscal
management of the Trust. We take a long-term
investment view and manage prudently to
ensure we maintain a strong balance sheet that
supports sustainable growth well into the future.
Our business is strengthened by the 179 leading
companies that have chosen Goodman as
their property provider. They represent a range
of industries, including automotive distributors,
building products, logistics and freight, warehousing
and retail operators.
Superior facilities, a commitment to customer
service and the ability to accommodate changing
business requirements help create long-term
partnerships. These relationships create value
for our investors and make us New Zealand’s leader
in high-quality warehouse and logistics space.
MANAGEPROMOTE
Pru
ently an
expertly
Long-term relationships
Our own+develop+manage business model has the customer as its central
focus. It’s a simple and effective approach that can be easily explained:
+
We own the very best industrial assets, putting our customers close
to consumers in key Auckland locations.
+
Strategic land holdings and a development capability allows us to
deliver tailored property solutions for customers.
+
We manage all aspects of our business directly, taking responsibility
for all our stakeholder relationships.
There’s space
for you here.
an
greatness
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
07
Making space for
08
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
g
reatn
e
ss
Making space for
Every one of our 179 customers relies on our property expertise. We've chosen four to
tell our story. They include international brands and local businesses and are a representative
mix of customers that share our focus and share our drive.
The following pages describe each company and tell the story of how they’ve partnered
with Goodman to achieve success. They’re aiming high and we’re helping them realise
their business ambitions.
While the individual requirements are different, scale and flexibility are themes that
stay constant. All our properties are designed to meet the requirements of a variety of
customers. They’re highly specified and operationally efficient, they’re well-located, and
can accommodate businesses that need access to air, port, rail and road freight networks.
The narrative is the same from customer to customer, Goodman is an important factor
in their success. We’re making the space for them to achieve great things. We're making
space for greatness.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Customer stories
09
Goodman Customers — left to right:
Sarah Herrick, Sales Excellence Specialist — NZ Post
David Edkins, Regional Manager NZ — Nisbets New Zealand Limited
Philip Fretton, Warehouse Manager — Ford PSG Depot Operations
Kevin Obern, Managing Director — OfficeMax New Zealand Limited
Our approach is what defines us,
it underpins our success.
NZ Post — GMT’s largest customer
Sarah Herrick, Sales Excellence Specialist
Working together successfully since 2006 means NZ Post calls Goodman first when it needs
a property solution in Auckland.
Greg Morris, National Property Manager for NZ Post, said, “Goodman understands that a
well-executed property strategy is critical to the NZ Post business. They are true partners
and have the scale and expertise to meet almost any requirement we have.”
Responding to a rapidly changing operating environment has also required flexible short-term
solutions. The commissioning of the new Paxster delivery vehicles is one example. NZ Post now
have the largest electric vehicle fleet in the country, part of a plan to be carbon neutral from 2030.
Shared corporate values mean NZ Post and Goodman are also working together on new
sustainability and energy efficiency initiatives at Highbrook Business Park, improving the
performance of four existing NZ Post facilities for the benefit of both parties.
for the future has created a long-term
partnership that is delivering much more
than a traditional commercial relationship.
NZ Post is at the forefront of the digital
revolution, developing its range of services
and utilising its distribution network to
facilitate the growth of e-commerce and
online shopping across New Zealand.
10
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
Our approach
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
This is Goodman
Customer stories
A share
vision
Nisbets New Zealand Limited — GMT's newest customer
David Edkins, Regional Manager NZ
Nisbets stocks hundreds of items at its Highbrook showroom and warehouse, ranging from
restaurant furniture and chef clothing through to cleaning equipment and catering disposables.
It’s a true multi-channel operation with customers able to purchase online, in store or by phone.
David Edkins said, “In Europe we offer same day or next day delivery. We are replicating that
customer service focus here in New Zealand to ensure the hospitality industry has immediate
access to the high-quality kitchen and catering products it needs.”
To make business as seamless as possible, the company provides same day dispatch and
online orders are freight free. CourierPost, another Highbrook customer, has the responsibility
for delivering these parcels nationwide.
It’s a successful strategy that demonstrates how the growth in online retailing is driving
demand for well-located industrial space close to consumers.
As Europe’s largest catering supplies distributor,
the company has been extremely successful at
promoting and distributing its range of products.
New premises at Highbrook are facilitating its
multi-channel retail strategy here in New Zealand.
Nisbets is one of the newest customers
in the portfolio and one that is bringing a
to how it does business.
global approach
Goodman Property Trust
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GMT Bond Issuer Limited
Annual Report 2019
11
Customer stories
Ford embraced the opportunity that
Highbrook offered, locating its head office
and national parts warehouse within the
Ford Motor Company — Leading automotive brand
Philip Fretton, Warehouse Manager
The record number of new car sales and the success of the recent model range has
driven strong growth for the New Zealand branch of the Ford Motor Company.
Craig Sterritt, Ford's Customer Service Director, said “We’ve transitioned from older
legacy premises into purpose-built alternatives, enabling our business to operate much
more efficiently.”
Flexible workspaces were integrated into Ford’s new 1,500 sqm office. Accommodating
around 50 staff, it can be easily configured into seminar and conference spaces for
dealer training and promotional events. An efficient warehouse, utilising the latest racking
and forklift technology, provides full parts inventory for the country. Future planning has
ensured it has the capacity to support a growing new model range.
The benefits of the location and amenity that’s been created were identified as
other key factors in Ford's decision to grow its business at Highbrook.
The automotive brand shared the vision and
was one of the first customers to commit to
Green Star rated office space in 2010.
A design-built 10,150 sqm parts warehouse
followed five years later.
awar
winning estate.
12
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
The specialist provider to workplaces has evolved
from a national stationer into one of NZ’s largest
office product and business consumable resellers.
As the business has grown, so has its relationship
with Goodman.
OfficeMax New Zealand Limited — Trusted supplier
Kevin Obern, Managing Director
OfficeMax is represented by a 200 strong sales force, an online store with over 24,000 products
and 17 retail stores throughout the country. It has a heritage dating back almost 150 years.
The company was an early adopter of online sales (both business to business and business to
consumer) and currently distributes over 8.7 million items annually. The majority of these products
are processed and packaged at Highbrook Business Park and delivered to customers across the
North Island and to OfficeMax’s network of retail stores.
Kevin Obern said, “Goodman is a likeminded partner and this is the location of choice for
our North Island distribution centre and headquarters. Business growth, acquisitions and an
increased category offering are driving our expansion.”
Goodman continues to share the journey, currently extending the 18,900 sqm facility developed
for OfficeMax at Highbrook in 2008.
to the changing needs of business
and education has been a feature of OfficeMax’s
long and successful history in New Zealand.
A
apting
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Customer stories
13
View over the Tamaki River from the Gateway Warehouses at Highbrook Business Park.
(1)
Wynyard Precinct Holdings Limited, the joint
venture between GMT and GIC, the sovereign
wealth fund of Singapore.
This year, we’ve completed
the portfolio repositioning and
made rapid progress with our
development programme.
$334.8 m
Profit before tax
61.6% increase
$201.9 m
Portfolio revaluation
8.2% increase in value
$370.5 m
Asset sales
including WPH
(1)
$160.5 m
New development
projects
total project cost
Record
results
An investment strategy focused on the Auckland industrial market is
creating value for investors and contributing to record financial results.
We’ve deleveraged the balance sheet and have substantial funding
capacity for future investment and development opportunities.
14
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
15
Cash distributions
$86.0 million paid
6.65 cpu
Loan to value ratio
25% previously
19.7 %
Total Unitholder Return
12 months to 31 March 2019
3 6 .1 %
Net tangible asset backing
13% increase
1 5 7. 0 cpu
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Result overview
Total Unitholder Return %
Annualised to 31 March 2019
17.2
14.7
13.7
25.2
36.1
5 year
4 year
3 year
2 year
1 year
This focus, together with a commitment to making
great spaces for our customers, is contributing to
record financial results. It is also positioning the
Trust for long-term, sustainable growth.
GMT’s $2.6 billion property
portfolio is now exclusively
invested in the Auckland
industrial market.
16
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Keith Smith — Chairman and Independent Director
The disposal of the Trust’s interests in the VXV Portfolio in December 2018 was one of the last
transactions in a sales programme that has spanned five years. It was a defining achievement
in a portfolio repositioning process that has focused investment in the rapidly growing and
supply-constrained Auckland industrial market.
The balance sheet capacity created by $1.2 billion of asset sales since 2014 has funded more
than $675 million of new development projects. Our preference for high-quality industrial
property reflects the positive investment attributes of this type of property and the superior
growth profile it offers.
The disruption of traditional retail channels through e-commerce is driving demand for efficient
warehouse and distribution space in key urban locations, all around the world. Being able to
meet customers’ requirements for logistics space close to consumers is a real competitive
advantage in these cities. The Trust’s Auckland focus and proven development capability mean
it is uniquely placed to benefit from these global trends as they become more established in
our local market.
Record performance
The sustained economic and demographic growth that is a feature of New Zealand’s largest
city is also contributing to GMT’s financial performance.
This year’s statutory profit of $334.8 million before tax was a record for the Trust and
61.6% higher than the previous year. Over $200 million of the profit was attributed to the
portfolio revaluation. The 8.2% increase in value reflects strong property fundamentals and
increased investor demand in the markets where we invest.
We have refined our business to capitalise on the
growth of Auckland, the expansion of e-commerce
and rising consumerism. It’s a successful strategy
that is delivering essential business infrastructure
for our customers, strong returns for our investors
and positive outcomes for other stakeholders.
Goodman Property Trust
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Chairman's report
17
170.9
247.9
220.5
207.2
334.8
Profit before tax
$ million
2015
2016
2017
2018
2019
Industrial weighting
%
73
75
84
83
100
(1)
2015
2016
2017
2018
2019
(1 )
After all contracted sales and acquisitions, including post balance date transactions.
The Directors are equally satisfied with GMT’s corporate performance and the progress being
made with the various initiatives that make up the Trust’s sustainability programme. Our carbon
rating has improved, we are doing more for our people, supporting our local communities and
focusing our reporting on the things that matter to our stakeholders.
Investment returns
A property strategy focused on the strongly performing Auckland industrial market has
resonated positively with the investment community and GMT is now the largest listed
property stock on the NZX, with a market capitalisation of around $2.2 billion.
The Trust has delivered a Total Unitholder Return of 36.1% over the year to 31 March 2019,
outperforming all the NZX listed property stocks. It’s a similar performance over longer
timeframes with the Trust achieving annualised returns of 13.7% and 17.2% over the last three-
and five-year periods. These returns were also higher than the NZX property sector and
wider NZX50 averages over the same timeframes.
A market-leading fee structure, which includes a performance component that rewards the
Manager when GMT achieves total returns greater than its listed peers, has been a feature
of the Trust's external management arrangement since 2007.
With a relative return 12.1% above its benchmark, a full performance fee of $8.6 million was
achieved this year. The Manager is required to use the fee to subscribe for new units in the
Trust – continuing the close alignment of interests between Goodman, as the Manager and
cornerstone investor, and other Unitholders.
The Board is extremely pleased with the results being
achieved and is confident that the current strategy
of development-led growth, funded from the Trust’s
substantial reserves, will support strong operating
performances into the future.
Mainfreight, Savill Link, Otahuhu
The NZX listed logistics and transport company now occupy
two facilities within the portfolio, totalling over 15,000 sqm.
18
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
NZX listing rules
The Board has always sought to maintain a contemporary governance structure for GMT
incorporating many of the requirements of a listed company into its Trust Deed. The update
to the NZX listing rules this year included changes to ensure consistency with the Financial
Markets Conduct Act.
Under the new listing rules GMT’s unit trust structure meant it could be classified as either:
+
an issuer of fund securities, or
+ an issuer of equity securities.
The Board believes that the additional governance and reporting requirements that apply
to equity issuers is a real benefit to GMT Unitholders and has obtained NZX's approval to
have the Trust designated an equity security issuer.
Future focus
We have repositioned GMT as an industrial property specialist to meet the growing demand
for warehouse and distribution space across Auckland. This strategy has enhanced the
portfolio and reduced gearing to just 19.7%. The balance sheet capacity provided by the sales
programme will be reinvested over time.
Making investment decisions focused on long-term growth is also improving the alignment
between the cash earning of the Trust and the distributions paid to Unitholders. Distributions
for the 2020 financial year are expected to be held at 6.65 cents per unit, a level that helps
absorb the short-term impact of balance sheet deleveraging.
A continuation of the development programme will drive our future growth and deliver positive
outcomes for all our stakeholders.
On behalf of the Board
Keith Smith
Chairman and Independent Director
Parade Units, Highbrook Business Park
A multi-unit development catering for small business occupiers.
All seven units were leased prior to completion in January 2019.
Move Logistics, Highbrook Business Park
One of five customers that has expanded their space
requirements at Highbrook over the last 18 months.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Chairman’s report (continued)
19
Management report
Seated from left to right:
Andy Eakin — Chief Financial Officer
John Dakin — Chief Executive Officer and Executive Director
20
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
The last five years has been a period of refinement as asset sales
and new development projects have repositioned the portfolio and
deleveraged the balance sheet.
Focusing our investment strategy on the Auckland industrial sector
recognises the emerging trends and unique drivers that have helped
make this New Zealand’s strongest performing real estate market.
Demographic changes, economic growth, and the rapid expansion of
online retailing are creating an unprecedented level of demand for well-
located and operationally efficient warehouse space across the city.
These factors are driving GMT’s operating performance and creating
value for investors. It's apparent in our results and this year’s record
profit, including a $201.9 million portfolio revaluation gain, highlights
the positive impact of our strategy.
Delivering the great spaces and exceptional
service that helps our customers succeed
motivates our team every day. It creates
links that support our communities and
most importantly, it provides our investors
with a share in a high-quality industrial
portfolio positioned for long-term growth.
Key highlights include:
+
Profit after tax of $319.5 million, compared to $194.0 million previously
+ Adjusted operating earnings after tax of $99.5 million and cash earnings
of 6.98 cents per unit, consistent with earlier guidance
+
Completion of the sales programme with $370.5 million of asset disposals
+ $160.5 million of new development projects announced with $195 million
of work in progress
+
A loan to value ratio of 19.7% at 31 March 2019, including contracted sales.
Comprehensive analysis of GMT’s financial result is provided on page 38
of this report.
Design-build facility for NCI Packaging at Savill Link
One of 14 development projects currently underway across the portfolio.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Management report
21
Customer relationships
More than 175 companies, employing around 10,000 people, occupy space in the portfolio.
These are our customers and their commercial success underpins our own. A long-term
focus means we establish lasting relationships as business partners, providing the high-quality
spaces and superior service that helps them prosper.
It’s a commitment that ensures high retention rates and preferred provider status when
current leases expire, or a customer’s space requirements change.
An impressive 59% of leasing transactions over the last 12 months were repeat business.
In total more than 63,000 sqm of space, around 6% of the portfolio, was secured on new
or revised terms. This leasing success has lifted portfolio occupancy to over 98% and
maintained the weighted average lease term at more than five years.
Portfolio refinement
The positive dynamics of the Auckland industrial market, with a shortage of high-quality space
available for lease, is supporting a record level of development activity. Around $160 million
of new projects were confirmed last year. Expansion commitments were also secured
from existing customers, OfficeMax and Panasonic, shortly after the year end. GMT now
has 14 projects underway at a total cost of $195 million. The majority are at Highbrook
in East Tamaki, with this world-class business park now over 90% developed.
We expect similar volumes of development over the next few years with demand from
within the portfolio indicating a further 50,000 sqm of industrial space will be required.
Like OfficeMax and Panasonic, these customers are already at capacity and require tailored
property solutions to accommodate their business growth.
Along with these design-build commitments the current workbook also includes smaller
build-to-lease projects. With the majority of these being leased prior to completion, it’s
been a highly successful approach that has contributed to the rapid development of
GMT’s strategic land holdings.
Premium Apparel, Gateway Warehouses, Highbrook Business Park
Modern racking systems and new forklift technology allows customers to
achieve greater efficiency and space utilisation within their warehouses.
22
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Developable land now makes up just 2.2% of the portfolio. With very limited industrial zoned
greenfield land remaining in Auckland, the focus is on securing strategic sites that offer future
opportunity through intensification of use or redevelopment. The acquisition of the Foodstuffs
Distribution Centre in Mt Roskill and three adjoining properties on Favona Road in Mangere
during the year are examples of this strategy.
Retaining a development capability is critical to our business growth and both these locations
are ideal sites for fulfilment and logistics companies.
Future direction
The strength of our customer relationships and the attraction of the portfolio have driven the
Trust’s recent success and positioned it for long-term growth.
The positive market dynamics created by a strong regional economy and the growth of online
retailing make Auckland industrial our preferred asset class. The Trust’s $2.6 billion portfolio is
now exclusively invested in this market.
The sale of office assets has repositioned GMT and created the balance sheet capacity
that is funding its development programme. A stable outlook supports a continuation of this
development-led growth strategy, extending an already high-quality portfolio.
It’s a disciplined approach focused on sustainable growth. We’re making space for greatness
and our customers and other stakeholders are embracing the opportunity it provides.
John Dakin
Chief Executive Officer and Executive Director
Andy Eakin
Chief Financial Officer
Around 85% of the portfolio has been developed since 2004.
Providing around one million square metres of high-quality
space, GMT is the country’s leading industrial property provider.
Plytech, Highbrook Business Park
The specialist plywood distributor moved into its new design-built warehouse in December 2018.
At 5,100 sqm it's more than double the size of the customer's previous Highbrook facility.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Management report (continued)
23
DHL Supply Chain has leased the largest of the Gateway Warehouses at Highbrook.
It's a prime location with the office area orientated to maximise the views over the Tamaki River
and Auckland's volcanic cones. The global logistics specialist now occupies three facilities in
the portfolio, encompassing more than 45,000 sqm of rentable area.
24
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Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
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Annual Report 2019
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Annual Report 2019
Our assets
Our $2.6 billion
portfolio includes
properties in the key
Auckland industrial
suburbs of East
Tamaki, Mangere,
Mt Roskill, Otahuhu,
Penrose and Wiri.
These facilities are modern, highly specified
and operationally efficient. They are designed
to meet the requirements of a variety of end
users and can accommodate businesses
that need access to air, port, rail and road
freight networks.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
25
High-quality assets, a proven development
capability and strong customer relationships
have all contributed to GMT’s success.
Almost 180 customers occupy space in the portfolio. The focus on superior customer service
means we work hard at maintaining these professional relationships because they underpin
demand for space within the portfolio.
The average remaining lease term across the portfolio is 5.2 years, while occupancy is now
more than 98%.
(1)
Property portfolio
as at 31 March 2019
PropertyPortfolio weighting Key customers
Highbrook Business Park, East Tamaki54%Big Chill, DHL, NZ Post, OfficeMax, Viridian
Savill Link, Otahuhu12%Coda, Mainstream, Steel & Tube, SuperCheap, Toll
M20 Business Park, Wiri10%Coles, Fliway, Frucor, Ingram Micro, Orora
The Gate Industry Park, Penrose9%Asaleo Care, Coda, CSR Building Products, Recall, Winstone Wallboards
Westney Industry Park, Mangere5%Cotton On, DHL, Fliway, Linfox, Winstone Wallboards
Roma Road, Mt Roskill4%Foodstuffs
Penrose Industrial Estate, Penrose3%Bridgestone, George Weston, Turners
Tamaki Estate, Panmure2%ContainerCo, Camelspace, Earthwise, Jellicoe, Sue-E
Connect Industrial Estate, Penrose1%Fletcher Steel, Mosscar Services
Show Place Office Park, Christchurch0%Conditionally sold post balance date
26
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Annual Report 2019
(1)
After all contracted sales, including post balance date transactions.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Our assets (continued)
27
Susan Paterson
Independent Director
John Dakin
Chief Executive Officer and Executive Director
Keith Smith
Chairman and Independent Director
Gregory Goodman
Non-Executive Director
Peter Simmonds
Independent Director
Phillip Pryke
Non-Executive Director
Leonie Freeman
Independent Director
28
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Board of
Directors
For full profiles of the directors and management team see
goodmanreport.co.nz
John Dakin
Chief Executive Officer and Executive Director
Andy Eakin
Chief Financial Officer
Anton Shead
General Counsel and Company Secretary
Kimberley Richards
Director – Investment Management
and Capital Transactions
Jonathan Simpson
Head of Corporate Affairs
James Spence
Director – Investment Management
Mandy Waldin
Marketing Director
Michael Gimblett
General Manager – Development
Goodman Property Trust
Annual Report 2019
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Annual Report 2019
Our people (continued)
29
Management
team
30
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Sustainability
Framewor
k
At Highbrook Business Park, we have re-thought
the modern workplace and changed perceptions
of how industrial property is presented and used.
Award-winning design, consistent landscaping, clear signage,
recreational facilities, public infrastructure and business support
services help create exceptional work environments for the
companies that partner with us.
Goodman Property Trust
Annual Report 2019
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Annual Report 2019
31
KiwiHarvest, Highbrook Business Park
The Goodman Foundation is a principal sponsor of the food rescue organisation
and its new premises within the Parade Multi-unit development.
Our own+develop+manage model represents
our core business functions. It is supported
by the four pillars of our sustainability
framework, ensuring that positive outcomes
are achieved for all our stakeholders.
Our framework
32
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Sustainable development
Future-proof portfolio
Leader in
quality
industrial
space
Corporate performance
Stakeholder partnerships
Asset management
Superior product and service
People and community
Thriving culture and neighbourhoods
We understand that resources are scarce and need to be used efficiently.
We also acknowledge that business and community are interconnected.
Balancing these obligations improves our environmental, social and financial
performance and helps position GMT as the leader in high quality industrial space.
Goodman Property Trust
Annual Report 2019
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Annual Report 2019
Our framework (continued)
33
Sustainable development
As a long-term investor, we seek to future-
proof our portfolio. We develop high-quality
facilities in strategic locations close to
consumers and key transport infrastructure.
Our base-build specification ensures
our new facilities are designed to be
industry-leading. They are constructed
from sustainably-sourced building
materials and we manage the development
process to reduce waste and other
environmental impacts.
We work collaboratively with our
customers and consultants, incorporating
the latest technology to maximise the
operational performance and energy
efficiency of these new buildings. We also
focus on workplace amenity, ensuring our
customers have functional and flexible
facilities that meet their wider needs.
Corporate performance
Recognising that our corporate
performance depends strongly on the
quality of our partnerships, we seek to
establish long-term, mutually beneficial
relationships with all our stakeholders.
We critically assess our performance and
provide investors, regulators, customers
and community partners with balanced
information about our business activities.
Robust governance structures give these
stakeholders confidence in our reporting
and we engage regularly across a variety
of communication channels.
Participation in the Carbon Disclosure
Project since 2009 demonstrates our
commitment to improving the environmental
performance of our business. The Trust
achieved a climate score of B- in 2018 an
improvement on the previous year.
You can find out more about
the rating process at www.CDP.net
Asset management
Maintaining our properties to a high
standard and delivering outstanding
customer service contributes to the
strong relationships that underpin our
financial results. Lifecycle management of
our assets improves their environmental
and investment performance.
Ongoing energy and waste monitoring
across the portfolio benchmarks our assets
against best-practice industry standards.
The energy consumed in FY19 totalled
9,600 MWhr, 92% of which was electricity
with the balance being natural gas.
It represents an 18% reduction from
2018 and continues a five-year trend of
falling emissions, largely resulting from
the divestment of office assets but also
the positive impact from new energy
efficiency initiatives.
People and community
The health, safety and wellbeing of our
people, our customers, our contractors
and the wider community is fundamental
to our business and we work to ensure our
obligations under the Health and Safety at
Work Act 2015 are complied with every day.
We believe that a business with a safe
and inclusive culture, that is positively
connected with its community, will deliver
superior long-term results.
We support and develop our team with
a flexible workplace environment that
inspires and challenges each employee.
Training, diversity and wellbeing initiatives
help us reach these goals.
We contribute to the creation of thriving
communities through the social initiatives
of the Goodman Foundation.
To learn more about the Goodman Foundation
see pages 35 to 37.
Follow this link for a
development case study.
Follow this link for an
energy case study.
Cooking For A Cause
Around 12 Goodman and KiwiHarvest staff participated in a cooking for a cause event at the
My Food Bag kitchen. Using rescued ingredients enough soup, curry and shepherd’s pie was
prepared in one afternoon to feed 100+ hungry secondary school students the following day.
From left to right:
John Dakin
Nadia Lim — Co-founder My Food Bag
Goodman has a team of 58 dedicated
property professionals, working together
with customers and community stakeholders
to achieve great things across Auckland.
People and community
People
We celebrate individual differences and have a comprehensive inclusion and diversity policy
that sets goals across gender, ethnicity and age. Flexible work practices and employment
policies that encourage diversity, help reduce bias and ensure we are an inclusive and
progressive organisation.
We know a lot about ourselves; our team of almost 60 has a roughly equal gender mix, an
average age of almost 39 and has been working for Goodman for more than six years.
We’ve committed to being more representative and have partnered with Champions for
Change and Diversity Works to help us on the journey. We’ve set clear objectives for 2023
and these are summarised in our governance disclosures on page 97.
To empower our people and enable them to achieve great things we have a wellbeing
programme focused on their health and happiness. These initiatives include annual flu
vaccines and skin checks, cooking for a cause, run & walk events at Highbrook Business Park,
Steptember fundraising and touch rugby at Victoria Park. Through the Employee Assistance
Programme, staff also have access to additional workplace support any time they need it.
We provide regular training and education opportunities for our team members and encourage
participation in our industry with an annual scholarship to a promising student. This year’s
recipient is Jordan Parratt, a fifth-year property and law honours student of the University of
Auckland. Jordan was inspired to pursue a career in property after participating in international
Real Estate Competitions held in Manhattan and Sydney.
34
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Goodman Property Trust
Annual Report 2019
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Annual Report 2019
People and community (continued)
35
Steptember
A month-long, global event that encourages participants to get active and walk 10,000
steps a day, while raising money for local Cerebral Palsy charities. In New Zealand,
Goodman staff raised over $17,000 through sponsorships and various fund-raising events.
www.steptember.org.nz
Food Rescue
In 2018 KiwiHarvest collected and redistributed 1,325,672 kgs of food, the equivalent of
3,787,634 meals, to 268 community agencies. It’s an exceptional effort made possible
through the efforts of 143 volunteers and food contributions from 214 donors.
www.kiwiharvest.org.nz
Community
Supporting the various stakeholder groups in the communities where we operate is
fundamental for a business focused on long-term relationships and sustainable growth.
The Goodman Foundation supports social initiatives that aim to improve the quality of life,
health and education, and standard of living of the people within these neighbourhoods.
Through these sponsorships, other fundraising, the donation of equipment, volunteering and
in-kind programmes, around $350,000 of support has been provided over the last 12 months.
The largest of our partnerships is with KiwiHarvest, a food rescue
organisation that collects and redistributes perishable food that would
otherwise be consigned to landfill. The food is delivered to charities and
social organisations for redistribution to those in need. The Foundation is
facilitating the growth of KiwiHarvest and the valuable work they do with
new premises at Highbrook Business Park.
Read more about this relationship by following this link.
Other organisations being supported
by Goodman and making a difference
in our communities include the Cerebral
Palsy Society of NZ, Duffy Books in
Homes, Great Potentials, Life Centre Trust,
Middlemore Foundation, Second Nature
Charitable Trust, the Tania Dalton
Foundation and Women's Refuge.
36
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Through payroll gifting, contributions were also made to ADC
New Zealand, Cure Kids, Diabetes New Zealand, Multiple Sclerosis
Society of New Zealand and Ronald McDonald House.
Duffy Books in Homes
A reading initiative that provides primary school children with two new books
every year to encourage literacy and learning. The Goodman Foundation
sponsors around 1,500 students across three South Auckland primary schools.
www.booksinhomes.org.nz
Christmas Box
Is an initiative of the Life Centre Trust Auckland that provides disadvantaged
families with a gift wrapped food hamper at Christmas. Goodman supports the
charity by providing warehouse and distribution space for the annual packing day.
www.christmasbox.co.nz
Women’s Refuge
To celebrate International Women’s Day Goodman hosted a fund-raising morning tea
with the proceeds going to support Woman’s Refuge. Team members also collected
and donated essential items to help women and families in crisis.
www.womensrefuge.org.nz
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
People and community (continued)
37
Waipuna Conference Suites Highbrook Fun Run 2019
An annual event run by the Rotary Club of Highbrook with support from the business
community within the estate. More than 550 runners and walkers completed the picturesque
course raising over $33,000 for local charities including the Middlemore Foundation.
www.middlemorefoundation.org.nz
HIPPY
The Home Interaction Programme for Parents and Youngsters is an early education
initiative of the Great Potentials Foundation. It is a home-based learning system with
weekly workbooks and activities that help children become competent learners
before they start school.
www.greatpotentials.org.nz
Jason Gillard
Is an architectural model maker creating scale versions of GMT’s
new developments to help market the facilities to customers.
Goodman was introduced to Jason through Poly-emp, an
employment & advisory service for people with learning difficulties.
Follow this link to learn more.
A portfolio revaluation gain of over $200 million has contributed
to a record statutory profit of $334.8 million before tax.
Financial summary
38
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Annual Report 2019
Overview
2019
2018% change
Profit before tax ($m) 334.8207.261.6
Profit after tax ($m) 319.5194.064.7
Movement in fair value of investment property ($m) 201.983.8140.9
Adjusted operating earnings before tax ($m) 117.0119.1(1.8)
Adjusted operating earnings after tax ($m) 99.5101.6(2.1)
Adjusted operating earnings per unit before tax (cpu) 9.049.25(2.3)
Adjusted operating earnings per unit after tax (cpu) 7.687.89(2.7)
Cash earnings per unit (cpu) 6.986.99(0.1)
Cash distribution per unit (cpu) 6.656.65–
Assets for loan to value calculation ($m)
(1)
2,633.42,231.018.0
Borrowings for loan to value calculation ($m)
(1)
519.0571.3(9.2)
Loan to value ratio (%) 19.725.6(23.0)
Net tangible assets (cpu) 157.0138.913.0
Management expense ratio 0.790.4671.7
Management expense ratio (%)
– excluding performance fee
0.460.46–
(1)
Refer to note 3.5 of GMT's Financial Statements.
The revaluation of the Trust’s property portfolio contributed $201.9 million of fair value gains
to this year’s profit. The 8.2% increase in asset values reflects the quality of the portfolio,
strong property market fundamentals and record sales results, with local and international
investors competing for assets in a low interest rate environment.
These factors are reflected in the portfolio's average capitalisation rate which has
strengthened 40bps over the last 12 months to 5.8%, while market rents have increased
by 5% on a like for like basis.
The disposal of the Trust's 51% interest in Wynyard Precinct Holdings Limited
(1)
has
also generated strong gains for GMT, contributing to a 61.6% increase in profit from the
$207.2 million achieved previously.
Adjusting for these and other cash and non-cash items provides the reconciliation
between statutory profit and operating earnings.
(2)
Operating performance
Low vacancy rates and sustained economic growth is driving customer demand for high
quality industrial facilities across Auckland. These positive market dynamics are contributing
to GMT’s strong operating performance, with new leasing and development commitments
growing rental cashflows across the portfolio.
A successful sales programme has provided the balance sheet capacity to fund the
heightened level of development being undertaken. The positive revenue contribution from
completed projects and new acquisitions during the year has been offset by the impact
of these earlier disposals. The deleveraging that has occurred, has contributed to a 2.5%
reduction in net property income, from $130.1 million to $126.8 million.
There has been a corresponding reduction in interest costs, which have decreased from
$18.7 million to $16.0 million.
(1)
The joint venture that owned the VXV portfolio of properties.
(2)
Operating earnings are a non-GAAP financial measure included to provide an assessment of the performance of
GMT’s principal operating activities. Calculation of operating earnings is as set out in GMT’s Profit or Loss statement.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Financial summary (continued)
39
Administrative expenses have increased $0.1 million to $2.7 million and while a performance
fee of $8.6 million was earned this year, it is excluded from operating earnings as the Manager
is required to use the fee to subscribe for new Units in the Trust.
The operating contribution from GMT’s share in Wynyard Holdings Precinct Limited, which
was contracted for sale in May 2018 and settled in December 2018, is detailed in note 2.1.
The $8.9 million total contribution
(1)
($10.3 million previously) from the joint venture results in
adjusted operating earnings of $117.0 million before tax.
On a weighted average unit basis, this equates to 9.04 cents per unit. Full year cash
distributions paid to Unitholders
(2)
have been maintained at 6.65 cents per unit, which
represents 95.3% of GMT’s cash earnings.
Balance sheet
The disposal of Trust's 51% interest in Wynyard Precinct Holdings Limited in December 2018
means GMT’s investment strategy is now exclusively focused on the Auckland industrial
sector. The transaction was the largest sale completed by the Trust, making up $323.9 million
of the $370.5 million of asset disposals announced last year.
The conditional sale of the remaining assets at Show Place Office Park, post balance date,
completes the sales programme. It has been a successful strategy that has repositioned
the business and deleveraged the balance sheet, providing the funding capacity for new
development and investment initiatives.
Eleven development projects, requiring $114.1 million of additional investment, commenced
during the year and two strategic acquisitions totalling $122.0 million were also announced.
At 31 March 2019, the Trust had a loan to value ratio (LVR) of just 19.7% with committed gearing
of 23.7%. It’s a conservative level, well below the 50% maximum allowed under the Trust Deed
and debt facility covenants.
While the fair value movements from GMT’s portfolio revaluation are excluded from operating
earnings, they are the main drivers of the 13.0% increase in net tangible asset backing to
157.0 cents per unit (on a fully diluted basis).
(1)
Adjusted operating earnings is a non-GAAP financial measure included to provide an assessment of the performance
of GMT’s principal operating activities. Refer to note 4.2 of GMT’s financial statements for further information.
(2)
Cash earnings is a non-GAAP measure that assesses free cash flow, on a per unit basis, after adjusting for certain items.
Calculation of GMT’s cash earnings is set out above.
Cash earnings
Cash earnings is a non-GAAP measure that assesses free cash flow, on a per unit basis, after
adjusting for certain items.
The table below shows how the Trust’s cash earnings are calculated and how this compares
to the distribution it pays.
$ million
31-Mar-19
31-Mar-18
Adjusted operating earnings before tax117.0119.1
Tax on adjusted operating earnings (17.5)(17.5)
Adjusted operating earnings after tax
(1)
99.5101.6
Capitalised borrowing costs – land
(2)
(6.0)(8.2)
Maintenance capex (3.1)(3.3)
Cash earnings 90.490.0
Cash earnings after tax (cpu)6.986.99
Distributions per unit (cpu)6.656.65
Distributions % of cash earnings95.395.1
(1)
Refer to note 4.2 of GMT's Financial Statements.
(2)
Refer to note 3.1 of GMT's Financial Statements.
The Manager currently uses the base management fee it earns to subscribe for new units in
the Trust. Adding back the fee in 2019 would reduce cash earnings to 6.24 cents per unit.
Taxation
A total tax expense of $15.3 million results in an after-tax profit of $319.5 million, an increase
of 64.7% from the $194.0 million recorded in 2018.
After tax adjusted operating earnings, reflects an effective tax rate of 15.0%.
GMT Bond Issuer Limited
During the year, GMT Bond Issuer Limited received $19.7 million of interest income and
incurred $19.7 million of interest expense. The 28.8% increase reflects the full year impact of
the GMB040 and GMB050 bond issues during the previous period.
Standard & Poor’s has maintained the credit rating of all Goodman+Bonds at BBB+. This is one
notch higher than the Trust’s investment grade issuer rating of BBB.
40
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Annual Report 2019
Five year financial summary
$ million20192018201720162015
Profit or loss
Net property income 126.8130.1134.2133.8134.7
Share of operating earnings before tax from joint ventures 2.110.38.46.34.4
Net interest costs (16.0)(18.7)(18.0)(20.5)(24.1)
Administrative expenses (2.7)(2.6)(2.9)(2.6)(2.7)
Operating earnings before other income / (expenses) and income tax 110.2119.1121.7117.0112.3
Movement in fair value of investment property 201.983.8114.7145.875.3
Disposal of investment property –0.5(4.3)(1.1)4.5
Profit on disposal of joint venture35.1––––
Dividend income from joint venture2.1––––
Share of other (expenses) / income and tax from joint ventures (0.5)20.6(1.4)(2.2)1.7
Movement in fair value of financial instruments 3.2(8.5)(2.5)(5.3)(15.3)
Manager’s base fee expected to be reinvested in units (8.6)(8.3)(7.7)(6.3)(6.4)
Manager’s performance fee expected to be reinvested in units (8.6)––––
Other items ––––(1.2)
Profit before tax 334.8207.2220.5247.9170.9
Current tax (16.2)(16.5)(17.8)(17.8)(15.4)
Deferred tax 0.93.311.13.024.2
Profit after tax attributable to unitholders 319.5194.0213.8233.1179.7
Adjusted operating earnings before tax per unit (cpu) 9.049.259.519.419.16
Adjusted operating earnings after tax per unit (cpu) 7.687.898.287.887.99
Cash earnings per unit (cpu) 6.986.997.086.116.04
Cash distribution per unit (cpu)
6.656.656.656.656.45
Balance sheet
Investment property 2,633.42,231.02,249.32,275.32,095.7
Investment property contracted for sale43.5238.67.743.8–
Investment in joint venture –114.370.763.259.1
Total assets 2,720.52,719.52,460.72,475.52,177.6
Borrowings for LVR calculation 519.0571.3681.8753.2694.2
Total liabilities 674.3925.8785.8939.3800.9
Total equity2,046.21,793.71,674.91,536.21,376.7
Loan to value ratio (%) 19.725.629.332.833.1
NTA per unit (cpu) 157.0138.9130.4120.4108.4
Unit price at 31 March (cpu) 173.0133.0120.5132.0119.5
Property portfolio
(1), (3)
Net lettable area
(2)
(sqm) 1,004,7941,111,244989,3001,040,991983,182
Weighted average capitalisation rate (%) 5.86.26.56.957.5
Investment portfolio occupancy (%) 9898989796
Weighted average lease term (years) 5.26.15.85.75.1
Customers 179264240281251
(1)
Property portfolio metrics includes GMT’s joint venture interests where applicable.
(2)
Net of canopies and yard.
(3)
After all contracted sales, including post balance date transactions.
Five year financial summary (continued)
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Financial summary (continued)
41
179.7
233.1
213.8
194.0
319.5
Profit after tax
$ million
2015
2016
2017
2018
2019
33.1
32.8
29.3
25.6
19.7
Loan to value ratio
%
2015
2016
2017
2018
2019
6.04
6.11
7.08
6.99
6.98
Cash earnings
cpu
2015
2016
2017
2018
2019
108.4
120.4
130.4
138.9
157.0
NTA per unit
cpu
2015
2016
2017
2018
2019
148.7
124.2
278.8
243.9
370.5
Disposals
$ million
2015
2016
2017
2018
2019
108.8
148.7
97.0
164.8
160.5
Development commitments
$ million
2015
2016
2017
2018
2019
Gateway Warehouses, Highbrook Business Park
Forming an elevated entrance to the estate, on the side of the Pukekiwiriki Reserve,
the seven warehouse development features the same design aesthetic and
high-quality landscaping that sets Highbrook apart..
42
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Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Goodman Property Trust
Financial Statements
For the year ended 31 March 2019
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
43
The Board of Goodman (NZ) Limited, the Manager of Goodman Property Trust, authorised
these financial statements for issue on 14 May 2019. For and on behalf of the Board:
Keith Smith Peter Simmonds
Chairman Chairman, Audit Committee
Contents
Profit or loss 44
Balance sheet 45
Cash flows 46
Changes in equity 47
General information 48
Notes to the financial statements:
1. Investment property 49
2. Investment in joint venture 58
3. Borrowings 61
4. Units, earnings per unit and distributions 64
5. Derivative financial instruments 66
6. Administrative expenses 67
7. Debtors and other assets 69
8. Creditors and other liabilities 69
9. Tax 70
10. Related party disclosures 72
11. Commitments and contingencies 76
12. Reconciliation of profit after tax to net cash flows from operating activities 76
13. Financial risk management 77
14. Operating segments 79
Independent auditor’s report 80
Profit or loss
For the year ended 31 March 2019
$ millionNote20192018
Property income1.1155.2159.5
Property expenses(28.4)(29.4)
Net property income126.813 0 .1
Share of operating earnings before tax from joint venture2.12 .110.3
Interest
Interest income3.14.97. 2
Interest cost3.1(20.9)(25.9)
Net interest cost(16.0)(18.7)
Administrative expenses6.1(2.7)(2.6)
Operating earnings before other income / (expenses) and tax110 . 2119 .1
Other income / (expenses)
Movement in fair value of investment property1.5201.983.8
Disposal of investment property–0.5
Profit on disposal of joint venture2.33 5 .1–
Dividend income from joint venture2 .1–
Share of other (expenses) / income and tax from joint venture2.1(0.5)20.6
Movement in fair value of financial instruments5.13.2(8.5)
Manager’s base fee expected to be reinvested in units6.3(8.6)(8.3)
Manager’s performance fee expected to be reinvested in units6.3(8.6)–
Profit before tax334.82 0 7. 2
Ta x
Current tax on operating earnings9.1(16.7)(16.9)
Current tax on non-operating earnings9.10.50.4
Deferred tax9.10.93.3
Total tax(15.3)(13.2)
Profit after tax attributable to unitholders319.5194.0
There are no items of other comprehensive income, therefore profit after tax attributable to unitholders equals total comprehensive income attributable to unitholders.
CentsNote20192018
Basic earnings per unit after tax4.224.6815.06
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
44
Balance sheet
As at 31 March 2019
$ millionNote20192018
Non-current assets
Stabilised properties1.62,478.62,043.5
Developments1.785.267.5
Land1.869.6120.0
Investment in joint venture2.2–114.3
Derivative financial instruments5.225.08.9
Deferred tax assets9.21.95.2
Total non-current assets2,660.32,359.4
Current assets
Investment property contracted for sale1.943.5238.6
Advances to joint venture10.2–1 0 7. 5
Debtors and other assets713.69.3
Cash3 .14.7
Total current assets60.23 6 0 .1
Total assets2,720.52,719.5
Non-current liabilities
Borrowings3.25 8 5 .1823.6
Derivative financial instruments5.212 .118.7
Deferred tax liabilities9.226.430.6
Total non-current liabilities623.6872.9
Current liabilities
Creditors and other liabilities84 7. 649.2
Current tax payable3 .13.7
Total current liabilities50.752.9
Total liabilities6 74 . 3925.8
Net assets2,046.21,793.7
Equity
Units4 .11, 419 .11,4 08.7
Unit based payments reserve13.95.3
Retained earnings613.2379.7
Total equity2,046.21,793.7
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
45
Cash flows
For the year ended 31 March 2019
$ millionNote20192018
Cash flows from operating activities
Property income received15 3 .1160.9
Property expenses paid(29.3)(35.2)
Interest income received4.913.6
Interest costs paid(20.6)(23.9)
Administrative expenses paid(2.7)(2.6)
Manager’s base fee paid(8.6)(8.0)
Net GST (paid) / received(0.8)0.5
Tax paid(16.8)(15.6)
Net cash flows from operating activities
12
79.289.7
Cash flows from investing activities
Acquisition of investment properties(98.8)(19.3)
Proceeds from the sale of investment properties233.014.5
Capital expenditure payments for investment properties(130.7)(88.7)
Holding costs capitalised to investment properties(13.5)(13.3)
Construction loan receivable repayment–6 5 .1
Proceeds from the sale of joint venture154.2–
Repayments from / (advances to) joint venture1 0 7. 5(102.4)
Dividends received from joint venture2 .10.5
Disposal of other investments–12.0
Net cash flows from investing activities253.8(131.6)
Cash flows from financing activities
Proceeds from borrowings256.0573.0
Repayments of borrowings(506.0)(449.0)
Proceeds from the issue of units10.410.0
Distributions paid to unitholders(86.0)(85.5)
Settlement of derivative financial instruments(9.0)(2.8)
Net cash flows from financing activities(334.6)45.7
Net movement in cash(1.6)3.8
Cash at the beginning of the year4.70.9
Cash at the end of the year3 .14.7
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
46
Changes in equity
For the year ended 31 March 2019
$ millionUnits
Unit based
payments
reserve
Retained
earningsTotal
As at 1 April 20171,398.75.0271.21,6 74 . 9
Profit after tax––194.0194.0
Distributions paid to unitholders––(85.5)(85.5)
Manager’s base fee–10.3–10.3
Issue of units10.0(10.0)––
As at 31 March 20181,408.75.3379.71,793.7
Profit after tax––319.5319.5
Distributions paid to unitholders––(86.0)(86.0)
Manager’s base fee–10.4–10.4
Manager’s performance fee–8.6–8.6
Issue of units10.4(10.4)––
As at 31 March 20191, 419 .113.9613.22,046.2
There are no items of other comprehensive income to include within changes in equity, therefore profit after tax equals total comprehensive income.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
47
Reporting entity
Goodman Property Trust (“GMT” or the “Trust”) is a unit trust established on 23 April 1999 under
the Unit Trusts Act 1960. GMT is domiciled in New Zealand. The Manager of the Trust is Goodman
(NZ) Limited (“GNZ”) and the address of its registered office is Level 2, 18 Viaduct Harbour Avenue,
Auckland.
The financial statements presented are consolidated financial statements for Goodman Property
Trust and its subsidiaries (the “Group”). GMT’s investment in Wynyard Precinct Holdings Limited
is accounted for as a joint venture using the equity method of accounting until the date that it was
contracted for sale, after which it is accounted for as a held for sale asset through to settlement
on 14 December 2018.
GMT is listed on the New Zealand Stock Exchange (“NZX”) and is an FMC reporting entity for the
purposes of the Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013 and
with effect from 15 May 2019, will be an Equity Security for the purposes of the NZX Main Board
Listing Rules.
The Group’s principal activity is to invest in real estate in New Zealand.
Basis of preparation and measurement
The financial statements of the Group have been prepared in accordance with the requirements
of Part 7 of the Financial Markets Conduct Act 2013 and the NZX Main Board Listing Rules. The
financial statements have been prepared in accordance with New Zealand Generally Accepted
Accounting Practice (“NZ GAAP”), comply with New Zealand equivalents to International Financial
Reporting Standards (“NZ IFRS”), other New Zealand accounting standards and authoritative notices
that are applicable to entities that apply NZ IFRS. The Group is a for-profit entity for the purposes of
complying with NZ GAAP. The financial statements also comply with International Financial Reporting
Standards (“IFRS”).
The financial statements have been prepared on the historical cost basis except for assets and
liabilities stated at fair value as disclosed.
The financial statements are in New Zealand dollars, the Group’s functional currency, unless
otherwise stated.
Basis of consolidation
The financial statements have eliminated in full all intercompany transactions, intercompany
balances and gains or losses on transactions between controlled entities.
Significant estimates and judgements
Management is required to make judgements, estimates, and apply assumptions that affect the
amounts reported in the financial statements. These have been based on historical experience
and other factors management believes to be reasonable. Actual results may differ from these
estimates and the difference may be material. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in the future periods affected.
The significant judgements made in the preparation of these financial statements are detailed in the
following notes:
+
Investment property (note 1.5)
+ Derivative financial instruments (note 5.1)
+ Deferred tax (note 9.2)
Significant accounting policies
Significant accounting policies are disclosed in the relevant notes.
Changes in accounting policy
There have been no changes in accounting policies made during the financial year. Where
necessary, comparative figures have been adjusted to conform with changes in presentation in
the financial statements.
New accounting standards now adopted
NZ IFRS 9 Financial Instruments and NZ IFRS 15 Revenue from Contracts with Customers have been
adopted in these financial statements. There have been no material changes required to these
financial statements and no changes to existing accounting policies along with comparatives as a
result of these new accounting standards.
New accounting standard not yet effective
The following new standard has not been early adopted in these financial statements:
NZ IFRS 16 Leases
This standard will replace the current guidance in NZ IAS 17 Leases and will be
adopted by GMT in the financial statements for the year ending 31 March 2020.
GMT is both a lessor and lessee of investment property.
As a lessor
GMT is a lessor of investment property leased to customers. For lessors,
the accounting for leases under NZ IFRS 16 is similar to NZ IAS 17, with no
significant changes to the recognition and measurement of leases expected
when compared to existing accounting policies.
As a lessee
GMT’s exposure as a lessee is in respect of occupational ground leases at
Westney Industry Park. As a lessee, NZ IFRS 16 requires the recognition of
a ‘right-of-use asset’ representing the fair value of the occupational ground
leases and a lease liability reflecting the present value of future lease payments
for the occupational ground leases.
On adoption, it is expected that a right-of-use asset of $127.3 million and a lease
liability of $62.0 million will be recorded, with stabilised investment property
expected to be reduced by $65.2 million resulting in no change to the book
value of overall net assets and no impact to profit. There will be no change to
net cash flows recognised as a result of adoption of the new standard.
General information
For the year ended 31 March 2019
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
48
Notes to the Financial Statements
For the year ended 31 March 2019
1. Investment property
Property income is earned from investment property leased to customers.
1 .1 Property income
$ million
2019
2018
Gross lease receipts14 3.014 5.9
Service charge income18.419.8
Straight line rental adjustments1.01.4
Amortisation of capitalised lease incentives( 7. 2 )( 7. 6 )
Property income155.2159.5
Accounting policies
Property income from investment property leased to customers under operating leases is recognised on a straight-line basis over the term of the lease to the extent that future rental increases are known with
certainty. Fixed rental adjustments are accounted for to achieve straight-line income recognition. Where lease incentives are provided to customers, the cost of incentives is recognised over the lease term on a
straight-line basis as a reduction to rental income.
Customers’ share of property operating expenses which is recoverable is recognised as service charge income.
1.2 Future contracted gross lease receipts
Gross lease receipts that the Trust has contracted to receive in future years are set out below. These leases cannot be cancelled by the customer.
$ million
2019
2018
Year 114 0 .1130.3
Year 2131.312 6 .1
Year 3111.9111.1
Year 493.394.0
Year 571.076.5
Year 6 and later245.7250.4
Total future contracted gross lease receipts793.3788.4
1.3 Weighted average lease term
The weighted average lease term (“WALT”) represents the average lease term for leases existing at balance date which are weighted by the value of the gross lease receipts.
Years
2019
2018
Weighted average lease term (years)5 .15.6
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
49
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.4 Total investment property
This table details the total investment property value.
2019
2018
$ million
Stabilised
propertiesDevelopmentsLandTotal
Stabilised
propertiesDevelopmentsLandTotal
Core
Highbrook Business Park, East Tamaki1,322.853.460.31,436.51,091.350.7101.01,24 3.0
Savill Link, Otahuhu292.53 1.12.3325.92 3 7. 86.511.9256.2
M20 Business Park, Wiri2 4 7. 2–7. 0254.2233.6–6.6240.2
The Gate Industry Park, Penrose232.5––232.5189.5–0.5190.0
Westney Industry Park, Mangere122.70.7–123.4119. 8––119. 8
Total core2 , 217.785.269.62,372.51,872.05 7. 2120.02,049.2
Value-add260.9––260.9171.510.3–181.8
Total investment property2,478.685.269.62,633.42,043.56 7. 5120.02,231.0
GMT’s estates are classified as either “core” or “value-add” estates.
Core
Those estates within the portfolio which consist largely of modern, high-quality industrial and logistics properties.
Value-add
Those estates which generally consist of older properties that are likely to have redevelopment potential over the medium to long-term. Redevelopment of the properties to realise their maximum future
value may require a change in use.
Significant transactions
In October 2018, GMT completed the acquisition of a property at Roma Road, Mount Roskill for $93.0 million.
In November 2018, GMT completed the disposal of 614-616 Great South Road, a value-add property, for $11.6 million. This sale resulted in a gain on sale of $5.1 million over the previous carrying value. This gain
has been reflected as a fair value movement in the financial statements.
In December 2018, GMT unconditionally contracted the sale of the Concourse Industry Park, a value-add property, for $35.0 million. This sale resulted in a gain on sale of $5.4 million over the previous carrying
value. This gain has been reflected as a fair value movement in the financial statements. Settlement is expected to occur in June 2019.
In December 2018, GMT conditionally contracted the acquisition of a value-add property at Favona Road, Auckland for $29.0 million. The acquisition remains conditional on Overseas Investment Office consent.
During the year ended 31 March 2019 seven developments were completed and were independently valued at a total of $178.4 million.
Subsequent event
In May 2019, GMT unconditionally contracted the acquisition of a value-add property on Pilkington Road, Auckland for $9.9 million. Settlement is expected to occur in May 2019.
In May 2019, GMT conditionally contracted the disposal of three office buildings at Show Place Office Park, Christchurch for $13.1 million. This disposal is expected to result in a nil value gain on sale and is subject
to the satisfaction of certain conditions, with settlement expected in July 2019.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
50
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.5 Movement in fair value of investment property
Movement in fair value of investment property for the period is summarised below.
$ millionNote
2019
2018
Stabilised properties1.6165.28 9 .1
Developments1.726.221.0
Land1.8–(5.6)
Investment property contracted for sale1.910.5(20.7)
Total movement in fair value of investment property201.983.8
The movement in fair value of investment property contracted for sale represents the difference between contracted sale price and book value.
Key judgement
The carrying value of stabilised properties, substantially completed developments and land is the fair value of the property as determined by an expert independent valuer. The carrying value of investment
property contracted for sale reflects the contracted sale price.
Fair value reflects the Board’s assessment of highest and best use of each property at the end of the reporting period. If the Board’s view of highest and best use has changed any impact on value will be
assessed by independent valuations. Management review the valuations performed by the independent valuers for financial reporting purposes. Discussions of valuation processes and results are held between
the Board, the Chief Executive Officer, the Chief Financial Officer, the Management Valuation Committee, and the independent valuers at least twice every year in line with the Group’s reporting dates. Full
independent valuations are completed for stabilised properties, developments held at fair value and land at least annually. Developments where fair value is not able to be reliably determined are carried at cost
less any impairment. Additionally, at each financial year end all major inputs to the independent valuation reports are verified and an assessment undertaken of all property valuation movements by management.
The fair values presented are based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length
transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. If this information is not available, alternative valuation methods are used, such as; recent
prices on less active markets; the capitalisation method, which determines fair value by capitalising a property’s sustainable net income at a market derived capitalisation rate with capital adjustments made where
appropriate; or discounted cash flow projections (“DCF”), which discount estimates of future cashflows by an appropriate discount rate to derive the fair value. The key assumptions used in the valuations are
derived from recent comparable transactions to the greatest extent possible; however, all three of the valuation methods rely upon unobservable inputs in determining fair value for all investment property.
Valuations also reflect the following unobservable inputs, where appropriate: the quality of customers in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant
accommodation, and the market’s general perception of their creditworthiness; the allocation of maintenance and insurance responsibilities between the Group and the customer; and the remaining economic life
of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices and where appropriate counter-notices have been served validly and within
the appropriate time. All investment property is categorised as level 3 in the fair value hierarchy. Refer to note 13.6 for details of the hierarchy and the Group’s transfer policy. During the year, there were no transfers
of properties between levels of the fair value hierarchy.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
51
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.5 Movement in fair value of investment property (continued)
The key inputs used to measure fair value of stabilised properties and substantially completed developments are disclosed below:
Significant inputDescription
Fair value measurement
sensitivity to increase in input
Fair value measurement
sensitivity to decrease in inputValuation method
Market capitalisation rateThe capitalisation rate applied to the market rental
to assess a property’s value. Derived from similar
transactional evidence taking into account location,
weighted average lease term, customer covenant, size
and quality of the property.
DecreaseIncreaseCapitalisation
Market rentalThe valuer’s assessment of the net market income
attributable to the property; includes both leased and
vacant areas.
IncreaseDecreaseCapitalisation & DCF
Discount rateThe rate applied to future cashflows; it reflects
transactional evidence from similar types of property
assets.
DecreaseIncreaseDCF
Rental growth rateThe rate applied to the market rental over the 10 year
cashflow projection.
IncreaseDecreaseDCF
Terminal capitalisation rateThe rate used to assess the terminal value of the property.DecreaseIncreaseDCF
The following table discloses the weighted average quantitative information by asset class for stabilised properties and developments held at fair value (excludes investment property contracted for sale):
2019
Market capitalisation rate
%
Market rental
$ per sqm
Discount rate
%
Rental growth rate
%
Terminal capitalisation rate
%
Industrial 5.71347.52.76.0
Office 9.321110.81 .19.3
2018
Market capitalisation rate
%
Market rental
$ per sqm
Discount rate
%
Rental growth rate
%
Terminal capitalisation rate
%
Industrial 6 .11307.92.76.4
Office 8.82599.91.58.8
Land is valued based on recent comparable transactions, resulting in land values ranging between $246 per square metre (“psm”) and $675 psm for industrial land (2018: between $230 psm and $650 psm)
and $1,485 psm for office land (2018: between $850 psm and $1,500 psm).
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
52
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.6 Stabilised properties
$ million
2019
Valuation
2018
Acquisitions /
transfers in
Net
expenditure
Disposals /
transfers out
Fair value
movement
Valuation
2019Valuer
Net lettable
area sqm
Weighted market
cap rateOccupancy
WA LT
years
Core
Highbrook Business Park, East Tamaki1,091.3160.66.4–64.5
1,322.8
Colliers, Savill432,6835.5%97%5 .1
Savill Link, Otahuhu2 3 7. 823.4––31.3
292.5
CBRE115,0755.8%100%6.6
M20 Business Park, Wiri233.6–––13.6
2 47. 2
JLL108,4626 .1%99%4.3
The Gate Industry Park, Penrose189.50.60 .1–42.3
232.5
CBRE85,3615.5%98%3.3
Westney Industry Park, Mangere119. 8–3.5–(0.6)
122.7
CBRE105,7777. 9 %98%6.2
Total core1,872.0184.610.0–151.12 , 217.7847,358
Value-add171.59 4 .15.9(24.7)14 .1
260.9
Colliers, CBRE114 , 3 2 65.9%93%3.5
Total stabilised properties2,043.5278.715.9(24.7)165.22,478.6961,684
Acquisitionsreflect the purchase price and any associated transaction costs.
Transfers inrepresent the net book value transferred in to a category during the year.
Net expenditurecomprises capital expenditure, holding costs, straight line rental adjustments, leasing incentives and leasing costs paid, less any amortisation of leasing incentives
and leasing costs.
Fair value movementreflects the difference between the 31 March independent valuation and the net book value immediately prior to the valuation.
Disposalscomprise the net book value at the date of disposal for properties sold in the year.
Transfers outrepresent the net book value transferred out of a category during the year.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
53
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.6 Stabilised properties (continued)
$ million
2018
Valuation
2017
Acquisitions /
transfers in
Net
expenditure
Disposals /
transfers out
Fair value
movement
Valuation
2018Valuer
Net lettable
area sqm
Weighted market
cap rateOccupancy
WA LT
years
Core
Highbrook Business Park, East Tamaki9 5 7.17 7. 32.0–54.9
1,091.3
Colliers, Savill390,4815.8%100%5.8
Savill Link, Otahuhu216.016.81.3–3.7
2 3 7. 8
CBRE106,5936 .1%100%7. 6
M20 Business Park, Wiri218.3–2.0–13.3
233.6
JLL108,4196.4%99%5.0
The Gate Industry Park, Penrose164.213.51.5–10.3
189.5
CBRE82,6766.3%100%4.3
Westney Industry Park, Mangere114 .92.61.1–1.2
119 . 8
CBRE105,7778 .1%100%7.1
Total core1,670.5110 . 27. 9–83.41,872.0793,946
Value-add355.231.919.6(240.9)5.7
171.5
Colliers, CBRE90,3246.6%94%2.3
Total stabilised properties2,025.714 2 .12 7. 5(240.9)8 9 .12,043.5884,270
Accounting policies
Stabilised properties are investment properties which are held to earn rental income. They are recorded initially at cost, including related transaction costs. After initial recognition, stabilised properties are carried
at fair value. A panel of expert independent valuers value the portfolio at least once each year, generally at 31 March. Fair values are based on estimated market values. If this information is not available, alternative
valuation methods such as recent prices in less active markets, the capitalisation method, or discounted cash flow projections are used.
Stabilised property that is being redeveloped is carried at fair value and holding costs are capitalised to the property during redevelopment. Expenditure is capitalised to a property when it is probable that it will
provide future economic benefits to the Group. All other repairs and maintenance costs are charged to Profit or Loss.
Any gain or loss arising from a change in fair value is recognised in Profit or Loss.
When sold, the net gain or loss on disposal of stabilised property is included in Profit or Loss in the period in which the sale occurred. The gain or loss on disposal is calculated as the difference between the
carrying amount of the stabilised property on the Balance Sheet and the proceeds from sale net of any costs associated with the sale.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
54
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.7 Developments
$ million
2019
Valuation /
Cost 2018Transfers in
Net
expenditure
Fair value
movementTransfers out
Valuation /
Cost 2019Valuer
Lettable
area sqm
Market
cap rate
Committed
OccupancyWALT years
At fair value
Highbrook Business Park, East Tamaki4 7.15 .188.417. 7(14 3.6)14.7Savill2,2366.4%100%9.5
Savill Link, Otahuhu6.59.423.98.5(23.4)24.9CBRE14,0505.3%100%15.0
At cost
Highbrook Business Park, East Tamaki3.626.28.9––38.7At cost35,238–18%2.6
Savill Link, Otahuhu–5.70.5––6.2At cost5,485–––
Westney Industry Park, Mangere––0.7––0.7At cost7, 8 9 0–––
Value-add10.3–1.1–(11.4 )––––––
Total developments6 7. 546.4123.526.2(178.4)85.264,899
$ million
2018
Valuation /
Cost 2017Transfers in
Net
expenditure
Fair value
movementTransfers out
Valuation /
Cost 2018Valuer
Lettable
area sqm
Market
cap rate
Committed
OccupancyWALT years
At fair value
Highbrook Business Park, East Tamaki24.38.831.412.8( 7 7. 3 )––––––
The Gate Industry Park, Penrose8.3–2.82.4(13.5)––––––
Savill Link, Otahuhu4.7–8.63.5(16.8)––––––
Westney Industry Park, Mangere––2.6–(2.6)––––––
Value-add6 .1–12.02.3(20.4)––––––
At cost
Highbrook Business Park, East Tamaki5.525.419.8––50.7At cost3 7, 7 5 0–31%8.8
Savill Link, Otahuhu–4.52.0––6.5At cost8,500–––
Value-add–8.61.7––10.3At cost11,0 9 8–––
Total developments48.947. 380.921.0(130.6)6 7. 55 7, 3 4 8
Developments are categorised between fair value and cost based on their status at the end of the financial year.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
55
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.7 Developments (continued)
Accounting policies
Developments are properties that are being constructed for future use as stabilised property. They are classified as developments and initially recorded at cost of acquisition, construction or development.
All costs directly associated with the purchase and construction of developments and all subsequent capital expenditure for developments are capitalised.
Holding costs are capitalised if they are directly attributable to the acquisition or development of a property. The most significant component of holding costs is borrowing costs. Capitalisation of borrowing
costs commences when the activities to prepare the property for its intended use are in progress and expenditures and borrowing costs are being incurred. The amount capitalised is determined by applying
the weighted average cost of debt to borrowings attributed to the development. Capitalisation of borrowing costs will continue until the development of the property is completed.
If the fair value of a development can be reliably determined during the course of its construction, then the development will be recorded at fair value in the same manner as stabilised properties.
1.8 Land
$ million
2019
Valuation
2018Acquisitions
Net
expenditure
Disposals /
transfers out
Fair value
movement
Valuation
2019Valuer
Net land
area sqm
Highbrook Business Park, East Tamaki101.0–7. 7(48.3)( 0 .1)60.3Colliers118 ,9 8 5
M20 Business Park, Wiri6.6–0.5–( 0 .1)7. 0CBRE18,770
Savill Link, Otahuhu11.94.70.6(15 .1)0.22.3JLL8,810
The Gate Industry Park, Penrose0.5–0 .1(0.6)––––
Total land120.04.78.9(64.0)–69.614 6,56 5
$ million
2018
Valuation
2017Acquisitions
Net
expenditure
Disposals /
transfers out
Fair value
movement
Valuation
2018Valuer
Net land
area sqm
Highbrook Business Park, East Tamaki132.0–8.6(34.2)(5.4)101.0Colliers188,763
Savill Link, Otahuhu13.42.30.8(4.5)( 0 .1)11.9CBRE3 7, 3 9 1
M20 Business Park, Wiri6.3–0.4–( 0 .1)6.6JLL18,770
The Gate Industry Park, Penrose0.4–0 .1––0.5CBRE2,592
Value-add22.68.61.3(32.5)––––
Total land174 .710.911. 2(71.2)(5.6)120.02 47, 516
Accounting policies
Land is recorded initially at cost, including related transaction costs. After initial recording, land is carried at fair value. Land is independently valued at least annually, with any changes in valuation recognised in
Profit or Loss.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
56
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
1. Investment property (continued)
1.9 Investment property contracted for sale
$ million
2019
Carrying
value 2018Transfers in
Net
expenditure
Fair value
movementSettlements
Carrying
value 2019
Greenlane Office, Auckland2 0 7. 86.50.75 .1( 211.6 )8.5
Glassworks, Christchurch30.8–––(30.8)–
Concourse Industry Park, Henderson–29.6–5.4–35.0
Total investment property contracted for sale238.63 6 .10.710.5(242.4)43.5
$ million
2018
Carrying
value 2017Transfers in
Net
expenditure
Fair value
movementSettlements
Carrying
value 2018
Greenlane Office, Auckland–2 2 8 .1–(20.3)–2 0 7. 8
Glassworks, Christchurch7. 723.5–(0.4)–30.8
Total investment property contracted for sale7.7251.6–(20.7)–238.6
Accounting policies
Investment property contracted for sale is recorded at the contracted sale price, with this being the best indicator of fair value.
Significant transactions
For Greenlane Office, settlement of the sale of Central Park office buildings occurred in June 2018 with settlement of the land to occur in February 2020. Settlement of the sale of 614-616 Great South Road
occurred in November 2018.
Settlement of the sale of separate properties at Glassworks Industry Park occurred in June 2018 and July 2018.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
57
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
2. Investment in joint venture
GMT formerly owned 51% of Wynyard Precinct Holdings Limited (“WPHL” or the “joint venture”), with the remaining 49% formerly owned by GIC, Singapore’s sovereign wealth fund. The shareholders’
agreement of WPHL ensured that joint control was maintained via equal board representation, with GMT unable to unilaterally direct the joint venture. Prior to the sale of WPHL by GMT and GIC, properties
owned by the joint venture were managed by Goodman Property Services (NZ) Limited (“GPSNZ”) on a similar basis to how GPSNZ manages GMT’s wholly owned properties.
Significant transactions
In May 2018, the shareholders of WPHL agreed to sell all the shares in WPHL to Blackstone with the price based on a property portfolio value of $635.0 million, which represented a price of $300.8 million for
the shares in WPHL. The transaction included full repayment of shareholder loans advanced to the joint venture and resulted in a gain of $35.1 million on disposal of GMT’s equity accounted investment in WPHL.
Settlement occurred on 14 December 2018.
Accounting policies
The joint venture was accounted for using the equity method until the date it was contracted for sale, after which it was classified as a held for sale asset and carried at its carrying amount immediately prior to
change in classification. Accounting policies of the joint venture were aligned with policies of GMT.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
58
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
2. Investment in joint venture (continued)
2 .1 WPHL Profit or Loss
WPHLGMT share at 51%
$ million
8½ mths to
14 Dec 2018
12 mths to
31 Mar 2018
8½ mths to
14 Dec 2018
12 mths to
31 Mar 2018
Net property income2 8 .136.0
Net interest costs(10.5)(15.7)
Administrative expenses( 0 .1)(0.2)
Operating earnings before other income / (expenses) and tax17. 52 0 .18.910.3
Other income / (expenses) and tax
Movement in fair value of investment properties–44.2
Movement in fair value of derivative financial instruments( 0 .1)(0.6)
Manager’s base fee(1.3)(1.6)
Income tax on operating earnings(1.6)(1.3)
Income tax on non-operating earnings0.4–
Deferred tax(1.3)(0.3)
Other income / (expenses) and tax(3.9)40.4(2.0)20.6
Profit after tax 13.660.56.930.9
The following analysis is provided to show GMT’s share of WPHL’s earnings for the periods pre- and post- being contracted for sale. GMT’s 51% share of
pre-contracted for sale earnings (for April and May 2018) are equity accounted, which is consistent with prior years. GMT’s share of post-contracted for sale
earnings (for June to 14 December 2018) are not equity accounted, therefore an adjustment has been made to the non-GAAP measure of operating earnings
in note 4.2 to allow for comparability to the prior year and to reflect GMT’s continued economic interest in WPHL until settlement (defined as adjusted
operating earnings).
Operating earnings – pre-contracted for sale (included in profit or loss)2 .110.3
Operating earnings – post-contracted for sale (included in adjusted operating earnings)6.8–
Operating earnings before other income / (expenses) and tax8.910.3
Share of other (expenses) / income and tax from joint venture – pre-contracted for sale (included in profit or loss)(0.5)20.6
Share of other (expenses) / income and tax from joint venture – post-contracted for sale (1.5)–
Share of other (expenses) / income and tax from joint venture(2.0)20.6
Profit after tax – pre-contracted for sale (included in profit or loss)1.630.9
Profit after tax – post-contracted for sale 5.3–
Profit after tax6.930.9
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
59
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
2. Investment in joint venture (continued)
2.2 WPHL Balance Sheet
$ million
WPHL as at
31 Mar 2018
GMT 51% share
31 Mar 2018
Non-current assets543.9
Other assets2.5
Total assets546.4
Non-current liabilities118 .6
Other liabilities2 17. 3
Total liabilities335.9
Net assets210.5
Share capital60.7
Retained earnings14 9.8
Total equity210.510 7. 4
Goodwill6.9
Investment in joint venture114 . 3
2.3 Disposal of joint venture
$ million
2019
2018
Proceeds153.3–
Investment in joint venture (at settlement on 14 December 2018)(116 .0 )–
Sale costs(2.2)–
Profit on disposal of joint venture3 5 .1–
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
60
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
3. Borrowings
3 .1 Interest
$ million
2019
2018
Interest income
Interest income4.97. 2
Total interest income4.97. 2
Interest costs
Interest expense(30.0)(34.1)
Amortisation of borrowing costs(3.2)( 4 .1)
Borrowing costs capitalised
(1)
12.312.3
Total interest cost(20.9)(25.9)
Net interest cost(16.0)(18.7)
(1)
Borrowing costs of $6.0 million were capitalised to land (2018: $8.2 million).
Accounting policies
Interest costs charged on borrowings are recognised as incurred. Costs associated with the establishment of borrowings are amortised over the term of the relevant borrowings.
3.2 Borrowings
$ million
2019
2018
Non-current
Syndicated bank facility12.0262.0
Retail bonds400.0400.0
US Private Placement notes – New Zealand dollar amount on inception
(1)
156.8156.8
568.8818.8
US Private Placement notes – foreign exchange translation impact
(1)
19.59.0
Unamortised borrowings establishment costs(3.2)(4.2)
Total non-current borrowings5 8 5 .1823.6
Total borrowings5 8 5 .1823.6
(1)
US Private Placement notes comprise $156.8 million for funds received at the borrowing date and $19.5 million for the foreign exchange translation impact (2018: $9.0 million). These borrowings are fully hedged and GMT takes no currency risk on interest and principal payments.
Accounting policies
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are carried at amortised cost using the effective interest method.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
61
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
3. Borrowings (continued)
3.3 Composition of borrowings
Weighted
average
remaining term
(years)
$ million
2019Date issuedExpiryInterest rate
Facility drawn /
Amount
Undrawn
facility
Syndicated bank facilities–Oct 20 – Oct 212.0Floating12.0288.0
Retail bonds – GMB020Dec 13Dec 201.76.20%100.0–
Retail bonds – GMB030Jun 15Jun 223.25.00%100.0–
Retail bonds – GMB040May 17May 245.24.54%100.0–
Retail bonds – GMB050Mar 18Sep 234.44.00%100.0–
US Private Placement notesJun 15Jun 256.23.46%US$40.0–
US Private Placement notesJun 15Jun 278.23.56%US$40.0–
US Private Placement notesJun 15Jun 3011. 23.71%US$40.0–
Weighted
average
remaining term
(years)
$ million
2018Date issuedExpiryInterest rate
Facility drawn /
Amount
Undrawn
facility
Syndicated bank facilities–Oct 19 – Oct 212.5Floating262.0188.0
Retail bonds – GMB020Dec 13Dec 202.76.20%100.0–
Retail bonds – GMB030Jun 15Jun 224.25.00%100.0–
Retail bonds – GMB040May 17May 246.24.54%100.0–
Retail bonds – GMB050May 18Sep 235.44.00%100.0–
US Private Placement notesJun 15Jun 257. 23.46%US$40.0–
US Private Placement notesJun 15Jun 279.23.56%US$40.0–
US Private Placement notesJun 15Jun 3012.23.71%US$40.0–
As at 31 March 2019 a $300.0 million (31 March 2018: $450.0 million) syndicated bank facility was provided to the Trust by ANZ Bank New Zealand Limited, Bank of New Zealand, Commonwealth Bank of
Australia, Westpac New Zealand Limited (each providing $67.5 million; 31 March 2018: each providing $101.25 million) and The Hongkong and Shanghai Banking Corporation Limited (providing $30.0 million;
31 March 2018: providing $45.0 million).
As at 31 March 2019, GMT’s drawn borrowings had a weighted average remaining term of 5.0 years (2018: 5.1 years), with 98% being drawn from non-bank sources (2018: 68%).
Calculation of the weighted average remaining term assumes bank debt utilises the longest dated facilities.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
62
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
3. Borrowings (continued)
3.4 Security and covenants
All borrowing facilities are secured on an equal ranking basis over the assets of the wholly-owned subsidiaries of Goodman Property Trust. A loan to value ratio covenant restricts total borrowings incurred
by the Group to 50% of the value of the secured property portfolio.
The Group has given a negative pledge to not create or permit any security interest over its assets. The principal financial ratios which must be met are the ratio of earnings before interest, tax, depreciation
and amortisation to interest expense, and the ratio of financial indebtedness to the value of the property portfolio. Further negative and positive undertakings have been given as to the nature of the
Group’s business.
3.5 Loan to value ratio calculation
The loan to value ratio (“LVR”) is a non-GAAP metric used to measure the strength of GMT’s Balance Sheet. The LVR calculation is set out in the table below. The GMT look through LVR as at 31 March 2018
incorporated GMT’s 51% share of WPHL. Due to the disposal of WPHL, GMT no longer has an additional look through LVR.
20192018
$ millionGMT GMT
WPHL
@ 51%
GMT look
through
Total borrowings5 8 5 .1823.65 7.1880.7
US Private Placement notes – foreign exchange translation impact(19.5)(9.0)–(9.0)
Cash( 3 .1)(4.7)(1.1)(5.8)
Investment property contracted for sale – settlement proceeds due(43.5)(238.6)–(238.6)
Borrowings for LVR calculation519.0571.356.06 2 7. 3
Investment property2,633.42,231.02 7 7. 22,508.2
Assets for LVR calculation2,633.42,231.0277.22,508.2
Loan to value ratio %19.7%25.6%20.2%25.0%
3.6 Weighted average cost of borrowings
The weighted average cost of borrowings is a non-GAAP measure that represents the weighted average interest rate paid on borrowings after all costs and taking account of the effect of interest rate
hedging.
20192018
Weighted average cost of borrowings
4.9%5.0%
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
63
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
4. Units, earnings per unit and distributions
Issued units represent capital contributed to GMT by unitholders. Distributions are paid to GMT unit holders when approved by the Board of the Manager.
4 .1 Issued units
Issued units
(million)
Value
($ million)
2019
2018
2019
2018
Balance at the beginning of the year1, 2 8 7. 81,280.21,4 08.71,398.7
Manager’s base fee reinvested7.17. 610.410.0
Balance at the end of the year1,294.91, 2 8 7. 81, 419 .11,408.7
Accounting policies
Units are classified as equity. If new units are issued in the year, any external costs, net of tax, directly attributable to the issue are deducted from the proceeds received.
GMT receives fund management services from GNZ and pays GNZ a management fee (the “base fee”). For the five year period ending on 31 March 2019, other than in limited circumstances as set out in the
Trust Deed, GNZ is required to use its base fee for the period to invest in newly issued units in GMT. The fee arrangements are considered a share based payment. GMT recognises fees for management services
at the time those services are provided. Fees are paid six monthly in arrears, and the proceeds immediately reinvested. The fee not yet paid and reinvested is reflected within the unit based payments reserve until
such time as it has been settled.
4.2 Earnings per unit
Earnings per unit measures are calculated as profit or adjusted operating earnings after tax divided by the weighted number of issued units for the year. Operating earnings is a non-GAAP financial measure
included to provide an assessment of the performance of GMT’s principal operating activities. The calculation of operating earnings before other income / (expenses) and tax is set out in Profit or Loss.
Adjusted operating earnings after tax, as set out below, incorporates GMT’s share of operating earnings of the WPHL joint venture between the date it was contracted for sale and settlement date (14
December 2018), reflecting GMT’s continuing economic interest in the joint venture:
$ millionNote20192018
Operating earnings before other income / (expenses) and tax110. 2119 .1
Share of operating earnings from joint venture – post-contracted for sale2 .16.8–
Adjusted operating earnings before tax117. 0119 .1
Income tax on operating earnings(16.7)(16.9)
Share of income tax on operating earnings from joint venture2 .1(0.8)(0.6)
Adjusted operating earnings after tax99.5101.6
Weighted units for the Manager’s base fee reinvested are included as the services are rendered. There are no other weighted units.
Weighted units
Million20192018
Issued units at the beginning of the year1, 2 8 7. 81,280.2
Manager’s base fee7. 07. 6
Weighted units1,294.81, 2 8 7. 8
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
64
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
4. Units, earnings per unit and distributions (continued)
4.2 Earnings per unit (continued)
cents per unit
2019
2018
Adjusted operating earnings per unit before tax9.049.25
Adjusted operating earnings per unit after tax7.687.89
Basic and diluted earnings per unit after tax24.6815.06
4.3 Net tangible assets
Diluted units, comprising issued units plus deferred units not yet issued, are used to calculate net tangible assets per unit.
Diluted units
Million
2019
2018
Issued units1,294.91, 2 8 7. 8
Deferred units for Manager’s base fee expected to be reinvested3 .14.0
Deferred units for Manager’s performance fee expected to be reinvested5 .1–
Diluted units1, 3 0 3 .11,291.8
20192018
Net tangible assets ($ million)2,046.21,79 3.7
Net tangible assets per unit
(cents)15 7. 0138.9
4.4 Distributions
2019 2018
Distributions relating to the period (cents per unit)6.656.65
Distributions paid in the period (cents per unit)6.656.65
Distributions relating to the period ($ million)86.085.5
Distributions paid in the period ($ million)86.085.5
Accounting policies
Distributions are recognised in equity in the period in which they are paid.
Subsequent event
On 14 May 2019 a cash distribution of 1.6625 cents per unit with 0.3167 cents per unit of imputation credits attached was declared. The record date for the distribution is 6 June 2019 and payment will be made on
20 June 2019.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
65
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
5. Derivative financial instruments
Derivative financial instruments are used to manage exposure to interest rate risks and foreign exchange risks arising from GMT’s borrowings.
5 .1 Movement in fair value of financial instruments
$ million20192018
Interest rate derivatives(1.2)(3.0)
Cross currency interest rate derivatives relating to US Private Placement notes14.9(10.9)
Total movement in fair value of derivative financial instruments13.7(13.9)
Foreign exchange rate movement on US Private Placement notes(10.5)5.4
Total movement in fair value of financial instruments3.2(8.5)
Accounting policies
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently measured at fair value at each reporting date. Derivative financial
instruments are classified as current or non-current based on their date of maturity.
Movements in the fair value of derivative financial instruments are recognised through Profit or Loss. GMT does not apply hedge accounting.
Key judgement
The fair values of derivative financial instruments are determined from valuations using Level 2 valuation techniques (2018: Level 2). These are based on the present value of estimated future cash flows, taking
account of the terms and maturity of each contract and the current market interest rates at reporting date. Fair values also reflect the creditworthiness of the derivative counterparty and GMT at balance date.
The valuations were based on market rates at 31 March 2019 of between 1.88% (2018: 1.93%) for the 90 day BKBM and 2.09% (2018: 3.06%) for the 10 year swap rate. There were no changes to these valuation
techniques during the period.
5.2 Derivative financial instruments
$ million20192018
Cross currency interest rate derivatives
Non-current assets13.7–
Non-current liabilities–(1.2)
Interest rate derivatives
Non-current assets11. 38.9
Non-current liabilities(12 .1)( 17. 5 )
Net derivative financial instruments12.9(9.8)
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
66
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
5. Derivative financial instruments (continued)
5.3 Additional derivative information
20192018
Cross currency interest rate derivatives
Notional contract value as receiver ($ million)156.8156.8
Percentage of US Private Placement notes borrowings converted to floating rate NZD payments100%100%
Weighted average term to maturity (years)8.59.5
Interest rate derivatives
Notional contract value as payer ($ million)435.0495.0
Notional contract value as receiver ($ million)200.0200.0
Percentage of borrowings fixed76%60%
Interest rate range2.4% – 4.3%2.7% – 5.0%
Weighted average term to maturity (years)3.74.5
6. Administrative expenses
Administrative expenses are incurred to manage the operational activity of GMT. Excluded from administrative expenses categorised within operating earnings are the Manager’s base fee and Manager’s
performance fee, which are expected to be used to reinvest in GMT units when payment of the fees occurs.
6 .1 Administrative expenses included within operating earnings
$ million20192018
Valuation fees(0.6)(0.6)
Auditor’s fees(0.2)(0.2)
Trustees fees(0.3)(0.3)
Other costs(1.6)(1.5)
Total administrative expenses included within operating earnings(2.7)(2.6)
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
67
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
6. Administrative expenses (continued)
6.2 Auditor’s fees
$ million20192018
Audit and review of financial statements(0.2)(0.2)
Other assurance related services––
Other services––
Total auditor’s fees(0.2)(0.2)
Other assurance
related services
Fees for other assurance related services of $7,000 (2018: $7,000) comprise work performed on the financial covenants of the bank facilities and the
performance fee calculation.
Other services
Other services of $47,800 (2018: nil) comprise data analysis and advisory services relating to the review of an application to the Overseas Investment Office for
approval to purchase a property.
6.3 Administrative expenses incurred but not included within operating earnings
These expenses, while excluded from GMT’s non-GAAP operating earnings measure, are included in other income / (expenses) within Profit or Loss. See note 10.4 for further details regarding the
calculation of the Manager’s performance fee.
$ million
2019
2018
Manager’s base fee expected to be reinvested in units(8.6)(8.3)
Manager’s performance fee expected to be reinvested in units(8.6)–
Total administrative expenses incurred but not included within operating earnings(17. 2 )(8.3)
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
68
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
7. Debtors and other assets
$ million
2019
2018
Current
Debtors1.40.3
Prepayments0 .10.2
Interest receivable2.32.3
Other assets9.86.5
Total debtors and other assets13.69.3
Accounting policies
Debtors and other assets are initially recognised at fair value and subsequently measured at amortised cost. They are adjusted for expected impairment losses. Discounting is not applied to receivables where
collection is expected to occur within the next twelve months.
A provision for impairment is recognised when there is objective evidence that GMT will be unable to collect amounts due. The simplified approach to providing for expected credit losses prescribed by
NZ IFRS 9 has been applied, permitting the use of a lifetime expected loss provision for all trade receivables. The amount provided is the difference between the carrying amount and expected recoverable
amount. There were no provisions for impairment in the year (2018: none).
8. Creditors and other liabilities
$ million
2019
2018
Current
Creditors0.80.3
Interest payable6.47.1
Related party payables1.70.5
Accrued capital expenditure26.62 7. 0
Other liabilities12 .114.3
Total creditors and other liabilities47. 649.2
Accounting policies
Creditors and other liabilities are initially recognised at fair value and subsequently measured at amortised cost. All payments are expected to be made within the next twelve months.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
69
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
9. Ta x
9.1 Tax expense
$ million
2019
2018
Profit before tax334.82 0 7. 2
Tax at 28%(93.7)(58.0)
Depreciation of investment property4.95.7
Movement in fair value of investment property56.523.5
Disposal of investment property0.90.6
Disposal of joint venture9.0–
Deductible net expenditure for investment property5.35.2
Share of joint venture net profit less dividends received1.98.6
Derivative financial instruments0.9(2.4)
Performance fee(2.4)–
Other–( 0 .1)
Current tax on operating earnings(16.7)(16.9)
Depreciation recovery income for property sold and settled(3.4)(0.4)
Settlement of derivative financial instruments2.40.8
Disposal of investment property(0.9)–
Performance fee2.4–
Current tax on non-operating earnings0.50.4
Current tax(16.2)(16.5)
Depreciation of investment property(5.0)(0.4)
Reduction of liability in respect of depreciation recovery income8.33.7
Deferred expenses0.8(1.6)
Derivative financial instruments(3.3)1.5
Borrowing issue costs0 .10 .1
Deferred tax0.93.3
Total tax(15.3)(13.2)
Current tax on operating earnings is a non-GAAP measure included to provide an assessment of current tax for GMT’s principal operating activities.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
70
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
9. Tax (continued)
Accounting policies
Tax expense for the year comprises current and deferred tax recognised in Profit or Loss.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at balance date, and includes any adjustment to tax payable in respect of previous years.
Deferred tax is provided in full using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax
is not accounted for if it arises from the initial recognition of assets or liabilities in a transaction, other than a business combination, that affects neither accounting nor taxable profit or loss and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
9.2 Deferred tax
$ million
2019
2018
Deferred tax assets
Derivative financial instruments1.95.2
Total deferred tax assets1.95.2
Deferred tax liabilities
Investment properties – depreciation recoverable(18.2)(21.5)
Investment properties – deferred expenses( 7. 9 )(8.7)
Borrowings issue costs(0.3)(0.4)
Total deferred tax liabilities(26.4)(30.6)
Net deferred tax(24.5)(25.4)
Key judgement
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the
balance date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realised.
For deferred tax liabilities potentially arising on investment property measured at fair value there is a rebuttable presumption that the carrying amount of the investment property asset will be recovered through
sale. In estimating this deferred tax liability, the Group has made reference to the Manager’s experience of tax depreciation recovered when properties of a similar nature have been sold.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
71
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
10. Related party disclosures
As a Unit Trust, GMT does not have any employees. Consequently services that the Group requires are provided under arrangements governed by GMT’s Trust Deed, or by contractual arrangements.
The Trust has related party relationships with the following parties.
EntityNature of relationship
Goodman (NZ) LimitedGNZManager of the Trust
Goodman Property Services (NZ) LimitedGPSNZProvider of property management, development management and related services to the Trust
and to its former joint venture WPHL
Goodman Investment Holdings (NZ) LimitedGIHUnitholder in GMT
Goodman LimitedGLParent entity of GNZ, GPSNZ & GIH
Goodman Industrial TrustGITProperty co-owner with GMT
Wynyard Precinct Holdings LimitedWPHLFormer joint venture between GMT and GIC, Singapore’s sovereign wealth fund (sale of WPHL
settled on 14 December 2018)
10.1 Transactions with related parties other than WPHL
Recorded Capitalised Outstanding
$ millionRelated party
2019
2018
2019
2018
2019
2018
Manager’s base feeGNZ(9.8)(9.4)1.21.1(5.3)(5.3)
Manager’s performance feeGNZ(8.6)–––(8.6)–
Property management fees
(1)
GPSNZ(3.3)(3.5)––(0.3)–
Leasing feesGPSNZ( 2 .1)(2.0)––( 0 .1)(0.4)
Acquisition and disposal feesGPSNZ(4.2)(0.3)1.1–––
Minor project feesGPSNZ(1.0)(0.7)1.00.7(0.4)–
Development management feesGPSNZ( 5 .1)(4.9)5 .14.9(0.8)–
Total fees( 3 4 .1 )(20.8)8.46.7(15.5 )(5.7)
Reimbursement of expenses for services providedGPSNZ(1.5)(1.5)0.30 .1( 0 .1)( 0 .1)
Total reimbursements(1.5)(1.5)0.30 .1( 0 .1)( 0 .1)
Land acquisition – Savill LinkGIT(4.7)(2.3)4.72.3––
Total capital transactions(4.7)(2.3)4.72.3––
Issue of units for Manager’s base fee reinvestedGIH10.410.0––––
Total issue of units for Manager’s base fee reinvested10.410.0––––
Distributions paidGIH(18.3)(18.0)––––
Total distributions paid(18.3)(18.0)–––
–
(1)
Of the property management fees charged by GPSNZ, $3.0 million was paid by customers and was not a cost borne by GMT (2018: $3.1 million).
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
72
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
10. Related party disclosures (continued)
10.2 Transactions with WPHL
RecordedCapitalised Outstanding
$ millionRelated party
2019
2018
2019
2018
2019
2018
Investment in joint ventureWPHL–(13.3)––––
Repayments from / (advances to) joint ventureWPHL1 0 7. 5( 8 9 .1)–––( 1 0 7. 5 )
Interest income received from joint ventureWPHL3.85.8––––
Funding fee received from joint ventureWPHL–0 .1––––
Dividends received from joint ventureWPHL2 .10.5––––
Advances to WPHL were unsecured and were subordinated to WPHL’s bank debt prior to disposal. The advances were repayable on demand and incurred a market rate of interest for advances of this type.
Significant transactions
Advances to the joint venture were repaid at settlement of the WPHL disposal in December 2018.
10.3 Other related party transactions
Capital transactions
Capital transactions that occur with related parties can only be approved by the independent directors of GNZ, with non-independent directors excluded from the approval process.
No properties were acquired pursuant to the Co-ownership Agreement between GMT and Goodman Industrial Trust (2018: none). This agreement was approved by unitholders at a general meeting held
on 23 March 2004.
GMT purchased land at Savill Link for $4.7 million in June 2018 (2018: $2.3 million) that was co-owned via the Co-ownership Agreement between GMT and Goodman Industrial Trust.
Key management personnel
Key management personnel are those people with the responsibility and authority for planning, directing and controlling the activities of an entity. As the Trust does not have any employees or Directors,
key management personnel is considered to be the Manager. All compensation paid to the Manager is disclosed within this note.
At 31 March 2019, Goodman Group, GNZ’s ultimate parent, through its subsidiary Goodman Investment Holdings (NZ) Limited, held 277,250,271 units in GMT out of a total 1,294,900,545 units on issue
(31 March 2018: 273,248,744 units out of a total 1,287,781,937 units).
10.4 Explanation of related party transactions
Manager’s base fee
The Manager’s base fee is calculated as 0.50% per annum of the book value of GMT’s assets (other than cash, debtors and development land) up to $500 million, plus 0.40% per annum of the book value
of GMT’s assets (other than cash, debtors and development land) greater than $500 million.
With effect from 1 April 2014, for a period of five years expiring 31 March 2019, the Manager has agreed to use its base management fee to reinvest in GMT units, provided that the Independent Directors
of GNZ consider it in the best interests of GMT unitholders for the Manager to do so. The terms of the issue of such units were approved by Unitholders on 5 August 2014. The terms of issue are included
in GMT’s Trust Deed.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
73
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
10. Related party disclosures (continued)
Manager’s performance fee
The Manager is entitled to be paid a performance fee equal to 10% of GMT’s performance above a target return (which is calculated annually on 31 March) and is capped at 5% of annual out performance
(except in a period in which GNZ ceases to hold office, or GMT terminates). The target return is equal to the annual return of a gross accumulation index created from NZX listed property entities having a
principal focus on investment in real property, excluding GMT, with the index being compiled by a suitably qualified and experienced person (currently Standard & Poor’s).
Any performance below the target return is carried forward indefinitely to future periods. GMT will not earn a performance fee on any performance in excess of the target return plus 5% per annum. Any
performance over that cap will be carried forward indefinitely to future periods (except in a period in which GNZ ceases to hold office, or GMT terminates). No performance fee is payable for any year where
GMT’s performance is less than 0%, however, any under or over performance is carried forward indefinitely to future periods.
The Manager is required to use performance fee proceeds to reinvest in GMT units in accordance with the terms of the Trust Deed, provided that the Independent Directors of GNZ consider it in the best
interests of GMT unitholders for the Manager to do so. The issue price for these units is equal to the higher of market price and the net asset value per unit.
At 31 March 2019 a performance fee of $8.6 million is payable, with a carry forward of $11.2 million to include in the calculation for future periods (2018: deficit of $1.1 million carried forward to include in the
calculation for future periods).
Property management fees
Property management fees are paid to GPSNZ for day to day management of properties.
Leasing fees
Leasing fees are paid to GPSNZ for executing leasing transactions.
Acquisition and disposal fees
Acquisition and disposal fees are paid to GPSNZ for executing sale and purchase agreements.
Minor project fees
Minor project fees are paid for services provided to manage capital expenditure projects for stabilised properties.
Development management fees
Development management fees are paid for services provided to manage capital expenditure projects for developments.
Reimbursement of expenses for services provided
Certain services are provided by GPSNZ instead of using external providers, with these amounts reimbursed on a cost recovery basis.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
74
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
10. Related party disclosures (continued)
10.5 Additional Trust information
(a) Termination of Goodman Property Trust
GMT terminates on the earlier of:
i. The date appointed by GNZ giving not less than three months’ written notice to the unitholders and the Trustee; or
ii. If the units are quoted, the office of trustee becomes vacant, and a new trustee is not appointed within two months of the vacancy occurring; or
iii. The date on which GMT is terminated under the Trust Deed or by operation of law.
(b) Trustee information
Covenant Trustee Services Limited is the Trustee of Goodman Property Trust. Covenant Trustee Services Limited is paid a fee as follows:
i. Up to $1,500 million of total assets, a fee of $190,000; and
ii. Over $1,500 million of total assets, $190,000 plus a fee equivalent to 0.01% of total assets greater than $1,500 million.
10.6 Related party capital commitments
$ millionRelated party
2019
2018
Development management fees for developments in progressGPSNZ4.82.4
Total related party capital commitments4.82.4
11. Commitments and contingencies
11 .1 Non-related party capital commitments
These commitments are amounts payable for contractually agreed services for capital expenditure. For related party capital commitments refer to note 10.6.
$ million20192018
Completion of developments7 9 .172.1
Acquisition – Favona Road29.0–
Total non-related party capital commitments10 8 .17 2 .1
11.2 Contingent liabilities
GMT has no material contingent liabilities.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
75
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
11. Commitments and contingencies (continued)
11.3 Lease commitments payable
Lease payments for ground leases that the Trust has contracted to pay in future years are set out below. These leases cannot be cancelled by the Trust.
$ million
2019
2018
Year 13.23.2
Year 23.23.2
Year 33.23.3
Year 43.23.4
Year 53.23.4
Year 6 and later9.59.9
To t a l25.526.4
12. Reconciliation of profit after tax to net cash flows from operating activities
$ million20192018
Profit after tax319.5194.0
Non-cash items:
Movement in fair value of investment property(201.9)(83.8)
Disposal of investment property–(0.5)
Deferred lease incentives0.4(1.5)
Deferred leasing costs(0.6)(1.4)
Fixed rental income adjustments(1.0)(1.4)
Share of profit arising from joint venture(3.7)(30.9)
Issue costs and subsequent amortisation for non-bank borrowings1.00.2
Movement in fair value of derivative financial instruments(3.2)8.5
Manager’s base fee expected to be reinvested in units–0.3
Manager’s performance fee expected to be reinvested in units8.6–
Disposal of joint venture( 3 5 .1)–
Deferred tax(0.9)(3.3)
Net cash flows from operating activities before changes in assets and liabilities8 3 .180.2
Movements in working capital from:
Trade and other receivables(0.3)1.5
Trade and other payables(3.0)7.1
Current tax liabilities(0.6)0.9
Movements working capital(3.9)9.5
Net cash flows from operating activities79.289.7
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
76
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
13. Financial risk management
In addition to business risk associated with the Group’s principal activity of investing in real estate in New Zealand, the Group is also exposed to financial risk for the financial instruments that it holds.
Financial risk can be classified in the following categories; interest rate risk, credit risk, liquidity risk and capital management risk.
13 .1 Financial instruments
The following items in the Balance Sheet are classified as financial instruments: Cash, debtors and other assets, advances to joint venture, derivative financial instruments, creditors and other liabilities, and
borrowings. All items are recorded at amortised cost with the exception of derivative financial instruments, which are recorded at fair value through Profit or Loss.
Accounting policies
Financial instruments are classified dependent on the purpose for which the financial instrument was acquired or assumed. Management determines the classification of its financial instruments at initial
recognition between two categories:
Amortised costInstruments recorded at amortised cost are those with fixed or determined receipts / payments that are recorded at their expected value at balance date.
Fair value through
Profit or Loss
Instruments recorded at fair value through Profit or Loss have their fair value measured via active market inputs, or by using valuation techniques if no active market exists.
13.2 Interest rate risk
The Group’s interest rate risk arises from borrowings. The Group manages its interest rate risk in accordance with its Financial Risk Management policy. The principal objective of the Group’s interest rate
risk management process is to mitigate negative interest rate volatility adversely affecting financial performance.
The Group manages its interest rate risk by using floating-to-fixed interest rate swaps and interest rate caps. Interest rate swaps have the economic effect of converting borrowings from floating rates to
fixed rates. Generally, the Group raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed directly at fixed rates. Under the
interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (primarily quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by
reference to the agreed notional amounts. Where the Group raises long-term borrowings at fixed rates, it may enter into fixed-to-floating interest rate swaps to enable the cash flow interest rate risk to be
managed in conjunction with its floating rate borrowings.
The table below considers the direct impact to interest costs of a 25 basis point change to interest rates.
$ million
2019
2018
Impact to net profit after tax of a 25 basis point increase in interest rates(0.7)(0.8)
Impact to net profit after tax of a 25 basis point decrease in interest rates0.70.8
13.3 Credit risk
Credit risk arises from cash, derivative financial instruments, advances to joint venture and credit exposures to customers. For banks and financial institutions only independently credit rated parties
are accepted, and when derivative contracts are entered into their credit risk is assessed. For advances to a joint venture the financial performance of the joint venture is monitored and assessed. For
customers the Group assesses the credit quality of the customer, taking into account its financial position, past experience and any other relevant factors. The overall credit risk is managed with a credit
policy that monitors exposures and ensures that the Group does not bear unacceptable concentrations of credit risk.
The Group’s maximum exposure to credit risk is best represented by the total of its debtors, advances to joint venture, derivative financial instrument assets and cash as shown in the Balance Sheet.
To mitigate credit risk the Group holds security deposits, bank guarantees, parent company guarantees or personal guarantees as deemed appropriate.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
77
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
13. Financial risk management (continued)
13.4 Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations from its financial liabilities. The Group’s approach to management of liquidity risk is to ensure that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages this
risk through active monitoring of the Group’s liquidity position and availability of borrowings from committed facilities.
The following table outlines the Group’s financial liabilities by their relevant contractual maturity date. Values are the contractual undiscounted cash flows and include both principal and interest where
applicable.
$ millionYear 1Year 2Year 3Year 4Year 5Year 6 and laterTotal cash flowsCarrying value
2019
Borrowings26.5124.73 2 .1116 .1112.6279.9691.95 8 5 .1
Derivative financial instruments14.414.47. 87. 92.34.751.512 .1
Creditors and other liabilities4 7. 6–––––4 7. 64 7. 6
To t a l88.513 9 .139.9124.0114 . 9284.6791.0644.8
2018
Borrowings33.331.2237.9169.9116 .1392.5980.9823.6
Derivative financial instruments18 .117. 916.012.58.48.981.818.7
Creditors and other liabilities49.2–––––49.249.2
To t a l100.64 9 .1253.9182.4124.5401.41,111. 9891.5
13.5 Capital management risk
The Group’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence, while maximising the return to investors through optimising the mix of debt and equity. The
Group meets its objectives for managing capital through its investment decisions on the acquisition, development and disposal of assets, its distribution policy and raising new equity. The Group’s policies in
respect of capital management are reviewed regularly by the Board of Directors of the Manager.
The Group’s capital structure includes bank debt, retail bonds, wholesale bonds, US Private Placement notes and unitholders’ equity. GMT’s Trust Deed requires the Group’s ratio of borrowings to the
aggregate value of its property assets to be less than 50%. The Group complied with this requirement during this year and the prior year.
The Group has issued US Private Placement notes, retail and previously wholesale bonds, the terms of which require that the total borrowings of GMT and its subsidiaries do not exceed 50% of the value of
the property portfolio on which these borrowings are secured. The Group complied with this requirement during this year and the prior year.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
78
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
13. Financial risk management (continued)
13.6 Fair value of financial instruments
Except for the retail bonds and US Private Placement notes; the carrying values of all balance sheet financial instruments approximate their estimated fair value. The fair values of retail bonds and US Private
Placement notes are as follows:
$ millionFair value hierarchy20192018
Retail bondsLevel 14 2 1.1416.2
US Private Placement NotesLevel 2U S $118 .4U S $113 .7
The Group classifies its fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
— Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
— Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
— Level 3: Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
The fair value of financial instruments classified as Level 2, being US Private Placement Notes, is measured using a present value calculation of the future cashflows using the relevant term swap rate as the
discount factor.
The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis of the lowest input to the fair value measurement. If a fair value measurement uses
observable inputs that require significant adjustment based on unobservable inputs, the measurement is a Level 3 measurement.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels at the date of the event or change in circumstances that caused the transfer.
14. Operating segments
The Trust’s activities are reported to the Board as a single operating segment. Therefore these financial statements are presented in a consistent manner to that reporting.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
79
Independent auditor’s report
To the unitholders of Goodman Property Trust
We have audited the financial statements which comprise:
the balance sheet as at 31 March 2019;
the statement of profit or loss for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
the notes to the financial statements, which include significant accounting policies.
Our opinion
In our opinion, the accompanying financial statements of Goodman Property Trust (the Trust), including its subsidiaries (the Group), present fairly, in all material respects, the financial position of the
Group as at 31 March 2019, its financial performance and its cash flows for the year then ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS)
and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of assurance services relating to the performance fee calculation, agreed upon procedures relating to the financial covenants of the bank
facilities and data analysis and advisory services relating to the review of an application to the Overseas Investment Office for approval to purchase a property. The provision of these other services has
not impaired our independence as auditor of the Group.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
80
Independent auditor’s report (continued)
To the unitholders of Goodman Property Trust
Our audit approach
Overview
An audit is designed to obtain reasonable assurance about whether the financial statements are free from material misstatement.
For the purpose of our audit, we used a threshold for overall Group materiality of $6.5 million.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $0.5 million as well as misstatements below that amount that,
in our view, warranted reporting for qualitative reasons.
We have one key audit matter being valuation of investment property.
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the financial statements as a whole as set out above.
These, together with qualitative considerations, helped us to determine the scope of our audit, the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
both individually and in aggregate on the financial statements as a whole.
Overall Group materiality$6.5 million
How we determined itApproximately 5% of profit before tax, excluding movement in fair value of investment property and financial instruments.
Rationale for the materiality benchmark appliedWe applied this benchmark because, in our view, it is reflective of the metrics against which the performance of the Group is most commonly measured.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and our application of materiality. As in all of our audits, we also addressed the risk of management
override of internal controls including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
81
Independent auditor’s report (continued)
To the unitholders of Goodman Property Trust
Key audit matter
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. We have one key audit matter
being valuation of investment property. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matterHow our audit addressed the key audit matter
Valuation of investment property
Refer to note 1 of the financial statements.
The Group’s investment properties comprise industrial and office properties and at $2.6 billion
represented the majority of the Group’s assets as at 31 March 2019.
Investment property is carried at fair value, based on market values where available. Where
market values are not available alternative valuation methods are used. Where developments are
not sufficiently progressed to enable fair value to be reliably determined, they are carried at the
cost spent on the development to date, less any impairment. Investment property contracted for
sale is carried at the contracted sale price.
The valuation of the Group’s investment property portfolio is inherently subjective due to, among
other factors, the individual nature of each property, location and expected future rental income
for each respective property.
The existence of significant estimation uncertainty, coupled with the fact that only a small
change to individual property valuation assumptions when aggregated could result in material
misstatement, is why we have given specific audit focus and attention to this area.
The valuations were carried out by third party valuers selected by the Group and rotated across
the portfolio on a three yearly cycle. The valuers were engaged to value investment properties,
and performed their work in accordance with the International Valuation Standards and the
Australia and New Zealand Valuation and Property Standards. The valuers used are well-known
firms, with experience in the markets in which the Group operates.
In determining a property’s valuation, the valuers take into account property specific information
such as current tenancy agreements and rental income earned by the asset.
They then apply assumptions in relation to capitalisation rates, current market rent and
anticipated growth, based on available market data and transactions, to arrive at a range of
valuation outcomes, from which they derive a point estimate. Due to the unique nature of each
property, the assumptions applied take into consideration the individual property characteristics,
as well as the qualities of the property as a whole. The Group has adopted the assessed values
determined by the valuers.
There is subjectivity involved in determining the appropriate valuations for individual properties,
including alternative assumptions and valuation methods. We therefore determined a range of
values that were considered reasonable for each individual property. In assessing whether the
valuation falls within this range, we perform the following procedures.
External valuations
We read the valuation reports and discussed the reports with the respective valuer. We
confirmed that the valuation approach for each property was in accordance with accounting
standards and suitable for use in determining the carrying value of investment property at
31 March 2019.
We assessed the valuers’ qualifications, expertise and their objectivity.
We also considered whether or not there was bias in determining individual valuations.
On a sample basis, we agreed property specific information supplied to the valuers by Goodman
(NZ) Limited (the Manager) to the underlying property records held by the Group.
It was evident from our discussions with management and the valuers and our review of the
valuation reports that close attention had been paid to each property’s individual characteristics,
its overall quality, geographic location and desirability as a whole.
Assumptions
Our work over the assumptions focused on the largest properties in the portfolio and properties
where the assumptions used and/or year-on-year fair value movement suggested a possible
outlier versus market data. In particular, we compared valuation metrics used by the valuers to
recent market activity. We also engaged our own in-house valuation specialist to critique and
challenge the valuers approach and assumptions used.
We concluded that the assumptions used in the valuations were supportable in light of available
market evidence.
From the procedures performed, we have no matters to report.
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
82
Independent auditor’s report (continued)
To the unitholders of Goodman Property Trust
Information other than the financial statements and auditor’s report
The directors of the Manager are responsible for the annual report. Our opinion on the financial statements does not cover the other information included in the annual report and we do not
express any form of assurance conclusion on the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior
to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors of the Manager for the financial statements
The directors of the Manager are responsible, on behalf of the Trust, for the preparation and fair presentation of the financial statements in accordance with NZ IFRS and IFRS, and for such internal control
as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Manager is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Manager either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs (NZ) and ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for the our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of the use of the going concern basis of accounting by the directors of the Manager and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our auditor’s opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinion.
Communicate with the directors of the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during the audit.
Financial Statements
of Goodman Property Trust
Goodman Property Trust
Annual Report 2019
83
Independent auditor’s report (continued)
To the unitholders of Goodman Property Trust
Auditor’s responsibilities for the audit of the financial statements (continued)
Provide the directors of the Manager with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
Determine those matters, from the matters communicated with the directors of the Manager, that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Who we report to
This report is made solely to the Trust’s unitholders, as a body. Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust and the Trust’s unitholders, as a body, for our audit work, for this
report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Richard Day.
For and on behalf of:
Chartered Accountants Auckland
14 May 2019
Goodman Property Trust
Annual Report 2019
Financial Statements
of Goodman Property Trust
84
GMT Bond Issuer Limited
Financial Statements
For the year ended 31 March 2019
Goodman Property Trust
Annual Report 2019
Financial Statements
of GMT Bond Issuer Limited
85
Goodman Property Trust
Annual Report 2019
Financial Statements
of GMT Bond Issuer Limited
85
The Board of GMT Bond Issuer Limited, authorised these financial statements for issue
on 14 May 2019. For and on behalf of the Board:
Keith Smith Peter Simmonds
Chairman Chairman, Audit Committee
Contents
Profit or loss 86
Balance sheet 86
Cash flows 87
Changes in equity 87
General information 88
Notes to the financial statements:
1. Borrowings 89
2. Advances to related parties 89
3. Administrative expenses 89
4. Commitments and contingencies 89
5. Reconciliation of profit after tax to net cash flows from operating activities 90
6. Financial risk management 90
7. Equity 91
Independent auditor’s report 92
Profit or loss
For the year ended 31 March 2019
$ million20192018
Interest income19.715.3
Interest cost(19.7)(15.3)
Profit before tax––
Ta x––
Profit after tax attributable to shareholder––
There are no items of other comprehensive income, therefore profit after tax attributable to shareholder equals total comprehensive income attributable to shareholder.
Balance sheet
As at 31 March 2019
$ millionNote20192018
Non-current assets
Advances to related parties
2
400.0400.0
Current assets
Cash0.2–
Interest receivable from related parties
2
5.0 5.0
Total assets405.2405.0
Non-current liabilities
Borrowings
1
400.0400.0
Current liabilities
Interest payable on retail bonds5.25.0
Total liabilities405.2405.0
Net assets––
Equity
Contributed equity
7
––
Retained earnings ––
Total equity––
GMT Bond Issuer Limited
Annual Report 2019
Financial Statements
of GMT Bond Issuer Limited
86
Cash flows
For the year ended 31 March 2019
$ million20192018
Cash flows from operating activities
Interest income received19.713.5
Interest costs paid(19.5)(13.5)
Net cash flows from operating activities0.2–
Cash flows from investing activities
Related party advances made–(200.0)
Net cash flows from investing activities–(200.0)
Cash flows from financing activities
Proceeds received from retail bonds–200.0
Net cash flows from financing activities–200.0
Net movement in cash0.2–
Cash at the beginning of the year––
Cash at the end of the year0.2–
Changes in equity
For the year ended 31 March 2019
$ million
Contributed
equity
Retained
earningsTo t a l
As at 1 April 2017–––
Profit after tax–––
As at 31 March 2018–––
Profit after tax–––
As at 31 March 2019–––
There are no items of other comprehensive income to include within changes in equity, therefore profit after tax equals total comprehensive income.
Financial Statements
of GMT Bond Issuer Limited
GMT Bond Issuer Limited
Annual Report 2019
87
Reporting entity
GMT Bond Issuer Limited (“the Company”) was incorporated on 5 November 2009. The address of
its registered office is Level 2, 18 Viaduct Harbour Avenue, Auckland. GMT Bond Issuer Limited is an
issuer for the purposes of the Financial Reporting Act 2013 as its issued debt securities are listed
on the New Zealand Debt Exchange (“NZDX”). GMT Bond Issuer Limited is a registered company
under the Companies Act 1993.
GMT Bond Issuer Limited is a profit-oriented company incorporated and domiciled in New Zealand.
The Company was incorporated to undertake issues of debt securities with the purpose of on
lending the proceeds to Goodman Property Trust (“GMT”) by way of interest bearing advances.
Basis of preparation and measurement
The principal accounting policies applied in the preparation of the financial report are set out below.
These policies have been consistently applied to all periods presented unless otherwise stated.
The financial statements of the Company have been prepared in accordance with the requirements
of Part 7 of the Financial Markets Conduct Act 2013. The financial statements have been prepared
in accordance with New Zealand Generally Accepted Accounting Practice (“NZ GAAP”), comply
with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”), other
New Zealand accounting standards and authoritative notices that are applicable to entities that
apply NZ IFRS. The Company is a for-profit entity for the purposes of complying with NZ GAAP.
The financial statements also comply with International Financial Reporting Standards (“IFRS”).
The financial statements have been prepared on the historical cost basis.
The financial statements are in New Zealand dollars, the Company’s functional currency.
Significant estimates and judgements
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in the future periods
affected.
Significant accounting policies
Interest income
Interest income from advances to related parties is recognised using the effective interest method.
Interest cost
Interest expense charged on borrowings is recognised as incurred using the effective interest method.
Advances to related parties
Advances to related parties are recorded initially at fair value, net of transaction costs. Subsequent to
initial recognition, they are carried at amortised cost using the effective interest method.
Interest receivable from related parties
These amounts represent the fair value of interest income recognised but not yet due for payment.
Due to the short term nature of the receivables the recoverable value represents the fair value.
Borrowings
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition,
borrowings are carried at amortised cost using the effective interest method.
Interest payable
Interest payable represents interest costs recognised as an expense but not yet due for payment.
Financial risk management
Financial instruments are classified dependent on the purpose for which the financial instrument was
acquired or assumed. Management determines the classification of its financial instruments at initial
recognition between two categories:
Amortised cost
Instruments recorded at amortised cost are those with fixed or determined
receipts / payments that are recorded at their expected value at balance
date.
Fair value through
Profit or Loss
Instruments recorded at fair value through Profit or Loss have their fair
value measured via active market inputs, or by using valuation techniques
if no active market exists.
Changes in accounting policy
There have been no changes in accounting policies made during the financial year.
New accounting standards now adopted
NZ IFRS 9 Financial Instruments has been adopted in these financial statements. There have been
no changes required to these financial statements and no changes to existing accounting policies
along with comparatives as a result of this new accounting standard.
General information
For the year ended 31 March 2019
GMT Bond Issuer Limited
Annual Report 2019
Financial Statements
of GMT Bond Issuer Limited
88
1. Borrowings
1 .1 Composition of borrowings
Carried atDate issuedMaturityInterest rate
2019
$ million
2018
$ million
Retail bonds – GMB020Amortised costDec 13Dec 206.20%100.0100.0
Retail bonds – GMB030Amortised costJun 15Jun 225.00%100.0100.0
Retail bonds – GMB040Amortised costMay 17May 244.54%100.0100.0
Retail bonds – GMB050Amortised costMar 18Sep 234.00%100.0100.0
To t a l400.0400.0
1.2 Security and covenants
All borrowing facilities are secured on an equal ranking basis over the assets of the wholly-owned subsidiaries of the Company’s parent entity, Goodman Property Trust. A loan to value covenant restricts
total borrowings incurred by the Goodman Property Trust Group to 50% of the value of the secured property portfolio.
The Goodman Property Trust Group has given a negative pledge which provides that it will not create or permit any security interest over its assets. The principal financial ratio which must be met is the ratio
of financial indebtedness to the value of the property portfolio. Further negative and positive undertakings have been given as to the nature of the Goodman Property Trust Group’s business.
2. Advances to related parties
GMT Bond Issuer Limited is a wholly-owned subsidiary of Goodman Property Trust. All members of the Goodman Property Trust Group are considered to be related parties of the Company.
2 .1 Composition of advances to related parties
Carried atDate issuedMaturityInterest rate
2019
$ million
2018
$ million
Advance made to Goodman Property Trust in December 2013Amortised costDec 13Dec 206.20%100.0100.0
Advance made to Goodman Property Trust in June 2015Amortised costJun 15Jun 225.00%100.0100.0
Advance made to Goodman Property Trust in May 2017Amortised costMay 17May 244.54%100.0100.0
Advance made to Goodman Property Trust in March 2018Amortised costMar 18Sep 234.00%100.0100.0
To t a l400.0400.0
2.2 Guarantee
Covenant Trustee Services Limited (as Trustee for Goodman Property Trust) has entered into a guarantee under which Goodman Property Trust unconditionally and irrevocably guarantees all of the
obligations of GMT Bond Issuer Limited under its Bond Trust Documents.
3. Administrative expenses
Goodman Property Trust, the Company’s parent, paid all fees for audit services provided to the Company (2019: $7,600, 2018: $7,600).
4. Commitments and contingencies
4 .1 Capital commitments payable
GMT Bond Issuer Limited has no capital commitments.
4.2 Contingent liabilities
GMT Bond Issuer Limited has no material contingent liabilities.
Notes to the Financial Statements
For the year ended 31 March 2019
Financial Statements
of GMT Bond Issuer Limited
GMT Bond Issuer Limited
Annual Report 2019
89
5. Reconciliation of profit after tax to net cash flows from operating activities
$ million
2019
2018
Profit after tax––
Movements in working capital from:
Interest payable on retail bonds0.2–
Movements working capital0.2–
Net cash flows from operating activities0.2–
6. Financial risk management
The Company is exposed to financial risk for the financial instruments that it holds. Financial risk can be classified in the following categories; interest rate risk, credit risk, liquidity risk and capital
management risk.
The Board has delegated to the Goodman (NZ) Limited Audit Committee the responsibility to review the effectiveness and efficiency of management processes, risk management and internal financial
controls and systems as part of their duties.
6 .1 Financial instruments
The following items in the Balance Sheet are classified as financial instruments: Advances to related parties, cash, interest receivable from related parties, borrowings and interest payable. All items are
recorded at amortised cost.
6.2 Interest rate risk
Interest rate risk is the risk that the value or future value of cash flows of a financial instrument will fluctuate because of changes in interest rates. The Board is responsible for the management of the interest
rate risk arising from the external borrowings.
To mitigate interest rate risk all advances to related parties have fixed interest rates receivable that match the fixed interest rates payable on borrowings.
6.3 Credit risk
Credit risk is the risk of loss that arises from a counterparty failing to meet their contractual commitment in full and on time, or from losses arising from the change in value of a trading financial instrument as
a result of changes in credit risk of that instrument.
The Company’s exposure to credit risk is limited to cash and deposits held with banks and credit exposure for the advances to related parties.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if applicable) or to historical information about counterparty default rates.
All financial assets are with Goodman Property Trust. Goodman Property Trust has been assigned a rating of BBB with a stable outlook by Standard & Poor’s.
6.4 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations from its financial liabilities. The Company’s approach to management of liquidity risk is to ensure that it will always
have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The following table outlines the Company’s financial liabilities by their relevant contractual maturity date. Values are the contractual undiscounted cash flows and include both principal and interest where
applicable.
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
GMT Bond Issuer Limited
Annual Report 2019
Financial Statements
of GMT Bond Issuer Limited
90
6. Financial risk management (continued)
6.4 Liquidity risk (continued)
$ millionYear 1Year 2Year 3Year 4Year 5Year 6 and laterTotal cash flowsCarrying value
2019
Financial assets – Advances to related parties19.7117. 913.5109.7106.2100.84 6 7. 8405.0
Financial liabilities – Retail bonds(19.9)( 117. 9 )(13.5)(109.7)(106.2)(100.8)(468.0)(405.2)
Cash0.2–––––0.20.2
To t a l––––––––
2018
Financial assets – Advances to related parties19.719.7117. 913.5109.72 0 7. 04 8 7. 5405.0
Financial liabilities – Retail bonds(19.7)(19.7)( 117. 9 )(13.5)(109.7)( 2 0 7. 0 )( 4 8 7. 5 )(405.0)
To t a l––––––––
6.5 Capital management risk
The Company’s policy is to match the value, term and maturity of external borrowings to the value, term and maturity of advances made to related parties. This minimises capital management risk for the Company.
6.6 Fair value of financial instruments
The fair value of financial instruments has been estimated as follows:
$ millionFair value hierarchy20192018
Related party receivablesLevel 24 2 1.1416.2
Retail bondsLevel 1( 4 2 1.1)(416.2)
For instruments where there is no active market, the Company may use internally developed models which are usually based on valuation methods and techniques generally recognised as standard within
the industry. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.
The Company classifies its fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
— Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
— Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
— Level 3: Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
The fair value of financial instruments classified as Level 2, being the related party receivables, is measured using the quoted prices of the retail bonds liability.
The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis of the lowest input to the fair value measurement. If a fair value measurement uses
observable inputs that require significant adjustment based on unobservable inputs, the measurement is a Level 3 measurement.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.
7. Equity
As at 31 March 2019, 100 ordinary shares had been issued for nil consideration (2018: 100 ordinary shares for nil consideration). All shares rank equally with one vote attached to each share.
The Company has tangible assets of $0.2 million, and its net assets are nil. Consequently, the net tangible assets per bond at 31 March 2019 are nil (2018: nil).
Notes to the Financial Statements (continued)
For the year ended 31 March 2019
Financial Statements
of GMT Bond Issuer Limited
GMT Bond Issuer Limited
Annual Report 2019
91
Independent auditor’s report
To the shareholder of GMT Bond Issuer Limited
We have audited the financial statements which comprise:
the balance sheet as at 31 March 2019;
the statement of profit or loss for the year then ended;
the statement of cash flows for the year then ended;
the statement of changes in equity for the year then ended; and
the notes to the financial statements, which include significant accounting policies.
Our opinion
In our opinion, the financial statements of GMT Bond Issuer Limited (the Company), present fairly, in all material respects, the financial position of the Company as at 31 March 2019, its financial performance
and its cash flows for the year then ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs NZ) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Company in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners (PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Other than in our capacity as the auditor, we have no relationship with, or interests in, the Company.
Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement.
For the purpose of our audit, we used a threshold for overall materiality of $197,000.
We have not identified any key audit matters from our audit given the nature of the entity. Refer to the Key audit matters section of our report.
GMT Bond Issuer Limited
Annual Report 2019
Financial Statements
of GMT Bond Issuer Limited
92
Independent auditor’s report (continued)
To the shareholder of GMT Bond Issuer Limited
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out above. These, together
with qualitative considerations, helped us to determine the scope of our audit, the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in
aggregate on the financial statements as a whole.
Overall materiality$197,000
How we determined itApproximately 1% of interest expense.
Rationale for the materiality benchmark appliedWe applied this benchmark because, in our view, it is the metric against which the performance of the Company is most commonly measured.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and our application of materiality. As in all of our audits, we also addressed the risk of management override
of internal controls including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Company, the
accounting processes and controls, and the industry in which the Company operates.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. The entity obtains funding from the issue of debt
securities and then lends the proceeds to Goodman Property Trust at the same cost. Given the nature of the Company’s operations, we determined that there were no key audit matters to communicate in
our report.
Information other than the financial statements and auditor’s report
The directors are responsible for the annual report. Our opinion on the financial statements does not cover the other information included in the annual report and we do not express any form of assurance
conclusion on the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained
prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial statements
The directors are responsible, on behalf of the Company, for the preparation and fair presentation of the financial statements in accordance with NZ IFRS and IFRS, and for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Financial Statements
of GMT Bond Issuer Limited
GMT Bond Issuer Limited
Annual Report 2019
93
Independent auditor’s report (continued)
To the shareholder of GMT Bond Issuer Limited
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs NZ and ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (NZ) and ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of the use of the going concern basis of accounting by the directors and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our auditor’s opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
Communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during the audit.
Provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
Determine those matters, from the matters communicated with the directors, that were of most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Who we report to
This report is made solely to the Company’s shareholder. Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholder, for our audit work, for this report or for
the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Richard Day.
For and on behalf of:
Chartered Accountants Auckland
14 May 2019
GMT Bond Issuer Limited
Annual Report 2019
Financial Statements
of GMT Bond Issuer Limited
94
Other
information
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
95
Contents
Corporate governance 96
Investor relations 104
Glossary 106
Corporate directory 107
Corporate governance
96
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Introduction
Corporate governance is the system by which organisations are directed and managed. It influences
how an organisation’s objectives are achieved, how its risks are monitored and assessed and how its
performance is optimised.
The Board has adopted an overall corporate governance framework that is designed to meet best
practice standards and recognises that an effective corporate governance culture is critical to success.
At all times, the Board strives to achieve governance outcomes which effectively balance the needs of
GMT and GMT Bond Issuer Limited, investors, regulators and the wider market.
The governance section of the Goodman Property Trust website contains all the relevant policies,
charters and other documents described in this report.
GMT and GMT Bond Issuer Limited
GMT is an NZX listed unit trust created by the Trust Deed and administered under the Financial Markets
Conduct Act 2013 (“FMCA”). Covenant Trustee Services Limited is the Trustee and supervisor of GMT
and is appointed to hold the assets of GMT on trust for Unitholders. The Trustee has the rights and
powers in respect of the assets of GMT it could exercise as if it was the absolute owner of such assets,
but subject to the FMCA and the rights given to the Manager by the FMCA and the Trust Deed.
GMT Bond Issuer Limited is a wholly owned subsidiary of GMT and issuer of Goodman+Bonds.
Goodman+Bonds are debt securities listed on the NZDX. They are direct, secured, unsubordinated,
obligations of the issuer, ranking equally with debt owed to GMT’s main banking syndicate. Public Trust
is the Bond Trustee for Goodman+Bonds.
GMT Bond Issuer Limited has no activities other than those necessary or incidental to the issuing of
Goodman+Bonds and complying with its obligations at law.
Relationship with Goodman Group
Goodman Group is the Trust’s largest investor, owning approximately 21.4% of Units on issue at
31 March 2019.
It is also the Manager of the Trust through its wholly owned subsidiary, Goodman (NZ) Limited. The
Manager receives fees for the fund management, property services, development management and
other services it provides through Goodman (NZ) Limited and Goodman Property Services (NZ) Limited.
These fees are summarised on the website within the corporate governance section.
Goodman Group’s cornerstone investment and management contract, which includes a market
leading performance fee structure, ensures close alignment of interests between Goodman Group
and other Unitholders.
Goodman Group holds no Goodman+Bonds.
NZX Corporate Governance Code
The following section assesses GMT's corporate governance framework against the principles and
recommendations of the NZX Corporate Governance Code. A more detailed analysis against the NZX
Code is set out in the Corporate Governance Statement which can be found in the governance section
of the Goodman Property Trust website.
Principle 1 — Code of Ethical Behaviour
The highest standards of behaviour are expected from the Directors and employees of the Manager.
These expectations are formalised in the following policies, practices and processes.
Code of Conduct
This policy establishes the standards of ethical and personal conduct expected of Directors and
Employees. It is consistent with the wider corporate values of the Manager and compliance with the
policy is a condition of employment. Induction training and regular refresher sessions are provided.
The policy specifically requires Directors and employees to act with honesty and integrity in a
professional and respectful manner, respecting confidentiality and in accordance with the law. All
stakeholders are to be treated fairly and individuals are expected to be transparent, declaring and
managing any conflicts of interest.
All Directors and employees are responsible for reporting unethical or corrupt behaviour and the
Manager will take whatever disciplinary action it considers appropriate in the circumstances, including
dismissal.
Financial Products Trading Policy
This policy reflects the insider trading provisions of the Financial Markets Conduct Act 2013 and
strengthens those requirements with additional compliance standards and procedures which Directors
and employees who wish to trade in GMT Units or Goodman+Bonds must comply with.
The Manager imposes trading windows through this policy as well as requiring written approval of the
CEO or Chairman prior to any trade.
Principle 2 — Board Composition & Performance
The Board works with Management to formulate and implement its strategy for the Trust, monitoring its
performance against set objectives. The Board also has the responsibility to ensure business risks are
appropriately identified and managed and that the statutory, financial and social responsibilities of the
Manager are complied with.
Board Charter
The Board Charter sets out the roles and responsibilities of the Board, while a statement of investment
policies and objectives provides the strategic framework.
Diversity and inclusion
As an externally managed Unit Trust GMT does not have any employees. The Directors and staff are
employed through Goodman (NZ) Limited and Goodman Property Services (NZ) Limited, subsidiaries
of Goodman Group.
A diversity and inclusion policy, specific to NZ Directors and employees was adopted in 2018. It
recognises that an inclusive and diverse culture provides a greater variety of views and ideas that lead
to better business outcomes. Under this policy the Manager undertakes to measure gender, ethnicity
and age on a regular basis and to report progress against future targets.
The table below shows gender diversity. Of the 65 employees and directors included, 44.6% are female
and 55.4% are male. The average employee has been with Goodman for 6.3 years and is 38.6 years old.
It is a team that includes 10 different ethnicities and has speakers of nine languages.
Gender diversity
Total
persons
FemaleMale
2019202320192023
Board728.6%>40%71.4%<60%
Executive728.6%>40%71.4%<60%
Managerial1020.0%>35%80.0%<65%
Other staff4156.1%=50%43.9%=50%
At the balance date and the date of this report the Board comprised two female Directors out of a
total of seven Directors. All four of the officers of the Manager are male. This is unchanged from the
prior period.
Board Performance
The skill set of the Board is carefully balanced with commercial, property, capital market and financial
expertise, all relevant to the effective and informed governance of GMT. The Directors have a wide range
of skills and experience, enabling the Board to bring critical judgement and independent assessment to
the oversight of the business.
The performance of the Board is reviewed regularly with such process being managed by the Chairman
of the Board.
Independent Directors maintain their skills and capabilities through regular training. This includes
completing the continuing education requirements of the NZ Institute of Directors and other relevant
professional bodies.
Corporate governance (continued)
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Other information (continued)
97
To facilitate the effective execution of its responsibilities, the Board has developed a statement of
delegated authority for Management. This statement clarifies which matters are dealt with by the Board
and which matters are the responsibility of Management and includes areas such as finance, corporate
matters and property transactions.
A copy of the Board's approved mandate and Board Charter can be found on the website within the
corporate governance section.
Board Composition
The Board of the Manager comprises seven Directors, with a majority being independent (as defined
in the Listing Rules). John Dakin, Gregory Goodman and Phil Pryke are not considered independent
due to their relationship with Goodman Group. The biographies of the Directors can be found online at
www.goodmanreport.co.nz.
The Board includes:
NameClassificationOriginal appointmentExpiry of current term
Keith SmithIndependent Director13 May 200427 July 2019
Leonie FreemanIndependent Director11 October 20113 July 2021
Susan PatersonIndependent Director11 April 20082 August 2020
Peter SimmondsIndependent Director14 October 201027 July 2019
Gregory GoodmanNon-executive Director23 December 2003n /a
Phil PrykeNon-executive Director28 January 200428 February 2020
John DakinExecutive Director01 July 201230 June 2021
Directors have an average tenure of 11.3 years at 31 March 2019. They are encouraged to undertake
training to ensure they have the market knowledge and governance expertise to perform their roles and
duties. Any new director receives a comprehensive induction that includes a tour of the Trust’s assets.
All Directors are appointed for three-year terms, after which they are eligible for reappointment
(1)
.
Independent Directors are appointed by Unitholders in the manner described in the Trust Deed. As the
Manager is a wholly owned subsidiary of Goodman Group, appointment of non-independent directors
is made by Goodman Group.
The Board of GMT Bond Issuer Limited replicates the Board of the Manager. A separate Board,
including separate Board meetings, is maintained to ensure the obligations of GMT Bond Issuer Limited
as the issuer of the Goodman+Bonds are met.
Both entities have written agreements with each Director setting out the terms and conditions of their
appointment.
(1)
The exception is Gregory Goodman who has a standing appointment in his role as Group CEO of Goodman Group.
98
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
The Chairman and the Chief Executive Officer
As recommended by the NZX Code, the roles of Chairman and Chief Executive Officer are separated.
This separation avoids concentrations of influence and increases accountability.
Keith Smith is the Chairman and John Dakin is the Chief Executive Officer of the Manager. John is also
an Executive Director of the Manager.
Board Meetings
The Board typically meets in person five times a year, with one of those meetings focused on business
planning and strategy.
During the financial year to 31 March 2019 all seven Directors attended each Board meeting. The 100%
attendance record was also maintained in the 2018 financial year.
The Independent Directors are encouraged to meet separately when necessary and, in any event, not
less than once a year. They are also entitled to take independent legal advice at the Manager’s expense
should they believe it necessary to adequately perform their role.
Company Secretary
The company secretarial function is performed by Anton Shead, the Manager’s General Counsel.
Refer to www.goodmanreport.co.nz for Anton’s biography.
Principle 3 – Board Committees
The Board establishes committees to assist in the exercise of its functions and duties and to ensure
that all risks are effectively monitored and managed.
Audit Committee
The Audit Committee is a permanent committee which typically meets four times a year. As at the
date of this Report, the Audit Committee has a majority of Independent Directors and comprises:
Peter Simmonds (Chairman), Keith Smith, Leonie Freeman, Susan Paterson and Phil Pryke. Phil Pryke
is the only Director on the Audit Committee who is not independent.
All members of the Audit Committee are non-executive Directors.
The Audit Committee operates under the terms of a formal charter, a copy of which is available on
the website within the corporate governance section. The duties and responsibilities of the Audit
Committee include the following:
+
monitoring the independence, ability and objectivity of the external auditor;
+ ensuring the Key Audit Partner (as defined in the Listing Rules) is changed every five years;
+ reviewing the financial statements of GMT and GMT Bond Issuer Limited and overseeing
the auditing of those financial statements;
+
reviewing and reporting to the Board on the appropriateness of GMT’s Financial Risk
Management policy;
+
setting the parameters for the internal audit programme, overseeing its implementation and
reviewing its outputs and recommendations; and
+
overseeing and advising on the Manager’s internal risk management programme.
Remuneration Committee
The NZX Code recommends that a Remuneration Committee be established to benchmark
remuneration packages for Directors and senior employees and that this be disclosed to investors.
GMT has not followed this recommendation during the financial year ended 31 March 2019, as its
external management structure means that these costs are borne by the Manager and a Remuneration
Committee is not required.
In the interests of transparency and good governance the Manager has disclosed the basis upon which
the Goodman Group Remuneration and Nominations Committee determines the packages payable to
Directors and employees involved with its New Zealand operations. This disclosure is included under
Principle 5 on page 99.
Nomination Committee
GMT’s Trust Deed gives unitholders the right to nominate and appoint Independent Directors.
The Board, rather than a committee, manage the nomination and appointment process of any new
non-independent director. The Goodman Group Remuneration and Nomination Charter applies to the
extent relevant and should the Board decide to add a director (whether as the result of a retirement or
otherwise), then the Board may constitute a committee to consider that appointment.
Other Committees
The Board may from time to time establish other Committees for a specific purpose. The terms
of reference for each committee is agreed by the Board as part of the establishment process.
Examples include:
a) Due Diligence Committee
The Board will establish a Due Diligence Committee to oversee and report to the Board on any
transaction of a significant size and/or complexity.
A Due Diligence Committee will usually include at least one Independent Director, relevant external
consultants and members of Management considered appropriate for the transaction in question.
b) Appointments Committee
The Board will, when it considers appropriate, constitute an Appointments Committee to consider
senior executive and director appointments and performance. An Appointments Committee will
usually include at least one Independent Director and other persons considered appropriate.
Takeover protocol
The Board has approved a Takeover Response Manual, which establishes the procedure to be followed
if there is a takeover offer, including the establishment of an independent committee to manage the
response obligations.
Corporate governance (continued)
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Other information (continued)
99
Principle 4 — Reporting & Disclosure
A fully informed and efficient market builds investor confidence which ultimately contributes to the
investment performance of the Trust and its ability to raise capital.
The Manager is committed to keeping Unitholders, regulators and other stakeholders fully and promptly
informed of all material information. The Manager has policies and procedures that govern the behaviour
of the Directors and employees ensuring balanced and timely information is provided to the market.
Continuous Disclosure Policy
The Manager has a Continuous Disclosure Policy which details the relevant legal requirements and sets
out the procedures put in place to ensure compliance with them.
Related Party Policy
The Manager believes that having a Board with a majority of experienced and strong Independent
Directors, effectively manages any related party issues or conflicts that could arise with an external
management structure.
A comprehensive Related Party Policy summarises the relevant restrictions contained in the Listing
Rules, the law and relevant contractual commitments, and how these issues are managed. The Manager
uses this policy as a tool to ensure that:
+
Management and the Board are properly briefed and educated on the relevant restrictions and the
processes put in place to ensure compliance with these restrictions; and
+
unitholders and the investment market recognise that the Manager deals with related party issues
in an appropriate, transparent and robust manner.
Other reporting
The Manager has extended GMT’s corporate reporting in recent years to provide a broader overview
of the business, explaining how the Trust creates long-term value for all its stakeholders. It includes
additional information about the Managers own-develop-manage business model, the current
investment strategy and achievements in the sustainability programme.
Sixteen factors were identified as key drivers of the Trust’s success in a materiality survey undertaken
with a representative group of stakeholders in early 2018. The six most important included, customer
relationships, sustainable development, resilient property portfolio, capital structure and financial results,
along with health and safety. These six areas are the focus of GMT’s corporate reporting.
Corporate governance (continued)
Access to key governance documents
The governance section of the website, https://nz.goodman.com/who-we-are/corporate-governance
contains all the relevant policies, charters and other documents described in this report including;
+
The Trust Deed of Goodman Property Trust
+ The Statement of Investment Policies and Objectives for Goodman Property Trust
+ Goodman (NZ) Limited Audit Committee Charter
+ Goodman Property Trust Fee Summary
+ Goodman (NZ) Limited Board Charter
+ Goodman (NZ) Limited Board Mandate
+ Code of Conduct
+ Corporate Governance Statement 2019
+ Financial Products Trading Policy
+ Goodman (NZ) Limited Diversity Policy
+ Continuous Disclosure Policy
+ Related Party Policy
Together with the Trust Deed of GMT Bond Issuer Limited (including the Supplemental Trust Deeds).
Principle 5 — Remuneration
GMT’s external management structure means that the Trust does not have any Directors or employees
of its own.
The remuneration of the Directors and employees are direct costs of Goodman (NZ) Limited and
Goodman Property Services (NZ) Limited respectively. The expense is a cost of managing GMT,
a service for which these entities receive fees. For these reasons, during the financial year ended
31 March 2019, GMT has not complied with the NZX Code recommendations for issuers to have a
remuneration policy and to recommend Director remuneration to unitholders for approval.
A breakdown of the fees paid by GMT in FY19 is provided in Note 10 of the Financial Statements,
page 72.
In the interests of transparency and good governance the Manager has disclosed the basis upon which
the Goodman Group Remuneration and Nominations Committee determines the packages payable
to Directors and employees involved with its New Zealand operations. This detail is provided with the
consent of the Directors and the Chief Executive Officer.
100
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Corporate governance (continued)
Directors remuneration
Directors of Goodman (NZ) Limited are paid fees that reflect the responsibility of governing the Trust
and implementing a strategy that creates value for its investors. The level of remuneration is regularly
benchmarked against other comparable companies.
Directors were entitled to fees, including fees for Due Diligence Committee matters, as set out below.
None of the Directors are paid performance related fees relating to their directorships.
DirectorRole
2019
$
2018
$
Keith SmithChairman, Independent Director
155,000153,750
Peter SimmondsChairman Audit Committee, Independent Director
100,000102,650
Susan PatersonIndependent Director
90,00088,750
Leonie FreemanIndependent Director
90,00096,550
Phil PrykeNon-executive Director
90,00099,550
Greg GoodmanNon-executive Director
––
John DakinExecutive Director
––
The Chairman receives $155,000 per annum, the Chairman of the Audit Committee $100,000 per
annum and each other Director $90,000 per annum. In addition, Directors are paid $300 per hour
for time spent in relation to Due Diligence Committee matters.
Greg Goodman and John Dakin are remunerated by way of salary for their executive roles and are not
paid any additional remuneration for their positions as Directors on the Board.
Chief Executive Officer and employee remuneration
The remuneration of the CEO and other employees is designed to attract and retain the most talented
and effective individuals. Packages include a base salary, together with short-term and long-term
incentive components.
A summary of key remuneration principles is set out below:
+
the basis of remuneration is local market referenced base salary, reviewed annually;
+ employees may be awarded short term incentives in the form of discretionary cash bonuses,
subject to GMT, Goodman Group and personal achievement of financial and operational targets;
+
all employees can participate equally in two long term incentive plans designed to maximise
long-term alignment with unitholders of GMT (“NZ LTIP”) and securityholders of Goodman
Group (“Goodman Group LTIP”);
+
the NZ LTIP, performance rights are issued which give employees the right to acquire, for nil
consideration, Goodman Property Trust units subject to the satisfaction of hurdles assessed
over specific three-year testing period timeframes. GMT units awarded are sourced from units
held by Goodman Group or purchased on market by Goodman Group;
+
under the Goodman Group LTIP, performance rights are issued which give employees the right to
acquire, for nil consideration, stapled securities of Goodman Group subject to the satisfaction of
hurdles assessed over specific three-year testing period timeframes; and
+
for both LTIP schemes, an employee is required to remain employed for a five-year period from the
initial granting to be eligible to receive all the awards that meet performance hurdles.
Employees automatically receive life cover and salary continuance insurance and for those that are
participating, KiwiSaver contributions of 3% are made.
The remuneration of the CEO, including the nature and amount of each major element, is shown below.
All amounts are in New Zealand dollars.
Chief Executive Officer’s Short Term Remuneration
Salary
$
Bonus
(1)
$
KiwiSaver
$
To t a l
$
31 March 2019413,654500,00027,900941,554
31 March 2018432,693500,00028,500961,192
Chief Executive Officer’s Long Term Remuneration
Goodman Group LTIPNZ LTIP
Performance Rights
Granted Number
Performance Rights
Vesting Number
Performance Rights
Granted Number
Performance Rights
Vesting Number
31 March 2019125,00099,431961,750574,649
31 March 2018125,00080,881949,750421,795
(1)
Bonus paid in the year ended 31 March 2019 related to GPSNZ’s year ended 30 June 2018. Bonus paid in the year ended 31 March 2018 related
to GPSNZ’s year ended 30 June 2017.
More than 80% of the CEO's total remuneration is performance based and therefore at risk. On average,
other executives have around 65% of their total remuneration at risk. For the year ended 31 March 2019
the ratio between the average base salary paid to an employee and the Chief Executive Officer was
1 to 3.95.
Participation in long term incentive plans
For the year ended 31 March 2019 the NZ LTIP awarded employees a total of 3,117,081 GMT units with a
market value of $4.4 million on the date of vesting. The Goodman Group LTIP awarded employees a total
of 594,651 GMG securities with a market value of NZ$6,702,754 million on the date of vesting.
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Other information (continued)
101
Corporate governance (continued)
As at 31 March 2019 under both LTIP schemes employees held performance rights some of which
had completed their three-year testing period and met some or all of the performance hurdles
(“Tested performance rights”). These performance rights will vest to employees over the next three
years subject to continuing employment and limited other circumstances. In addition, employees hold
performance rights which have not yet reached the end of their three-year testing period (“Untested
performance rights”).
Total performance rights held by employees at 31 March 2019 are summarised below:
NZ LTIPGoodman Group LTIP
Tested performance rights
3,488,245654,217
Untested performance rights
12,920,0001,842,121
Total performance rights held
16,408,2452,493,538
Principle 6 — Risk Management
The Manager maintains a risk management framework for GMT that includes regular reporting to both
the Audit Committee and the Board and the undertaking of an annual risk assessment for GMT.
The Board has the overall responsibility for ensuring that risk is managed effectively. This includes
consideration of all strategic, operational, financial and compliance risks. The Audit Committee reviews
the effectiveness of the risk management process.
Risk register
The register identifies the material risks to the business, assessing the impact and likelihood of each
risk along with the steps taken to mitigate possible adverse impacts. Customer, environmental, financial,
human, health and safety, regulatory and reputational impacts are all considered.
The Manager's businesses risk function facilitates the annual review of the risk register in conjunction
with senior management. Existing risks are reassessed, and new risks considered during the review.
Financial risk management policy
The policy reflects the Boards approach to managing financial risks. It includes policies, controls
relating to:
+
Liquidity risk
+ Interest rate risk
+ Foreign exchange risk
+ Counterparty credit risk
+ Operational risk
This policy is reviewed by the Board annually.
Health and Safety
The health, safety and wellbeing of employees, customers, contractors and the wider community is
a business priority.
Since the introduction of the Health and Safety at Work Act 2015 the Manager has worked closely
with staff and contractors to develop a culture of greater safety awareness. The emphasis on proper
processes, vigilance and personal responsibility is consistent with the aim being free of serious
harm accidents.
Detailed reporting, including trend analysis, is provided to the Board on a regular basis and used to
identify and mitigate future health and safety risks.
There were no serious harm accidents recorded in the last financial year.
Principle 7 — Auditors
The Audit Committee ensures the quality and independence of the external audit process. The
Committee ensures the annual audit is carried our independently and without impairment maintaining
the credibility and reliability of the Trust’s financial reporting.
Annual meeting attendance
The Manager also requires the external auditors to attend the annual meeting to answer Unitholders’
questions about the conduct of the audit, as well as the preparation and content of the independent
auditor’s report.
Internal audit
The Audit Committee approves the annual internal audit programme. The scope of the internal audit
programme varies from year to year depending on the outcome of the risk assessment review described
in Principle 6.
The service is performed by Goodman Group with its engagement approved by the Trust’s supervisor
and the Independent Directors.
Principle 8 — Unitholder Rights & Relations
The Board and Manager encourage investor engagement and facilitate this through regular
communication and meeting opportunities. The Managers investor relations resource is responsible for
delivering this programme. It typically includes:
+
An annual meeting
+ Investor open days
+ Six monthly newsletters
+ Annual reports
+ Live webcasts of the interim and annual result presentations
+ Regular institutional investor and analyst meetings
+ National road show presentations
+ Investor briefings
Corporate governance (continued)
The investor relations section of the website is the repository of important information about GMT and
GMT Bond Issuer Limited. It includes, NZX releases, financial result and meeting presentations, reports
and newsletters, and distribution histories. It also allows investors to view current prices and link to the
Registrar to check their holding, update details and download forms.
Investors have the option of receiving communication in printed or electronic format and live webcasting
is provided for the annual meeting and financial result presentations.
A dedicated toll-free investor line is also available for any investment related queries,
0800 000 656 (+64 9 375 6073 from outside New Zealand).
Annual meeting of Unitholders
The Trust Deed requires an annual meeting of Unitholders every year. The Board encourages the
participation of Unitholders at these meetings to ensure accountability and familiarity with the objectives
of its investment strategy.
The next annual meeting is to be held at Eden Park in Auckland on 3 July 2019.
Further details will be contained in the Notice of Meeting, which is expected to be distributed on or
around 5 June 2019. This timing is consistent with the NZX requirement of being at least 28 days ahead
of the meeting.
Voting on resolutions is done by poll and online proxy voting is provided for investors unable to attend.
Unitholders have one vote per unit they hold.
Other statutory and listing rule disclosures
NZX Waivers
NZX has granted waivers to GMT and GMT Bond Issuer at various times, some of which have been
relied upon by GMT and GMT Bond Issuer Limited during the year ended 31 March 2019.
Fees
Under paragraph 39(d) of the waivers that were granted to GMT by NZX on 12 November 2012, GMT
is required to disclose in its interim financial statements the fees that were paid to GPSNZ under the
property management and development management agreements between HDL and GPSNZ, during
the period they were in force.
Included within property management fees and development management fees paid is $5.2 million paid
pursuant to the property management and development management agreements between HDL and
GPSNZ for the year ended 31 March 2019.
GMT
On 17 May 2018, NZX granted GMT a waiver from NZX Listing Rule 9.2.1 in relation to the proposed sale
of 100% of the shares in Wynyard Precinct Holdings Limited (“WPH”) to Viaduct Holdings IV Limited
pursuant to the terms of a sale and purchase agreement (“Proposed Transaction”). GMT, through its
wholly-owned subsidiary Goodman Nominee (NZ) Limited (“Nominee”), holds 51% of the shares in WPH.
Reco Aotearoa Private Limited (“Reco”) holds the remaining 49% of shares in WPH. The waiver from
NZX Listing Rule 9.2.1 was granted to the extent that the Rule would otherwise require GMT to seek
unitholder approval to enter into the Proposed Transaction.
The effect of the waiver from NZX Listing Rule 9.2.1 is that GMT is able to enter into the Proposed
Transaction without first obtaining the approval of an ordinary resolution of unitholders. Unitholder
approval of the Proposed Transaction would otherwise have been required, as the Proposed
Transaction will be a “Material Transaction” (as that term is defined in the NZX Listing Rules) for GMT,
and GMT and Reco are considered “Related Parties” (as that term is defined in the NZX Listing Rules)
for the purposes of the NZX Listing Rules.
The waiver from NZX Listing Rule 9.2.1 has been granted on the condition that the Independent Directors
of Goodman certify, in a form acceptable to NZX, that:
a) the Proposed Transaction has been negotiated, agreed and entered into on an arm’s length and
commercial basis;
b) in their opinion the Proposed Transaction represents fair value and is fair and reasonable to GMT
and its unitholders who are not related to, or Associated Persons (as that term is defined in the
NZX Listing Rules) of Reco;
c) Reco did not influence the final decision of the Board to enter into the Proposed Transaction.
The waiver from NZX Listing Rule 9.2.1 has been granted on the further condition that the waiver, its
conditions and the implications of this waiver are disclosed in GMT’s next annual report.
GMT Bond Issuer
No waivers were relied upon during the period.
A complete copy of the waivers provided by NZX can be found at www.nzx.com under the GMT code.
Summary of recent Trust Deed amendments
There have been no amendments to the Trust Deed during the period from 1 April 2018 to
31 March 2019. A copy of the supplemental deed which amended GMT’s Trust Deed with effect from
14 November 2016 is available on the Corporate Governance section of the Goodman Property Trust
Website at www.goodman.com/nz. It is also available on the Disclose Register accessible on the
Companies Office website (https://www.companiesoffice.govt.nz/disclose).
102
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Corporate governance (continued)
Register of Directors’ holdings as at the Balance Date (to 31 March 2019)
The table below shows all relevant interests of Directors in Units and Goodman+Bonds under the FMCA,
which include legal and beneficial interests in Units.
DirectorUnitsGoodman+ Bonds
Keith Smith (Chairman)
(1)
462,654150,000
Leonie Freeman
(2)
173,750Nil
Susan Paterson
(3)
329,060Nil
Peter Simmonds
(4)
201,741Nil
Gregory GoodmanNilNil
Phil PrykeNilNil
John Dakin
(5)
1,437,757Nil
(1)
Keith holds a beneficial interest in 378,460 GMT units through The Selwyn Trust. He is also a trustee of that trust. Keith has an interest as a
trustee only (i.e. no beneficial interest) in a further 84,194 units, through being trustee of The Gwendoline Trust. Keith also has a beneficial interest
in 150,000 GMB020 Bonds held by Gwendoline Holdings Limited.
(2)
Leonie holds her GMT units through Wave Trust of which she is a trustee and beneficiary.
(3)
Susan holds her GMT units through SM Taylor Family Trust of which she is a trustee and beneficiary.
(4)
Peter holds his GMT units through the Simmonds Family Trust of which he is a trustee and beneficiary (with the exception of 40,505 units which
he holds personally).
(5)
John holds his units through SGH Investment Trust of which he is a trustee and beneficiary.
Other Disclosures for GMT Bond Issuer Limited
Interests register
GMT Bond Issuer Limited is required to maintain an interests register in which the particulars of certain
transactions and matters involving the Directors must be recorded. The interests register is available
for inspection on request.
Specific disclosures of interests
During the financial period, GMT Bond Issuer Limited did not enter into any transactions in which its
Directors had an interest. Accordingly, no disclosures of interest were made.
Indemnity and insurance
In accordance with section 162 of the Companies Act 1993 and its constitution, GMT Bond Issuer
Limited has provided insurance for, and indemnities to, Directors for losses from actions undertaken in
the course of their duties. The insurance includes indemnity costs and expenses incurred to defend an
action that falls outside the scope of the indemnity. The cost of such insurance has been certified as
fair by the Directors of GMT Bond Issuer Limited. Particulars have been entered in the interests register
pursuant to section 162 of the Companies Act 1993.
Use of company information by Directors
No member of the Board issued a notice requesting to use information received in his or her capacity
as a Director which would not have otherwise been available to that Director.
Donations
GMT Bond Issuer Limited did not make any donations during the financial period.
Audit fees
All audit fees and fees for other services provided by PricewaterhouseCoopers are paid by GMT.
Directors’ disclosure
During the year ended 31 March 2019, Directors’ disclosed interest or cessation of interest (indicated
by (C)), in the following entities pursuant to section 140 of the Companies Act 1993.
Gregory Goodman
A.C.N. 136 625 502 Pty Limited (C)
A.C.N. 136 626 447 Pty Limited (C)
Goodman Wholesale Construction Loan Note Pty Limited (C)
Goodman Wholesale Loan Note Pty Limited (C)
Wynyard Precinct No.1 Limited (C)
Wynyard Precinct No.2 Limited (C)
Wynyard Precinct No.3 Limited (C)
Wynyard Precinct No.4 Limited (C)
Wynyard Precinct No.5 Limited (C)
Wynyard Precinct No.6 Limited (C)
Wynyard Precinct No.7 Limited (C)
Wynyard Precinct Holdings Limited (C)
Susan Paterson
Eroad Limited
Wondermins Limited
Phil Pryke
Dairy Technology Services Limited
Keith Smith
Stiles Holdings Limited (C)
Electronic Navigation Limited (C)
Western Building Supplies Limited
Pine New Zealand Group Limited
John Dakin
Wynyard Precinct No.1 Limited (C)
Wynyard Precinct No.2 Limited (C)
Wynyard Precinct No.3 Limited (C)
Wynyard Precinct No.4 Limited (C)
Wynyard Precinct No.5 Limited (C)
Wynyard Precinct No.6 Limited (C)
Wynyard Precinct No.7 Limited (C)
Wynyard Precinct Holdings Limited (C)
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Other information (continued)
103
104
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Introduction
Ensuring Unitholders and Bondholders are well informed and easily able to manage their investment is a
key priority of the Manager’s investor relations team. Regular meetings and communications, its website
and a dedicated toll-free contact number provide investors with the means to make informed decisions.
Investor centre
The website, www.goodman.com/nz, enables Unitholders and Bondholders to view information
about their investment, download investor forms, check current prices and view publications and
announcements.
Publications
For Unitholders and Bondholders who elect to receive printed copies, the Annual and Interim Reports
are typically mailed around June and December of each year respectively. Goodresults newsletters
detailing the operational activities of the Trust over the intervening periods are mailed to Unitholders
in September and March.
Helpline
The Manager has a dedicated toll-free number, 0800 000 656 (+64 9 375 6073 from outside
New Zealand), which will connect Unitholders and Bondholders directly with the investor relations
team who will assist with any queries.
Unitholder distribution
The Trust typically pays its distributions quarterly in the third month that follows each quarter.
For example, the distribution for the March 2019 quarter will be paid in June 2019.
Bondholder interest payments
Interest is paid semi-annually, each year, until redemption. No dividends or distributions have been
paid by GMT Bond Issuer Limited.
Registrar
Computershare Investor Services Limited is the registrar with responsibility for administering
and maintaining the Trust’s Unit and Bond Registers.
If you have a question about the administration of your investment, Computershare can be
contacted directly:
+
by phone, on their toll-free number 0800 359 999 (+64 9 488 8777 from outside New Zealand);
+ by email, to enquiry@computershare.co.nz; or
+
by mail, to Computershare Investor Services Limited, Private Bag 92119, Auckland 1142.
Investor relations
Complaints procedure
As a financial service provider registered under the Financial Service Providers (Registration
and Dispute Resolution) Act 2008, the Manager is a member of an approved dispute resolution
scheme (registration number FSP36542).
Complaints may be made to the Manager or through the financial dispute resolution scheme.
Contact details of both are included in the corporate directory at the end of this document.
Top 20 Unitholders
As at 1 May 2019
Rank Holder Name
Number of
units held
% of total
issued units
1 Goodman Investment Holdings (NZ) Limited
277,250,271
21.41
2 Accident Compensation Corporation
77,803,843
6.01
3 FNZ Custodians Limited
71,666,609
5.54
4 HSBC Nominees (New Zealand) Limited
66,193,912
5 .11
5 Forsyth Barr Custodians Limited
59,461,356
4.59
6 Citibank Nominees (New Zealand) Limited
58,961,010
4.55
7 Investment Custodial Services Limited
45,846,117
3.54
8 HSBC Nominees (New Zealand) Limited A/C State Street
42,757,595
3.30
9 BNP Paribas Nominees (NZ) Limited
32,307,668
2.50
10 JPMorgan Chase Bank NA NZ Branch – Segregated Clients Acct
30,246,418
2.34
11 BNP Paribas Nominees (NZ) Limited
22,955,022
1.77
12 ANZ Wholesale Trans-Tasman Property Securities Fund
19,006,689
1 .47
13 Tea Custodians Limited Client Property Trust Account
17,399,732
1.34
14 Custodial Services Limited
12,205,204
0.94
15 Sir Woolf Fisher Charitable Trust Inc
11,139,000
0.86
16 New Zealand Depository Nominee Limited
10,683,024
0.83
17 ANZ Wholesale Property Securities
10,104,719
0.78
18 BNP Paribas Nominees (NZ) Limited
8,618,827
0.67
19 Mssrs. Williams, Parsons, Henshaw and Pearson
7,734,694
0.60
20 Custodial Services Limited
7,529,893
0.58
Units held by top 20 Unitholders 889,871,60368.72
Balance of Units held 405,028,942 31.28
Total of issued Units 1,294,900,545 100.00
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Other information (continued)
105
Substantial Unitholders
As at 31 March 2019
It is a requirement of the Financial Markets Conduct Act 2013
(1)
that each listed issuer makes available
the following information in its Annual Report.
Unitholder
Number of Units Held
(2)
Goodman Investment Holdings (NZ) Limited
262,447,211
(3)
Goodman Limited
262,447,211
(3)
Accident Compensation Corporation
58,295,875
(1)
The numbers of Units listed above are as at 31 March 2019 according to disclosures made under section 280(1)(b) of the Financial Markets
Conduct Act 2013 and (prior to 1 December 2014) notices received under section 26 of the Securities Markets Act 1988. As these disclosures and
notices are required to be filed only if the total holding of a Unitholder changes by 1% or more since the last notice filed, the numbers noted in this
table may differ from those shown in the list of top 20 Unitholders. The list of top 20 Unitholders is shown as at 1 May 2019, rather than 31 March
2019.
(2)
The total number of Units on issue as at 31 March 2019 was 1,294,900,545.
(3)
Due to the breadth of the definition of ‘Substantial Product Holder’ in the Financial Markets Conduct Act 2013 and the nature of Goodman
Group’s corporate structure, the list above requires Goodman Group’s holding in GMT to be shown through multiple entities each holding
differing (i.e. legal or beneficial) interests. The total holding of Goodman Group as at 31 March 2019 is 277,250,271 Units.
Unitholder distribution
As at 1 May 2019
Unitholding Range Number of Unitholders Number of Units
1 to 9,999
3,12015,832,950
10,000 to 49,999
5,126112,6 4 3 ,0 01
50,000 to 99,999
79051,974,655
100,000 to 499,999
50089,375,755
500,000 to 999,999
3422,714,343
1,000,000 and above
501,002,359,841
Total 9,6201,294,900,545
Investor relations (continued)
Bondholder distribution
As at 1 May 2019
GMB020
Number of Bondholders Number of Bonds
1 to 9,999
164972,000
10,000 to 49,999
82715,310,000
50,000 to 99,999
1216,710,000
100,000 to 499,999
537,839,000
500,000 to 999,999
1945,000
1,000,000 and above
1568,224,000
Total 1,181100,000,000
GMB030
Number of Bondholders Number of Bonds
1 to 9,999
177982,000
10,000 to 49,999
67211,862,000
50,000 to 99,999
1136,860,000
100,000 to 499,999
436,901,000
500,000 to 999,999
74,580,000
1,000,000 and above
1268,815,000
Total 1,024100,000,000
GMB040
Number of Bondholders Number of Bonds
1 to 9,999
1382,000
10,000 to 49,999
1513,089,000
50,000 to 99,999
281,650,000
100,000 to 499,999
244,296,000
500,000 to 999,999
53,243,000
1,000,000 and above
1387,640,000
Total 234100,000,000
GMB050
Number of Bondholders Number of Bonds
1 to 9,999
35188,000
10,000 to 49,999
1923,593,000
50,000 to 99,999
281,758,000
100,000 to 499,999
173,180,000
500,000 to 999,999
32,102,000
1,000,000 and above
1289,179,000
Total 287100,000,000
106
Good to great
Result overview
Chairman’s report
Management report
Our assets
Our people
This is Goodman
Our approach
Customer stories
Sustainability at Goodman
Our framework
People and community
Financial
Financial summary
Goodman Property Trust Financial Statements
GMT Bond Issuer Limited Financial Statements
Other information
Corporate governance
Investor relations
Glossary
Business directory
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Glossary
$ and cents
New Zealand currency.
Associated Person
has the meaning given to that term in the Listing Rules.
ASX
ASX Limited or any market operated by it, as the context
requires.
Balance Date
31 March 2019.
Board
the Board of Directors of the Manager and GMT Bond
Issuer Limited.
Bondholder
a person whose name is recorded in the register as a holder
of a Goodman+Bond.
Cash Earnings
Cash earnings is a non-GAAP measure that assesses free
cash flow, on a per unit basis, after adjusting for certain items.
Calculation of GMT’s cash earnings is set out on page 39.
CEO
the Chief Executive Officer of the Manager.
Chairman
the Chairman of the Board of the Manager.
Co-ownership Agreement
the agreement of that name between the Manager, Goodman
Property Aggregated Limited, the Trustee, Goodman Funds
Management Limited as responsible entity of GIT, Tallina
Pty Limited as trustee of Penrose Trust, and Trust Company
Limited as custodian of Tallina Pty Limited, dated 1 April 2004
as amended by the Restructuring Agreement between the
same parties dated 7 March 2005, relating to the buying,
selling and holding of property by the Trust and Goodman
Group in 50/50 shares.
CPU or cpu
cents per unit.
Disclose Register
the Disclose Register is a register for offers of financial
products and managed investment schemes under the
Financial Markets Conduct Act 2013.
Director
a director of the Manager and GMT Bond Issuer Limited.
GIC
the sovereign wealth fund of Singapore.
GIT
Goodman Industrial Trust and its controlled entities, as the
context requires.
GL
Goodman Limited and its controlled entities, as the context
requires.
GMB
GMT Bond Issuer Limited, a wholly owned subsidiary of
Goodman Property Trust.
Goodman
means Goodman (NZ) Limited as the Manager of the Trust.
Goodman Group or GMG
means GL, GIT and Goodman Logistics (HK) Limited,
operating together as a stapled group. Where either GL,
GIT or and Goodman Logistics (HK) Limited is party to a
contract or agreement or responsible for an obligation or
liability, without the other, all references to Goodman Group
as concerns that contract, agreement or responsibility shall
be to that party alone.
Goodman+Bond or Bond
a bond issued by GMB.
GPSNZ
Goodman Property Services (NZ) Limited.
Independent Director
has the meaning given to that term in the Listing Rules
which, for the Manager are those persons listed on the
following page.
Listing Rules
the Listing Rules of NZX from time to time and ‘LR’ is a
reference to any of those rules.
Management
the senior executives of the Manager.
Manager or GNZ
the manager of the Trust, Goodman (NZ) Limited.
NTA
net tangible assets.
NZ IAS
New Zealand equivalents to International Accounting
Standards.
NZ IFRS
New Zealand equivalents to International Financial Reporting
Standards.
NZDX
the New Zealand debt market operated by NZX.
NZX
means NZX Limited.
NZX Code
means the NZX Corporate Governance Code 2019.
Operating Earnings
Operating earnings are a non-GAAP financial measure
included to provide an assessment of the performance of
GMT’s principal operating activities. Calculation of operating
earnings are as set out in GMT’s Profit or Loss statement.
Registrar
the unit registrar for GMT and Goodman+Bond registrar
for GMB which, at the date of this Annual Report, is
Computershare Investor Services Limited.
sqm
square metres.
Total Unitholder Return
GMT’s stock market performance including unit price
appreciation and distributions paid.
Trust Deed
the GMT trust deed dated 23 April 1999, as amended from
time to time.
Trust or GMT
Goodman Property Trust and its controlled entities, including
GMB, as the context requires.
Trustee
the trustee of the Trust, Covenant Trustee Services Limited.
Unitholder or unitholder
any holder of a Unit whose name is recorded in the register.
Unit or unit
a unit in GMT.
WPH or Wynyard Precinct
Wynyard Precinct Holdings Limited, the joint venture between
GMT and GIC, the sovereign wealth fund of Singapore.
Business
directory
Manager of Goodman Property Trust
Goodman (NZ) Limited
Level 2, 18 Viaduct Harbour Avenue
Auckland 1010
PO Box 90940
Victoria Street West
Auckland 1142
Toll free: 0800 000 656 (within New Zealand)
Telephone: +64 9 375 6060 (outside New Zealand)
Email: info-nz@goodman.com
Website: www.goodman.com/nz
Issuer of Goodman+Bonds
GMT Bond Issuer Limited
Level 2, 18 Viaduct Harbour Avenue
Auckland 1010
PO Box 90940
Victoria Street West
Auckland 1142
Toll free: 0800 000 656 (within New Zealand)
Telephone: +64 9 375 6060 (outside New Zealand)
Email: info-nz@goodman.com
Website: www.goodman.com/nz
Complaint Procedure
Financial Dispute Resolution Service
Freepost 231075
PO Box 2272
Wellington 6140
Toll free: 0508 337 337 (within New Zealand)
Telephone: +64 4 910 9952 (outside New Zealand)
Email: enquiries@fdr.org.nz
Auditor
PricewaterhouseCoopers
PwC Tower
188 Quay Street
Private Bag 92162
Auckland 1142
Telephone: +64 9 355 8000
Facsimile: +64 9 355 8001
Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna
Private Bag 92119
Auckland 1142
Toll free: 0800 359 999 (within New Zealand)
Telephone: +64 9 488 8777 (outside New Zealand)
Facsimile: +64 9 488 8787
Email: enquiry@computershare.co.nz
Legal Advisors
Russell McVeagh
Level 30, Vero Centre
48 Shortland Street
PO Box 8
Auckland 1140
Telephone: +64 9 367 8000
Facsimile: +64 9 367 8163
Trustee and Supervisor
for Goodman Property Trust
Covenant Trustee Services Limited
Level 6, Crombie Lockwood Building
191 Queen Street
PO Box 4243
Auckland 1140
Telephone: +64 9 302 0638
Bond Trustee
Public Trust
Level 9
34 Shortland Street
PO Box 1598
Shortland Street
Auckland 1140
Toll free: 0800 371 471 (within New Zealand)
Telephone: +64 9 985 5300 (outside New Zealand)
Facsimile: 0800 371 001
Directors of Goodman (NZ) Limited
and GMT Bond Issuer Limited
Chairman and Independent Director
Keith Smith
Independent Directors
Leonie Freeman
Susan Paterson ONZM
Peter Simmonds
Executive Director
John Dakin
Non-executive Directors
Gregory Goodman
Phillip Pryke
Management Team of Goodman (NZ)
Limited and GMT Bond Issuer Limited
Chief Executive Officer
John Dakin
Chief Financial Officer
Andy Eakin
General Counsel and Company Secretary
Anton Shead
Director Investment Management
James Spence
General Manager Development
Michael Gimblett
Director Investment Management
and Capital Transactions
Kimberley Richards
Head of Corporate Affairs
Jonathan Simpson
Marketing Director
Mandy Waldin
Goodman Property Trust
Annual Report 2019
GMT Bond Issuer Limited
Annual Report 2019
Other information (continued)
107
goodman.com/nz
---
Level 2, 18 Viaduct Harbour Avenue, Auckland | PO Box 90940, Victoria Street West, Auckland 1142
Tel +64 9 375 6060 | www.goodman.com/nz
media release+
GMT’s Industrial Strategy Delivers Record Profit
Date 15 May 2019
Release Immediate
An investment strategy focused exclusively on the Auckland industrial market is
providing high-quality property solutions for customers and record financial
returns for investors.
Goodman Property Trust (“GMT” or “Trust”) reported its 2019 annual result today,
delivering a record profit of $334.8 million before tax (2018 $207.2 millon).
The last five years have been a period of business refinement as $1.2 billion of asset
sales and $675 million of new development projects have repositioned the portfolio,
generated strong profits and deleveraged the balance sheet.
Keith Smith, Chairman of Goodman (NZ) Limited said, “Focusing our investment in the
Auckland industrial market recognises the emerging trends and unique drivers that have
helped make this New Zealand’s strongest performing real estate sector.”
Demographic changes, economic growth, and the rapid expansion of online retailing are
creating an unprecedented level of demand for well-located and operationally efficient
warehouse space across the city.
Chief Executive Officer, John Dakin said, “GMT’s substantial $2.6 billion portfolio is now
100% Auckland industrial. It’s a supply constrained market and we’re undertaking a
record level of development activity to accommodate customer demand. It’s contributing
to GMT’s impressive financial results and improving an already high-quality portfolio.”
Around $160 million of new projects were confirmed last year. GMT now has 14
developments underway at a total cost of $195 million. The majority are at Highbrook in
East Tamaki, with this world-class business park now over 90% developed.
The Trust’s development activity is creating value too, contributing $26.2 million of the
record $201.9 million revaluation gain.
John Dakin said, “Our preference for high-quality Auckland industrial property reflects the
positive investment attributes of this asset-class and the superior growth profile it offers.
It’s the focus of our development programme and we expect to undertake a similar level
of development activity this financial year.”
The sale of office assets has repositioned GMT and created the balance sheet capacity
that is funding its development programme. At 31 March 2019 the Trust had a loan to
value ratio of just 19.7% and committed gearing of 23.7%.
Following its year-end balance date the Trust’s remaining Christchurch assets were also
conditionally sold.
John Dakin said, “The sales programme has been highly successful and these disposals
complete the repositioning of GMT.
Keith Smith said, “The Board is extremely pleased with the results being achieved and is
confident that the current strategy of development-led growth, funded from the Trust’s
substantial reserves, will support strong operating performances into the future.”
Level 2, 18 Viaduct Harbour Avenue, Auckland | PO Box 90940, Victoria Street West, Auckland 1142
Tel +64 9 375 6060 | www.goodman.com/nz
A comprehensive summary of GMT’s financial performance for the 12 months ended 31
March 2019 is contained within the 2019 Annual Report. The report was released today
and is available online at www.goodmanreport.co.nz
.
For additional information please contact:
John Dakin
Chief Executive Officer
Goodman (NZ) Limited
(09) 375 6063
(021) 321 541
About Goodman Property Trust:
GMT is an externally managed unit trust, listed on the NZX. It has a market capitalisation of around $2.2 billion, ranking it in the
top 20 of all listed investment vehicles. The Manager of the Trust is a subsidiary of the ASX listed Goodman Group, Goodman
Group is also the Trust’s largest investor with a cornerstone unitholding of 21%.
GMT is New Zealand’s leading industrial space provider. It has a substantial property portfolio, with a value of $2.6 billion. The
Trust holds an investment grade credit rating of BBB from Standard & Poor’s.
---
Level 2, 18 Viaduct Harbour Avenue, Auckland | PO Box 90940, Victoria Street West, Auckland 1142
Tel +64 9 375 6060 | www.goodman.com/nz
nzx release+
GMT’s Industrial Strategy Delivering Results
Date 15 May 2019
Release Immediate
Goodman (NZ) Limited, the manager of Goodman Property Trust (“GMT” or
“Trust”) is pleased to announce the Trust’s financial results for the year ended 31
March 2019.
An investment strategy focused exclusively on the Auckland industrial market is
providing high-quality property solutions for customers and record financial returns for
investors.
Highlights for the 12 months include:
+ A statutory profit of $334.8 million before tax (including valuation gains of $201.9
million), compared to $207.2 million (including valuation gains of $83.8 million)
previously.
+ A 13% increase in net tangible assets, from 138.9 cents per unit, to 157.0 cents per
unit at 31 March 2019.
+ Adjusted operating earnings
1
of $117.0 million before tax or 9.04 cents per unit.
+ Cash distributions of 6.65 cents per unit, representing around 95% of GMT’s cash
earnings
2
of 6.98 cents per unit.
+ Asset sales totalling $370.5 million, including GMT’s 51% share in the joint venture
that owned the VXV office portfolio.
+ Greater balance sheet capacity with a loan to value ratio
3
of 19.7% and committed
gearing of just 23.7%.
+ Continued development momentum with the commencement of 11 new projects,
total project cost $160.5 million.
+ Strong operating results with portfolio occupancy of 98% and a weighted average
lease term of 5.2 years
4
.
Focused strategy
Keith Smith, Chairman of Goodman (NZ) Limited said, “Focusing our investment in the
Auckland industrial market recognises the emerging trends and unique drivers that have
helped make this New Zealand’s strongest performing real estate sector.”
Demographic changes, economic growth, and the rapid expansion of online retailing are
creating an unprecedented level of demand for well-located and operationally efficient
warehouse space across the city.
Chief Executive Officer, John Dakin said, “GMT’s substantial $2.6 billion portfolio is now
100% Auckland industrial
4
. It’s a supply constrained market with very limited vacancy in
the prime locations where we invest. We’re undertaking a record volume of
1
Adjusted operating earnings is a non-GAAP financial measure included to provide an assessment of the performance
of GMT’s principal operating activities. Refer to note 4.2 of GMT’s financial statements for further information.
2
A non-GAAP measure of free cash flow. The calculation is set out on page 39 of the Annual Report.
3
Refer to note 3.5 of GMT’s financial statements for further information.
4
After all contracted sales, including post balance date transactions.
Level 2, 18 Viaduct Harbour Avenue, Auckland | PO Box 90940, Victoria Street West, Auckland 1142
Tel +64 9 375 6060 | www.goodman.com/nz
development to accommodate current demand. It’ s contributing to GMT’s impressive
financial results and improving an already high-quality portfolio.”
Six projects totaling over 50,000 sqm were completed during the year with 96% of this
space now leased. The Trust’s development activity is creating value too, contributing
$26.2 million of the $201.9 million valuation gain this year.
Keith Smith said, “The Board is extremely pleased with the results being achieved and
is confident that the current strategy of development-led growth, funded from the Trust’s
substantial reserves, will support strong operating performances into the future.”
The strategic approach has been well supported by the investment community and
GMT has recorded a Total Unitholder Return
5
of 36.1% over the year to 31 March 2019,
outperforming all the NZX listed property stocks and the wider NZX50.
With a market capitalisation of around $2.2 billion the Trust is also now the largest listed
property entity on the NZX.
Further information is provided in the Trust’s 2019 Annual Report which was released
today. A copy of the report has been provided to the NZX and an online version will be
available later this morning at www.goodmanreport.co.nz.
Portfolio repositioning
The last five years have been a period of business refinement as $1.2 billion of asset
sales and $675 million of new development projects have repositioned the portfolio and
deleveraged the balance sheet.
John Dakin said, “Our preference for high-quality Auckland industrial property reflects
the positive investment attributes of this asset-class and the superior growth profile it
offers. It’s the focus of our development programme and we expect to undertake a
similar level of development activity this financial year.”
Development commitments totalling 10,000 sqm (total project cost of $28.3 million)
have already been confirmed for existing customers OfficeMax and Panasonic, at
Highbrook Business Park. The two warehouse expansions add to the large volume of
work in progress, the combined cost of these 14 projects is $195.7 million.
John Dakin said, “Other customers from within the portfolio are also signalling future
expansion requirments. The additional space this represents is expected to underpin
our development workbook for the next two to three years.”
The low vacancy rates and sustained economic growth that is driving customer demand
for new facilities is contributing to positive leasing results elsewhere in the portfolio.
New rental benchmarks are being set and annualised average increases of 6.3% were
achieved on lease reversion events during the year.
At 31 March 2019 the portfolio had an occupancy rate of 98% and a weighted average
lease term of more than five years
4
.
Balance sheet strength
The execution of the sales programme over the last five years has provided GMT with
substantial balance sheet capacity. At 31 March 2019 the Trust had a loan to value
ratio of just 19.7% and committed gearing of 23.7%.
Following its year-end balance date the Trust’s remaining Christchurch assets were
also conditionally sold.
John Dakin said, “The sales programme has been highly successful and these disposals
complete the repositioning of GMT. The investment focus is now exclusively on
Auckland industrial property.”
5
GMT’s stock market performance including unit price appreciation and distributions paid.
Level 2, 18 Viaduct Harbour Avenue, Auckland | PO Box 90940, Victoria Street West, Auckland 1142
Tel +64 9 375 6060 | www.goodman.com/nz
Keith Smith said, “GMT has a strong balance sheet and almost $300 million in undrawn
bank facilities. It is a very resilient business and the Board will continue to ensure its
managed prudently.”
The rapid progress in the development programme means the focus is also on securing
strategic sites that offer future opportunity, either through intensification of use or
redevelopment.
John Dakin said, “Retaining a development capability is critical to servicing the needs of
our customers and we’re continuing to invest in key locations that position these
businesses close to consumers.”
The acquisition of the Foodstuffs Distribution Centre in Mt Roskill, and the conditional
purchase of three adjoining properties on Favona Road in Mangere during the year are
examples of this strategy. With easy connectivity to the CBD, port and airport both
locations are ideal future sites for fulfilment and logistics companies.
Future focus
GMT has been repositioned as an industrial property specialist to meet the growing
demand for warehouse and distribution space across Auckland. This investment
strategy has enhanced the portfolio, generated strong profits and reduced gearing.
Keith Smith said, “Making investment decisions focused on long-term growth is also
improving the alignment between the cash earning of the Trust and the distributions
paid to investors.”
Distributions for the 2020 financial year are expected to be held at 6.65 cents per unit, a
level that helps absorb the short-term impact of balance sheet deleveraging.
John Dakin said, “The balance sheet capacity provided by the sales programme will be
invested into new development and acquisition opportunities over time. It’s a
sustainable growth strategy that will drive GMT’s future performance.”
For additional information please contact:
John Dakin Andy Eakin
Chief Executive Officer Chief Financial Officer
Goodman (NZ) Limited Goodman (NZ) Limited
(09) 375 6063 (09) 375 6077
(021) 321 541 (021) 305 316
James Spence
Director Investment Management
Goodman (NZ) Limited
(09) 903 3269
(021) 538 934
Attachments provided to NZX:
1. Goodman Property Trust and GMT Bond Issuer Limited Annual Report 2019
2. GMT Annual Result Presentation
3. NZX Result Announcement
4. Media Release
About Goodman Property Trust:
GMT is an externally managed unit trust, listed on the NZX. It has a market capitalisation of around $2.2 billion, ranking it in
the top 20 of all listed investment vehicles. The Manager of the Trust is a subsidiary of the ASX listed Goodman Group,
Goodman Group is also the Trust’s largest investor with a cornerstone unitholding of 21%.
GMT is New Zealand’s leading industrial space provider. It has a substantial property portfolio, with a value of $2.6 billion.
The Trust holds an investment grade credit rating of BBB from Standard & Poor’s.
---
Goodman Property Trust Annual Result 2019
Unless otherwise indicated, all numerical data provided in this presentation is stated as at 31 March 2019. All dollar valuesar e NZD unless otherwise stated. All figures are rounded.
03Targeted strategy
09Investment portfolio
22Financial result
29Capital management
32Summary and outlook
35Appendix
Contents
Presented by:
John Dakin Chief Executive Officer James Spence Director - Investment Management Andy Eakin Chief Financial Officer
3
Gateway warehouse B–HighbrookBusiness Park
Investment strategy
Auckland
＋Geographically constrained with limited industrial land supply
＋Urban centre, with scale supporting innovation and e-commerce trends
＋Economy and population growing faster than other centres
＋Congested distribution networks
＋Significant airport, port, rail and road infrastructure projects
Industrial
＋Auckland industrial market at capacity
＋Historically low vacancy driving market rental growth
＋Prime locations, close to consumers, expected to deliver best returns
＋Strongest investment performance of all property sectors
Customers
＋Businesses strong and many at capacity, limited space options
＋Customer expansions major component of development projects
＋Greater sophistication, differentiating between locations and building quality
＋Increasingly focused on timely and cost-effective distribution as end
consumer demands intensify
＋Looking for efficiencies, racking and automation technologies
Results
＋Premium asset quality reflected in portfolio metrics and returns
＋Quality and location of assets reflected in differential rental growth
＋Customer demand means development workbook remains strong
＋Completion of sales programme provides substantial balance sheet capacity
＋GMT delivering market leading returns
Targeted investment strategy to concentrate on the best locations within the Auckland Industrial market
4
Annual Result 2019
Targeted strategy
14.4%
17.2%
13.8%
11.6%
17.8%
0%
5%
10%
15%
20%
FY15FY16FY17FY18FY19
Income returnCapital return
Strategy driving performance
＋Profit after tax of $319.5 million for FY19
reflects strong operational and revaluation
result
＋Five year total profit after tax over $1.1 billion
＋13% increase in net tangible assets, from
138.9 cents to 157.0 cents per unit
＋Five year total return
1
of 14.9% per annum
Profit after tax
($m)Total return (NTA + distribution)
179.7
233.1
213.8
194.0
319.5
0
100
200
300
400
FY15FY16FY17FY18FY19
Profit excluding revaluationRevaluation
14.9%
Total
return
5 years
5.6%
Income
return
5 years
1
Total return is a combination of NTA growth + distribution paid
5
Annual Result 2019
Targeted strategy
148.7
124.2
278.8
243.9
370.5
201.9
179.0
115.9
196.6
282.5
500
400
300
200
100
-
100
200
300
400
500
FY15FY16FY17FY18FY19
DisposalsDevelopmentsAcquisitions
73.0%
75.0%
84.4%
83.2%
100.0%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
FY15FY16FY17FY18FY19
Portfolio repositioned
＋Portfolio quality improved following $1.2 billion
of disposals offset by $1.0 billion of
acquisitions and developments
2
over 5 years
＋Following settlement of Show Place disposal
3
,
GMT will be 100% focused on the Auckland
industrial market
Investment activity
1
($m)Industrial weighting
1
Transactions contracted in the period
2
Development commencements – total project cost including land
3
Conditionally contracted for sale in May 2019
2
6
Annual Result 2019
Targeted strategy
$2.6bn
Property portfolio
GMT’s portfolio is positioned for growth, with assets
located in efficient and desirable distribution locations.
235 ha
Portfolio footprint
1.0m sqm
Net lettable area
Acquisition of FavonaRoad remains conditional
7
＋Conservative gearing level
–loan-to-value ratio below 20%
–well below the 50% maximum allowed
under the Trust’s debt covenants
＋Significant capacity for development pipeline
and other opportunities
Balance sheet strength
Loan-to-value ratio
1
1
LVR on a look-through basis (including interests in WPH) for FY15-FY18. WPH interests sold in FY19.
34.2%
33.9%
30.6%
25.0%
19.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
FY15FY16FY17FY18FY19
8
Annual Result 2019
Targeted strategy
9
Premium Apparel –HighbrookBusiness Park
Annual Result 2019
Investment portfolio
Portfolio highlights
$160.5m
Development
commencements
3.0%
Like-for-like net property
income growth
5.2years
Weighted average lease
term
1
100%
Auckland industrial
weighting
1
98.2%
Occupancy
1
1
ExcludesShow Place, Christchurch, conditionally contracted for sale in May 2019
10
Gateway warehouse G –HighbrookBusiness Park
Consumer/Retail
31%
Storage/Distribution
21%
Manufacturing
13%
Other
21%
Automotive
15%
Strong leasing results
＋Leasing across the portfolio totalled97,385 sqm (equates to 10% of
the portfolio)
＋Sustained period of economic growth in region is a major driver
behind increased requirement for warehouse space
＋Development leasing a strong mixture of expansions for GMT’s
existing customer base (21,244 sqm) and 10 new customers
(24,682 sqm)
＋50,000 sqm of unsatisfied demand from existing customers within
portfolio
Industry exposure – new customers
11
Annual Result 2019
Investment portfolio
FY19
% leased96%
Average WALE5.8 years
Yield on cost6.2%
Yield on additional cost8.3%
Cap rate on completion5.2%
Completed developments
Highly successful leasing outcome
＋6 developments (18 buildings) completed across 50,428 sqm,
96% leased
＋Build-to-lease programme ahead of expectations with average
period of 2 months to let-up
＋65% of development leasing is the result of occupiers growing
their overall warehousing footprint in the region
Highlights – completed developments
Parade units -HighbrookBusiness Park
Gateway warehouses -HighbrookBusiness Park
12
Annual Result 2019
Investment portfolio
FY19
Expansion net lettable area10,004 sqm
Total project cost$28.3m
Yield on additional cost8.3%
Renewal and expansion of OfficeMax and Panasonic buildings
at Highbrook Business Park
＋OfficeMax 18,901sqm of existing space plus 7,344 sqm of
additional warehouse space
＋Panasonic 7,503 sqm of existing space plus 2,660 sqm of
additional warehouse space
＋Average extended lease term of 13.6 years (expiries were in 2020
and 2023)
＋Average rental uplift of 3.3%
New developments
Highlights – new developments
OfficeMax expansion - HighbrookBusiness Park – Artist’s impression
Panasonic expansion -HighbrookBusiness Park – Artist’s impression
13
Annual Result 2019
Investment portfolio
Volume of work in progress reflects strong demand
＋14 developments across 57,992 sqm (2 additional announced
today)
＋Additional spend of $142.9m ($195.7m TPC)
＋9 projects (51%) on a build-to-lease basis with significant amount
of forward interest
Projects underway
Highlights – projects underway
FY19
Additional spend$142.9m
Yield on cost6.3%
Yield on additional cost8.6%
Underwood 2,600 -HighbrookBusiness Park - Artist’s impression
SavillDrive Units -SavillLink - Artist’s impression
14
Annual Result 2019
Investment portfolio
Development track record
＋Programme of build-to-lease developments
has been a successful part of GMT’s strategy
with 127,627 sqm developed since 2014
＋Over the last 5 years, average let-up time on
build-to-lease programme of 2.4 months
＋Developments have improved the quality of
the portfolio as 85% has now been developed
by Goodman
Development commencements ($m, total project cost including land)
98.2
108.8
148.9
97.0
164.8
160.5
28.3
0
20
40
60
80
100
120
140
160
180
FY14FY15FY16FY17FY18FY19FY20 YTD
Pre-committedBuild-to-lease
15
Annual Result 2019
Investment portfolio
Stabilisedleasing
Solid leasing totalling 51,459 sqm across GMT’s stabilised
portfolio
＋Rental growth on new leases of 9.6%
＋Average industrial vacancy downtime of 2months
＋Face rental range for premium warehouses of $120psm - $140psm,
dependent on size
＋Incentives averaging around 5%
GMT’s new customer, Nisbets New Zealand Limited, typifies
recent leasing activity
＋Asset vacated by GMT customer, Plytech, for adjacent expansion
＋Leased to Nisbets within 1 month
＋2,413 sqm premises will facilitate Nisbets’ multi-channel retail
strategy here in New Zealand
＋The company provides same-day dispatch and online orders are
freight free
＋The 6 year lease deal demonstrates how the growth in online
retailing is driving demand for well-located industrial space close to
consumers
FedEx- HighbrookBusiness Park
Nisbets -HighbrookBusiness Park
16
Annual Result 2019
Investment portfolio
Market Review
32%
Fixed
52%
CPI
16%
Income subject to
reversion in FY19
Increase from FY19
reversion events
Increase from FY19
reversion event pa
1
Core6.0%7.0%5.7%
Value-add28.8%13.8%7.7%
Total7.9%9.0%6.3%
Rental growth
Rental reversion (industrial)
＋New leases and market reviews (reversion
events) within the industrial portfolio recorded
average annualised increases of 6.3%
1
＋45% of portfolio due to revert to market within
next three years
＋Portfolio estimated to be around 5-6% under-
rented as at November 2018
＋52% of all reviews are fixed and provide for
average increase of 2.7% pa
＋Portfolio income up $2.6 million, a 3.0%
increase on a like-for -like basis
Rent reviews by next review type
1
Increase in contract rental for reversion events divided by number of years since last time rental was reviewed
17
Annual Result 2019
Investment portfolio
Core
89%
Value-add
5%
Assets transacted
in period
6%
Property returns
FY19 property total return by asset class
1
＋Significant re-rating of core portfolio large driver
behind record revaluation of $201.9m or 8.2%
＋Portfolio cap rate now 5.8%
＋Developments contributed $26.2 million to the
revaluation gain, reflecting a development margin
of 14.3% on completed developments.
Asset diversity
18
Annual Result 2019
Investment portfolio
1
Includes land and developments. Excludes WPH assets.
2
Includes assets acquired, sold or contracted for sale during the period, and Show Place which was conditionally sold post balance date.
5.0%
5.3%
5.9%
5.1%
8.1%
13.4%
4.4%
8.2%
13.1%
18.7%
10.2%
13.3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
CoreValue-addAssets transacted
in period
Total
Income returnCapital return
2
0%
5%
10%
15%
20%
25%
30%
VacantFY20FY21FY22FY23FY24FY25FY26FY27FY28>FY28
VacantExpiring Income
Lease expiry profile
Lease expiry profile (% of portfolio income)
＋Limited expiries (2%) over next 12 months
following strong leasing and retention
＋Proposals for renewals sought from one third
of customers expiring over the next 36 months
19
Annual Result 2019
Investment portfolio
Consumer/Retail
13%
Storage/Distribution
54%
Manufacturing
16%
Other
12%
Automotive
5%
Customer exposure
＋GMT’s customer base robust and diversified
with top 10 customers accounting for 33% of
portfolio income
＋Majority of GMT customers focused on
storage and distribution
Top ten customers
(% of portfolio income,split by subsidiary companies)
Industry exposure – total portfolio
20
Annual Result 2019
Investment portfolio
0%1%2%3%4%5%6%7%8%
New Zealand Post Group
DHL Group
Coda Group
Foodstuffs North Island Limited
Fletcher Building Group
Big Chill Distribution Limited
Fliway Transport Limited
Toll Group (NZ) Limited
CSR Building Products Group
OfficeMax New Zealand Limited
Future development potential
＋Significant level of developments has reduced greenfield land
weighting to 2.2%
＋Focus shifted towards income producing brownfield sites with future
development potential
＋Total medium to long term development pipeline across portfolio of
>$500m
＋Acquisition of FavonaRoad sites provides potential for medium-term
redevelopment of up to 30,000 sqm of warehouse space
21
FavonaRoad (approximate boundary)
0%
2%
4%
6%
8%
10%
12%
FY15FY16FY17FY18FY19
Greenfield land weighting
Annual Result 2019
Investment portfolio
22
Premium Apparel –HighbrookBusiness Park
Annual Result 2019
Financial result
Financial highlights
19.7%
Loan-to-value ratio
25% previously
157.0cpu
Net tangible asset backing
13.0% increase
$201.9m
Portfolio revaluation
140.9% increase
$334.8m
Profit before tax
61.6% increase
5.0years
Weighted average debt term
6.65cpu
Cash distributions
6.98cpu
Cash earnings
36.1%
1
GMT’s stock market performance including unit price appreciation and distributions paid
Total Unitholder Return
1
12 months to 31 March 2019
23
130.1
126.8
18.4
14.3
+1.9
+5.8
+2.6
-1.2
-0.9
-11.5
-0.3
-3.8
148.5
141.1
120
130
140
150
160
FY18AcquisitionsDevelopmentsLike-for-like
portfolio
(Auckland)
Vacancy
(Christchurch)
Additional
income
DisposalsFY19
GMTWPHGMTWPH
Net property income
Look-through net property income bridge ($m)
＋Income from acquisitions and developments in
addition to like-for -like rental growth has
mitigated some of the impact of asset
disposals
＋Average occupancy of 98.7%, a 0.6%
decrease from 2018, driven by Show Place
office vacancy in Christchurch
24
Annual Result 2019
Financial result
FY19FY18FY17FY16FY15
Adjusted operating earnings after tax
1
99.5101.6106.098.1101.1
Capitalised borrowing costs – land(6.0)(8.2)(11.4)(17.1)(20.3)
Maintenance capex(3.1)(3.3)(3.9)(5.0)(6.7)
Cash earnings90.490.090.776.074.1
Distribution per unit (cpu)6.656.656.656.656.45
Cash earnings per unit (cpu)6.986.997.086.116.04
Distribution % of cash earnings95%95%94%109%107%
＋Holding the GMT dividend consistent for 4 years has
significantly closed the gap with underlying cash
earnings
＋Arrangement by which management fee is paid in
units expired 31 March 2019
＋Performance fee of $8.6 million to be paid for FY19
＋Cash earnings of 6.98 cpu
＋Adjusted cash earnings of 6.24 cpu(FY18: 6.29 cpu)
＋FY20 cash earnings expected to be materially
consistent with FY19 despite significant de-gearing
Cash earnings
Cash earnings summary ($m)
1
FY19 adjusted as per note 4.2 of GMT’s financial statements
2
Including base fee charged on GMT’s interests in WPH
FY19
Cash earnings 90.4
Manager’s base fee
2
(9.3)
Capitalised management fees -land(0.5)
Adjusted cash earnings80.6
Adjusted cash earnings per unit (cpu)6.24
Distribution % of adjusted cash earnings107%
Adjusted cash earnings summary ($m)
25
Annual Result 2019
Financial result
Net tangible assets
Net tangible assets(cents per unit)
＋NTA increased 18.1 cpu(13%) for the
year
＋8.2% increase in stabilised valuation
main contributor
＋$35.1 million gain on sale of interests in
WPH joint venture
＋$26.2 million revaluation gains on
developments
157.0
+12.8
+2.5
+2.0
+0.8
138.9
130
135
140
145
150
155
160
FY18Stabilised
revaluation
Disposal
of WPH
Development
profit
Investment property
contracted for sale
FY19
26
Annual Result 2019
Financial result
Investment property
Look-through investment property ($m)
＋Total look-through investment property
increased by $125.2 million
＋Acquisitions and developments adding
$248.5 million
＋Strong revaluation gains
DisposalsAcquisitionsDevelopmentsOther
27
Annual Result 2019
Financial result
1
FY18 includes GMT’s 51% share of WPH investment property
2,043.5
2,478.6
277.2
67.5
85.2
120.0
69.6
-277.2
-36.2
+94.1
+4.7
+115.0
+32.9
+1.8
+165.2
+24.9
2,508.2
2,633.4
1,500
1,700
1,900
2,100
2,300
2,500
2,700
FY18WPHOtherRoma RoadSavillHighbrookSavillOtherStabilised
valuation
Capitalised
costs
FY19
StabilisedWPHDevelopmentLand
1
Capacity for growth
Committed LVR
＋GMT in strong liquidity position now disposal
programme complete
＋Revised target LVR range of 25-35%
(previously 30-35%)
＋Target provides $500 million of capacity to
invest in preferred Auckland industrial market
＋Committed to Standard & Poor’s BBB+ debt
rating
19.7%
23.7%
$97m
$29m
$10m
$44m
21.0%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%
Balance sheet
LVR
Unconditionally
contracted sales
LVRCommitted
developments
Favona Rd
acquisition
Pilkington Rd
acquisition
Committed
LVR
1
1
Pilkington Road acquisition unconditionally contracted in May 2019
28
Annual Result 2019
Financial result
29
Mainfreight warehouse – SavillLink
FY19FY18
Non-bank funding98%68%
Headroom within bank facility$288m$188m
Weighted average debt term5.0y5.1y
Gearing – covenant50%50%
Gearing – measured 22.4%33.6%
Managing funding risk
Non-bank funding maturity profile
Bank funding maturity profile
＋Material reduction in debt levels from asset sales:
—Bank facilities resized to $300 million total ($288
undrawn at 31 March 2019)
＋Earliest maturity is October 2020
＋Maintained Standard & Poor’s corporate rating of
BBB (stable), BBB+ debt issue rating
30
Annual Result 2019
Capital management
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Y1Y2Y3Y4Y5
FY19FY18
12m forward hedging level76%63%
Weighted average debt cost4.9%5.0%
Interest cover ratio - covenant>2.0x>2.0x
Interest cover ratio - measure3.6x3.2x
Managing interest rate risk
Hedging profile
＋Debt repayment has resulted in elevated hedging
levels
＋NZ interest rate environment has seen significant
downward movement during FY19:
—1Y swap rate at 1.70% from 2.06%
—10Y at 2.15% from 3.05%
—“Lower for longer” view persists
31
Annual Result 2019
Capital management
32
Gateway warehouses -HighbrookBusiness Park
Summary
GMT repositioned to capture benefits from exposure to rapidly evolving Auckland industrial market
＋Demographic changes, economic growth, and the rapid expansion of online retailing are creating an unprecedented level of demand for
well-located and operationally efficient warehouse space across the city
＋Low vacancy rates and limited capacity in the warehousing market are also contributing to strong leasing results and underlying rental growth
Outlook
＋With increasing demands from consumers, GMT’s customers are becoming even more focused on locations which provide efficient and timely
distribution
＋The execution of the sales programme over the last five years has generated strong gains and provided GMT with substantial balance sheet
capacity to further increase footprint in preferred Auckland markets
＋Portfolio quality and strong property market fundamentals support continuation of development programme
＋FY20 cash earnings materially consistent with FY19 despite significant de-gearing
＋Distributions expected to be maintained at 6.65 cpu
33
Annual Result 2019
Summary and outlook
34
Goodman office –VXV Precinct
Appendix
35
NCI Packaging – SavillLink
5 year financial summary
36
Annual Result 2019
Appendix
Profit or loss
Annual Result 2019
Appendix
37
Balance sheet
Annual Result 2019
Appendix
38
Cash flows
Annual Result 2019
Appendix
39
Loan-to-value ratio
Annual Result 2019
Appendix
40
Valuation ($m)Cap rateChange ($m)Change (%)
HighbrookBusiness Park1,322.85.5%64.55.1%
SavillLink292.55.8%31.312.0%
M20 Business Park247.26.1%13.65.8%
The Gate Industry Park232.55.5%42.322.2%
WestneyIndustry Park122.77.9%(0.6)(0.5%)
Value-add estates260.95.9%14.15.7%
Total stabilised properties2,478.6165.27.1%
Developments85.226.2
Land69.6-
Total investment portfolio2,633.4191.4
Investment property contracted for sale43.510.5
Total portfolio2,676.95.8%201.98.2%
Valuation
Portfolio valuation summary
41
Annual Result 2019
Appendix
Capital
expenditure
1
($m)
% of asset
value
Average
building age
(years)
Core10.90.58%10.0
Value-add1.20.94%49.8
Total stabilised12.10.60%14.2
Capital expenditure
Stabilised capital expenditure summary
＋Stabilised capex spend of $12.1 million
equates to 0.60% of asset value
＋$3.1 million of spend was maintenance capex
1
Excludes all assets acquired, sold or contracted for sale during the period, and Show Place which was conditionally sold postbalance date. Excludes WPH assets.
42
Annual Result 2019
Appendix
DevelopmentEstate
Total project cost
($m)
Lettable area
(sqm)
Expected
completion date
Leased
The Crossing CarparkHighbrook10.7324
1
Nov-1950%
Quest ExpansionHighbrook12.060
2
Apr-19100%
NCI PackagingSavill Link38.214,050Aug-19100%
WaiouruYardHighbrook4.7-May-190%
Westney HardstandWestney2.1-May-190%
El Kobar10,000Highbrook26.110,400FY210%
Business Parade North 3,100Highbrook11.23,530Dec-19100%
4
El KobarUnitsHighbrook18.05,300Nov-1934%
4
Underwood 2,600Highbrook9.42,990Nov-19100%
4
Underwood 1,000Highbrook3.61,000Oct-190%
SavillDrive UnitsSavill Link18.05,485Jan-200%
Big Chill ExpansionHighbrook13.25,203Dec-19100%
Panasonic ExpansionHighbrook8.02,660Mar-20100%
OfficeMax ExpansionHighbrook20.37,344Jul-20100%
Total195.757,992
3
65%
Work in progress
1
Number of carpark spaces
2
Number of rooms
3
Excludes carpark spaces and rooms
4
Terms agreed, subject to final documentation
43
Annual Result 2019
Appendix
Estate
Highbrook Business Park
Completion
Dec-18
NLA
3,026 sqm
Estate
Highbrook Business Park
Completion
Jan-19
NLA
6,051 sqm
Completed projects
Building 6
Parade units
44
Annual Result 2019
Appendix
Estate
Highbrook Business Park
Completion
Jan-19
NLA
22,305 sqm
Completed projects
Gateway warehouses
Estate
Savill Link
Completion
Dec-18
NLA
8,510 sqm
Mainfreight warehouse
45
Annual Result 2019
Appendix
Estate
Highbrook Business Park
Completion
Dec-18
NLA
5,132 sqm
Completed projects
Plytechwarehouse
Estate
Highbrook Business Park
Completion
Mar-19
NLA
5,423 sqm
MOVE Logistics expansion
46
Annual Result 2019
Appendix
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.