The past year has reinforced the important role that warehousing and logistics has in our national supply chain, facilitating fast and efficient distribution of food and other essential items. This critical business infrastructure supports the rapid growth of New Zealand’s digital economy.
While the pandemic has constrained overall economic activity this year, the focus and quality of the Trust’s $3.8 billion portfolio and strength of its customer relationships have contributed to another impressive financial result.
Low gearing has allowed the Trust to remain active and maximise new opportunities. Strategic acquisitions, further development progress and new capital management and governance initiatives have added to the positive momentum in the business.
The Board is equally satisfied with GMT’s corporate performance and the progress being made on our sustainability programme.
We have reduced our carbon footprint and strengthened our commitment to mitigating the impacts of climate change. We are doing more for our people, increasing our community support and focusing our reporting on topics that matter to our stakeholders.
This year’s statutory profit of $648.9 million before tax was a record for the Trust and 128.2% higher than FY20. $560.0 million of the profit was attributed to the portfolio revaluation. The 17.3% increase in value reflects strong property market fundamentals and increased investor demand for high-quality Auckland industrial assets.
Operating earnings before tax were also higher in FY21, with positive leasing results, new development completions and strategic acquisitions contributing to an increase from $109.7 million in FY20 to $114.9 million.
A performance fee of $13.7 million was also earned by the Manager this year.
The fee is excluded from operating earnings as it is used to subscribe for new units in the Trust. The Trust Deed requirement ensures the close alignment of interests between Goodman, as Manager and cornerstone investor, and other Unitholders.
Cash distributions of 5.3 cents per unit, representing around 83% of GMT’s cash earnings, were paid. The change to distribution policy this year, where we introduced a target payout ratio of between 80% and 90% of cash earnings, provides better alignment between Unitholder distributions and underlying cashflows from the Trust’s portfolio.
A more stable economic outlook supported by strong levels of leasing and development enquiry give the Board confidence about the coming year. Guidance for FY22 includes cash distributions of at least 5.5 cents per unit, representing a 4% increase from FY21.
Toward a sustainable future
A sustainable operating model is essential for an organisation to be successful over the long-term. Having the resilience to respond to market disruptions while minimising any negative economic, social and governance outcomes has never been more important.
This year we have reviewed the material factors that determine our success and have increased our efforts and commitments in key areas.
Receiving carbonzero certification from Toitū is a notable achievement that reflects the priority placed on reducing our environmental impact. Implementing an emissions reduction plan and purchasing New Zealand carbon credits means the business is now proudly carbon neutral, four years ahead of our 2025 target date.
Our commitment to reducing climate change impacts has been extended to the Trust’s development programme where a five star Green Star rated building specification is being targeted for all new developments.
We will also be offsetting embodied carbon in these new projects. Mitigating greenhouse gas emissions from construction activities and from the manufacture of building materials and products used in our developments is industry leading.
A sustainable capital structure, that includes substantial reserves, has allowed GMT to pursue new investment and development opportunities.
The work of the Goodman Foundation recognises the wider responsibility we have to the communities where the Trust invests.
To help address the disproportionate impacts of the pandemic the Goodman Foundation has increased the level of support it provides.
Over the last 12 months, more than $500,000 has been distributed to initiatives and programmes to help the vulnerable, particularly those facing food insecurity issues.
A highly capable Board, that includes a majority of independent directors, has overseen the growth of GMT and the significant portfolio repositioning that occurred between 2015 and 2019. A stable and contemporary governance structure has given investors and other stakeholders confidence in our business model and strategic direction.
While operational performance has been the focus of the last 12 months, positive progress has also been made with our Board renewal programme. The governance initiative will ensure the tenure of independent directors is aligned with best practice guidelines.
After more than 10 years of valued service, independent directors Peter Simmonds and Susan Paterson retired, effective 31 December 2020 and 31 March 2021, respectively.
Both directors made an outstanding contribution to the business and on behalf of the Board and Management I would like to acknowledge their support, efforts and commitment.
Laurissa Cooney and David Gibson, two highly capable professional directors have been appointed. The refreshed Board maintains its majority of independent directors and will continue to provide strong direction to guide the next phase of GMT’s growth.
Despite the challenges of the last 12 months, GMT delivered a record financial result and finished the year a more sustainable and resilient business.
Business confidence is returning to most sectors, and the continued execution of an investment strategy focused on urban logistics means the Trust is benefitting from a growing digital economy.
It’s a positive trend that is expected to be an important driver of GMT’s future growth.
On behalf of the Board, I sincerely thank our customers and investors for their support and all of the Goodman team for their contributions to the Trust’s outstanding result.
Chair and Independent Director