Daily ShareChat: Goodman Property Trust

By Jenny Ruth

Monday 18th April 2011 1 Comment

Goodman Property Trust's $91.7 million mixed-use development at its Highbrook Business Park is "a largely speculative development" and not an ideal scenario in the current environment, says Jason Lindsay, an analyst at First NZ Capital.

"Unfortunately, this is one development investors will have to 'take on the chin'," Lindsay says. "Initial tenants in the Highbrook estate were promised (or at least strongly hinted at) a retail and hospitality precinct along with accommodation offerings," he says.

"The one perceived positive that they are moving some of the development land is not even really a positive as the land component on this part of the development is so low it pales into comparison to the capitalised interest that is being charge to the land."

The total development, of which Goodman owns 50%, is expected to have a yield on cost of 8.45% once complete, but Lindsay says the first stage will be some way below this "with the first stage on 33% pre-committed and a sizeable portion (around half) of the potential rent roll on the Quest property subject to turnover rent," he says.

"The 8.45% assumes an average Quest occupancy of 60% to 70%, something we expect would be difficult to achieve in the earlier years."

Rating: Neutral.

Comments from our readers

On 18 April 2011 at 2:17 pm Conan said:

Too much undeveloped land, and the holding costs that go with that. I'm out - for now.