Goodman selectively buying in UK for CPPIB, APG partnership
Despite uncertainty surrounding Brexit, Goodman has been actively acquiring industrial sites in prime locations to build up a £1bn (€1.17bn) logistics platform in the UK.
Sites are being bought for the Goodman UK Logistics Partnership – a three-way partnership between Goodman, Canada Pension Plan Investment Board and Dutch pension manager APG.
“We are being very selective in where we develop in the UK – like we are elsewhere in the world,” chief executive Greg Goodman told IPE Real Estate.
Goodman said the company had been active in the market over the past 12 months, and has already acquired sites along M1 and M25 motorways. The built-out value of these sites would be AUD300m, he said.
Since Brexit, the value of non-core land has flattened, but prices of core locations, like M1 and M25, have been resilient.
The impact of Brexit on the UK economy will pan out over a long period of time, Goodman said, and developers are being cautious, building potential risks into their feasibility studies.
“We are no different. We have been buying land around the M1, the M25 and locations where demand is strong for core sites,” he told IPE Real Estate after the company’s second-half earnings call.
As a precaution, the group has written a £20m impairment into its accounts for its UK land in the first half.
Elsewhere, strong global demand for logistics assets has delivered an AUD1bn uplift in valuation of the group’s portfolio, located predominantly in Australia, Europe, Japan, China, the United States.
In the UK, Goodman Group and its partner, Legal & General Property, are also in the final round of negotiations to sell their £500m Arlington Business Park assets.
Since Europa Capital, and its strategic investor Mitsubishi Estate, apparently pulled out of negotiations, the joint owners are believed to be focusing their negotiations with the US-based Fortress Investment Group, manager of more than US$70bn of assets.
Asked about Fortress, Goodman told IPE Real Estate: “I can’t confirm, but I can say there is significant interest from a number of parties — all offering sensible pricing.
“I can’t really say any more than that, as we have to work through a process. We would like to have (a deal) transacted during this half.”
Goodman said he also expects to finalise a Brazilian partnership, which seeks to raise US$750m from capital partners, in the first half of the year.
The group’s total assets under management rose from AUD30.1bn in the previous corresponding period to AUD34.8bn at December 31, 2016.
Goodman has AUD10.9bn in undrawn debt, equity and cash, and its gearing is expected to fall to zero by the end of the financial year.
Goodman said: “We have a lot of capital to deploy and we are looking for the right opportunities. We are in no rush. We can afford to be very patient.
“In real estate, [sometimes] the best thing is doing nothing.”
Goodman Group announced a 9% rise in its first half earnings to AUD388m, and guided the market with 7.5% earnings per share for the full financial year.