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News Release


Goodman Fielder appoints Jones Lang LaSalle to sell its Kiwi property portfolio



Long term investment with development potential/new-zealand/en-gb/news/916/long-term-investment-with-development-potentialAUCKLANDLong term investment with development potential
Former Fire Station on high profile corner site/new-zealand/en-gb/news/915/former-fire-station-on-high-profile-corner-siteCHRISTCHURCHFormer Fire Station on high profile corner site

Goodman Fielder, Australasia’s leading listed food company, is to sell and leaseback a number of New Zealand properties following the success of a similar move this year in Australia.
The company, which has performed creditably during the recession with revenues of $A2.8 billion in 2009, has decided to own assets only where they are essential to its core business.
The move has freed up capital in Australia to be invested more efficiently elsewhere and prompted the company to appoint Jones Lang LaSalle New Zealand to assist in a sale and leaseback of select premises in Goodman Fielder’s New Zealand portfolio.
Three properties, all in prime industrial locations, have been selected for the initial offering –– 20–24 Toop St, Seaview, Wellington; 101 Bolt Rd, Tahunanui, Nelson, and the corner of Tallyho and Riri sts, Rotorua.
The largest is Toop St –– a 7745 sq m site offering a net annual current rent of more than $500,000. The Tallyho and Riri sts site covers 5532 sq m with a net annual rent of nearly $367,000. The Bolt Rd site is 6663 sq m and earns a contract annual rent of more than $200,000.
Jones Lang LaSalle national sales director Nick Hargreaves said the three premises on offer provided astute investors the opportunity to invest in quality real estate in prime locations with “one of the strongest covenants in today’s market”.
“The premises will be well known by locals and sought after by New Zealand and offshore investors, syndicates and high net-worth investors. All of the premises are being sold under a sale and leaseback arrangement and will have a beneficial lease agreement of 12 years with rights of renewal of two more six-year leases,” he said.
Hargreaves said the Seaview bakery at Toop St, with some 4743 sq m of warehouse and office space, was in a precinct and city limited by land supply and difficult geography.
“As a result, tenant demand is relatively strong despite easing economic conditions. Jones Lang LaSalle research shows that the vacancy rate in Seaview is just below 2 per cent and easily accessible industrial premises with strong lease covenants in Seaview are extremely sought after by a range of investors.”
He said the Rotorua property, with 3,796 sq m of office and warehouse space, was well located in one of the town’s primary industrial precincts.
“The premises are highly attractive to investors for their well-maintained condition, functional layout and design, substantial road frontage and access to main arterial routes.
“The bakery in Nelson, some 2250 sq m, is well positioned in the established industrial precinct. Current contract rent is $208,250 a year. and it is expected that the premise will attract a number of local investors.”
Hargreaves said the global financial crisis had created challenging business conditions around the world and Goodman Fielder was not immune to this, although it performed solidly
“The company was also affected the increase in input costs in the first half of of the 2009 fiscal year as a result of high agricultural commodity pricies. However, the company successfully bounced back from this and recorded a strong recovery over the second half of the year, increasing revenue in New Zealand.”
He said Goodman Fielder’s strategy to provide a diverse and innovative product range and continue with research and development initiatives had proved to be its competitive advantage. Rationalising its property portfolio was also a key initiative.
Hargreaces said the “own-versus-lease” argument had been heavily debated and various factors such as flexibility, control, liquidity, quality and ease of realising the assets would decide the course of action.
“Implementing a sale and leaseback arrangement comes at a time when many firms are looking for flexibility in their business operations. The ability to generate strong cash flow is an inherent feature of the company’s business model and supports the company’s high dividend payout.
“The decision to inject capital into the balance sheet and lower debt to equity ratios will be regarded as a positive approach by many and is reflected in Goodman Fielder’s shareholder confidence and share market gains”.
Jones Lang LaSalle research and consulting manager Chris Dibble said the state of the economy provided companies with the opportunity to structure their businesses to meet a diverse range of financial and operational objectives.
“Freeing up capital through realising quality assets can be advantageous for financial obligations and may even provide upside for the balance sheet. The extra capital may also be diverted into other areas of the business to maximise competitive advantage or market share.”
Expressions of interest on the three properties were sought by December 4.