Goodman eyes expansion as Hong Kong hub opens

THE Goodman Group has opened its Interlink centre in Hong Kong which will serve as its integrated Asian hub for expansion into the region.

By InvestSMART · 7 Mar 2012

By InvestSMART ·
7 Mar 2012

Comments

THE Goodman Group has opened its Interlink centre in Hong Kong which will serve as its integrated Asian hub for expansion into the region.

As part of what it calls its capital recycling program, Goodman last year sold a 50 per cent stake in the project, with the cash to be funnelled into new development opportunities across China and Japan.

The chief executive of Goodman, Greg Goodman, said at the group's half-year results that he would be increasing the Japanese exposure. Last year, the company bought a development site in Osaka Bay with a completion value of $300 million.

The project is expected to be the seed asset for the launch of the wholesale development partnership in Japan. Analysts said the new Japanese fund would be earnings positive for the group.

As part of its rebranding initiative in Asia, Goodman will redevelop a 60,000-square-metre land bank into a 130,000-square-metre multi-tenant logistics and distribution centre.

The opening of Interlink property comes as general divestment activity across the rest of the real estate investment trusts sector continues at a hectic pace. It is expected real estate investment trusts will be net sellers of assets in the coming year, with private superannuation funds and sovereign wealth funds the main buyers.

Although last month was dominated by the reporting season, the "for sale" list of assets has crept up to be worth $9.3 billion - up from $8.9 billion in January but down from $10.4 billion in December.

According to JP Morgan, the list continues to be dominated by a small group of assets and portfolios, including GPT Group and Queensland Investment Corporations' MLC Centre in Sydney ($750 million), Beville Group's Top Ryde shopping centre ($650 million) in Sydney, a Woolworths shopping centre portfolio ($610 million) and Raine Square, Perth, ($500 million).

Additions to the list include BlackRock's Australian portfolio ($468 million) and Investa's 231 Elizabeth Street, Sydney, ($200 million).

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What is the Goodman Group Interlink centre in Hong Kong and why is it important for investors?

The Goodman Group has opened the Interlink centre in Hong Kong as its integrated Asian hub for regional expansion. For investors, the Interlink hub signals Goodman’s strategic focus on growing its Asia operations and coordinating new development activity across markets such as China and Japan.

How is Goodman funding its Asian expansion and what is the capital recycling program?

Goodman is using a capital recycling program: last year it sold a 50% stake in the Interlink project and plans to funnel the cash into new development opportunities across China and Japan. That sale of equity is a way for Goodman to free up capital for further development without necessarily increasing debt.

Is Goodman increasing its exposure to Japan and what projects are underway there?

Yes. CEO Greg Goodman said he would increase Japanese exposure, and last year Goodman bought a development site in Osaka Bay with a completion value of $300 million. That Osaka Bay project is intended as the seed asset for a wholesale development partnership in Japan, which analysts say would be earnings positive for Goodman.

What redevelopment plans does Goodman have for its Asian land bank?

As part of a rebranding initiative in Asia, Goodman plans to redevelop a 60,000‑square‑metre land bank into a 130,000‑square‑metre multi‑tenant logistics and distribution centre. This redevelopment aligns with Goodman’s focus on logistics and distribution real estate in the region.

What is happening with divestment activity in the REIT sector and how large is the current 'for sale' list?

Divestment activity across the real estate investment trust sector remains busy, and REITs are expected to be net sellers of assets in the coming year. The article says the current 'for sale' list has risen to $9.3 billion (up from $8.9 billion in January, but down from $10.4 billion in December).

Which major assets and portfolios are included in the for‑sale list affecting the Australian property market?

JP Morgan notes the list is dominated by a small group of assets and portfolios, including GPT Group and Queensland Investment Corporation’s MLC Centre in Sydney ($750 million), Beville Group’s Top Ryde shopping centre ($650 million), a Woolworths shopping centre portfolio ($610 million), Raine Square in Perth ($500 million), plus additions like BlackRock’s Australian portfolio ($468 million) and Investa’s 231 Elizabeth Street, Sydney ($200 million).

Who are the main buyers expected to purchase assets being sold by REITs?

The article says private superannuation funds and sovereign wealth funds are the main buyers expected to pick up assets sold by REITs over the coming year.

What could the opening of Goodman’s Interlink centre mean for everyday investors in property and REITs?

While no guarantees are made, the Interlink opening highlights Goodman’s growth strategy in Asia and its use of capital recycling to fund developments—moves that could bolster the company’s development pipeline. Investors should note analysts expect the new Japanese fund to be earnings positive, but they should always consider their own risk tolerance and seek further company updates before making investment decisions.