Doubts raised about Goodman’s Highbrook acquisition

The Goodman Property Trust purchase of the other half of Highbrook Business Park has received mixed ratings.

Analyst Jason Lindsay of First NZ Capital says the $186 million deal was “fully priced”.

The assets are good but he is “fairly neutral” on the transaction itself. It will be marginally dilutive once deferred equity is factored in, he told NBR NZPI.

He has downgraded the stock to “underperform” but says this is more related to the recent share price rise.

Mr Lindsay’s main concern is the cost of the development land bank, which may require a cut in distributions before a return to growth.

“More detail is required around the development land. As has been the case in the past, the elephant in the room remains the trust’s policy of paying out capitalised interest on development land."

The company has also downgraded its full-year forecast.

Forsyth Barr analyst Jeremy Simpson says the purchase will improve the quality of the portfolio and increases its exposure to prime industrial assets that are proven to be resilient.

But Morningstar’s head of property research, Tony Sherlock, raises doubts about the level of development land in the portfolio that is not gleaning any income. He estimates it to be about 12% of the $2 billion portfolio.

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