Decision Summary - Goodman Group

187.707 hectares of freehold situated at 70-100 Plunket Road, Wiri, Auckland, 41 Nesdale Avenue, Manukau City, Auckland, 60-70 Stanley Street, Auckland, 113 and 118 Savill Drive, Mangere, Auckland, 179 James Fletcher Drive, Otahuhu, Auckland, Highbrook Business Park, Highbrook Drive, Manukau City, Auckland being CTs NA125C/689, NA125C/690, NA125C/691, 67C/435, NA72D/895, NA72D/896, 67106, 67107, NA136B/865, NA132B/111 and part NA127B/103 (North Auckland Registry).

44.9346 hectares of leasehold situated at 60 Westney Road, Manukau, Auckland and 85 Fanshawe Street and 18 Viaduct Harbour Avenue, Auckland being CTs 53370, 57643 and 107246 (North Auckland Registry).

The application has been approved as it met the criteria.

The Overseas Investment Office is satisfied that the individuals with control of the Applicant collectively have business experience and acumen relevant to the overseas investment, and that the Applicant has demonstrated financial commitment towards the overseas investment. The Overseas Investment Office is further satisfied that each individual that exercises control over the Applicant is of good character and is not an individual of the kind referred to in section 7(1) of the Immigration Act 1987.

Background to the Investment:
As part of its New Zealand property portfolio, Goodman Group currently holds certain proprietary interests in the Highbrook Business Park development (via its 75% holding in Highbrook Development Limited). Goodman Group and the Goodman Property Trust (GMT) have agreed to reorganise the ownership structure of this interest. Goodman Group proposes to transfer to GMT 50% of its interest in Highbrook Business Park. Subsequent to this transaction, Goodman Group's exposure to the Highbrook Business Park development will be a direct 25% interest and a 50% indirect interest, arising through its unit holding in GMT.
It is anticipated that Goodman Group's interest in GMT will increase by virtue of a capital raising exercise to be undertaken by GMT (in the form of a placement, retail and institutional entitlements offer and retail offer) (the Capital Raising). GMT's intention is to deploy this capital to help finance the land acquisition contemplated herein.

Outline of the Proposed Investment:
Goodman Group seeks consent to:

1. acquire a further 108 million units in GMT (valued at circa NZ$157.4 million), which will be effected through Goodman Group participating directly in the Capital Raising and/or a subunderwrite of the Capital Raising; and
2. acquire further units in GMT in accordance with the distribution reinvestment plan operated by GMT and payment of any performance fees to GNZL (the Further Unit Issue) - on an annualised basis, the Further Unit Issue could result in units to the maximum value of $35 million being issued to Goodman Group. In total, consent is sought for Goodman Group to acquire up to 40% of the units in GMT.

Rationale for the Proposed Investment:
Goodman Group wishes to rationalise and consolidate its New Zealand property portfolio. It's future investments in the industrial and commercial property market will be through its unit holdings in GMT (which will increase by virtue of the unit issue and capital raising). GMT believes that the proposed transactions represent an opportunity for it to significantly grow its New Zealand property portfolio from approximately $1.3 billion to $1.6 billion. In particular, the proposed transactions will improve GMT's weighted average lease expiry from 5.6 years to approximately 5.9 years and will introduce high quality customers to GMT's portfolio.
It is envisaged the capital raising will increase GMT's market capitalisation to a point where it is expected to be the largest listed property trust on the New Zealand Stock Exchange (NZSX). This increase is likely to raise investor awareness of GMT and enhance trading liquidity in GMT units.

The proposal is likely to result in the following benefits:

1. by allowing GMT to substantially grow its property portfolio in New Zealand, the Transactions (and the developments undertaken pursuant to them) will result in GMT becoming one of New Zealand's largest property investors. In turn, this will create a platform for GMT to carry out further investment in New Zealand; and
2. the transactions will benefit New Zealand's construction industry (Highbrook Business Park will require significant and ongoing development and construction), promote competition within New Zealand's commercial and industrial property sector and generate new employment opportunities.