3 Aug 2011

Property trust says building project value rising

3:45 pm on 3 August 2011

Goodman Property Trust says the value of building projects on its books so far this year already surpasses that of last year.

The trust's chief executive told investors at its annual meeting in Auckland on Tuesday that, although still patchy, the economic recovery is taking shape in the property market.

Mr Dakin says occupancy has picked up, rent arrears are low, and valuations are stabilising - which helps to build a case for more development.

He says that during the recession, the Trust was undertaking about $30 million in developments per year - well down from a high of $150 million.

In the year to date, Goodman Property Trust had signed $70-80 million worth of developments - a strong increase, Mr Dakin says, on 2010.

He says he expects more development activity in coming months, particularly in industrial property, but adds that businesses are still focusing on keeping costs contained and there is pressure on rent.

Insurance premiums well up in Christchurch

Of Goodman Property Trust's property portfolio, 10% is in Christchurch, where it owns three buildings that were unaffected by the earthquakes.

Even so, Mr Dakin says the trust's insurance premium costs have jumped by up to 100%.

He says that means about $1 million extra for every million square metres of space, or $1 per square metre square metre, most of which was paid for directly by the tenants.

Goodman Property Trust's chief executive John Dakin says the trust's independent directors recently reviewed its management structure and consider there are more benefits of retaining Goodman as a manager.

The trust will pay a first quarter distribution for the year ending March 2012, of 1.5 cents per unit and .04 cents per unit in imputation credits.