Goodman (“Goodman” or “Group”), a leading global owner, developer and manager of industrial real estate, closed its 2015 fiscal year, ending 30 June, with €20.9 billion of assets under management globally, an increase of 13.5% compared to its last fiscal year. In Continental Europe, the Group signed lease agreements for existing space totalling approximately 842,000 sqm and committed to around 887,000 sqm of new development space, of which Goodman commenced construction of close to 654,000 sqm by the close of the fiscal year. These deals and commitments total more than 1.7 million sqm of logistics space, making FY15 one of the most successful on record for Goodman in Continental Europe.
“We have been able to capitalise on favourable market conditions, our strong platform, and quality portfolio to conclude the 2015 fiscal year with one of Goodman’s best performances in Continental Europe. This result demonstrates the strength of our business model as a specialist owner, developer and manager of industrial real estate, which provides value to our customers and capital partners,” said Philippe van der Beken, Goodman Managing Director for Continental Europe. “Goodman will continue to pursue a development-led approach and active management of our current portfolio to create long-term value for its stakeholders.”
Leading European developer
Goodman confirmed its leading market position being named the top real estate developer in Europe for the fourth consecutive year by PropertyEU. Development remained a key focal point for the Group in Continental Europe. Goodman delivered more than 710,000 sqm of logistics space and commenced construction of about 654,000 sqm.
For the first time, Poland accounted for the largest share of completed developments, delivering 327,000 sqm of new logistics space across seven projects. This was largely due to the completion of the 123,000 sqm facility leased to Amazon in Wrocław and the 82,000 sqm development leased to the Mousquetaires Group (Intermarché) in Poznań. Germany contributed 322,000 sqm, with the largest development being the 103,000 sqm facility for the logistics service provider Hammer in Bedburg.
Across Continental Europe, Goodman closed the fiscal year with 501,000 sqm of development work in progress and since has begun the construction of additional 233,000 sqm of logistics space. The core markets of Germany, France and Poland have the most projects currently under construction totalling approximately 323,000 sqm, 202,000 sqm and 135,000 sqm, respectively. Globally, the Group has €2.1 billion of development work in progress in 11 countries, of which 65% is pre-committed.
Given strong demand for modern logistics space and low vacancy levels in proven logistics locations across several key markets, Goodman is prudently stepping up its speculative development activity in strategic locations in Europe.
Strong performance from European platform
Across its operations on the European continent, the Group leveraged strong market demand for modern, quality properties in prime locations to secure a record number of lease agreements.
Goodman closed the 2015 fiscal year signing approximately 842,000 sqm of logistics space across its existing portfolio in Continental Europe, resulting in an occupancy rate of 98% and a customer retention rate of over 80%. The vast majority of leasing deals secured during the year were through lease renewals, demonstrating the quality of Goodman’s properties and active property management.
The demand for new and existing space came largely from third party logistics providers (3PL) and ecommerce players, which combined accounted for nearly 60% of all lease agreements signed during the fiscal year.
Demand from third party logistics providers is a reflection of the 2.5% growth of the sector across Europe, which has been spurred by consolidation, increased trade and the drive to modernise supply chains. In addition to strengthening its relationships with companies like DB Schenker and Kuehne+Nagel, Goodman has begun working with a number of new 3PL customers, such as Agility (Slovakia), KMC Services (Poland), Logwin (Germany), Nabuurs (the Netherlands), Vetten (Germany) and Zufall (Germany).
Demand from the ecommerce sector is fuelled by the steady growth in online sales and the need for greater versatility across delivery networks, resulting in a variety of building typologies. The Group increased its ecommerce portfolio with developments for new customers such as eBay Enterprise (28,000 sqm) in Germany, Cdiscount (40,000 sqm) in France and Alza (12,000 sqm) in Slovakia. Furthermore, the Group completed the 56,000 sqm extension of the facility developed for Zalando in Mönchengladbach, now with a total space to 134,000 sqm, making it the largest ecommerce distribution centre in Europe.
Retail and consumer goods companies also contributed greatly to the Group’s activity on the continent, based on the sector’s need for new, modern logistics space and the optimization of delivery infrastructure to achieve greater operating efficiencies and cost reductions. A significant example is the consolidation of WMF’s logistics network, from 33 warehouses to two new Goodman developments, of which one is operated by DB Schenker. Additionally, Goodman extended its global relationship with Decathlon with a 40,000 sqm pre-let project in Barcelona, marking one of the largest development deals in Spanish market.
Goodman also entered a new industry sector, signing two lease agreements with major players in the aerospace industry, Airbus and Diehl Comfort Modules, at one of its key projects in Germany: Goodman Hamburg Interlink.
Leading European managed fund
Goodman European Logistics Fund (“GELF”), the Group’s flagship European real estate managed partnership, undertook several initiatives to strengthen its performance and capital position.
In June, GELF sold 19 assets in France and Germany. This is part of Goodman’s global strategy of selectively rotating assets at the Group level and within its managed partnerships and recycling the capital into new prime properties from Goodman’s active development pipeline.
Additionally, GELF took advantage of a low-interest rate environment to optimise its debt structure by issuing a €400 million bond with a 7 year maturity. The proceeds of the bond were predominantly applied to repay existing debt facilities and to support the growth of the Fund. The bond is listed on the Luxembourg Stock Exchange.
Across its portfolio of 95 assets, GELF achieved an occupancy level of 98% as at 30 June 2015, a customer retention rate of over 80% and average lease term of five years.
Whilst prudently managing its capital structure and leverage well below 40%, GELF delivered a strong distribution yield over 8% and total return in excess of 13%.
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