Goodman Property Trust earnings down, bond issue pending

While Goodman Property Trust’s operating revenue improved during the six months to September 30, its occupancy worsened. It now seeks its unitholder's help raising capital to reduce debt, with a $100 million bond issue about to open.

Its distributable earnings were $38.5 million, down 9.9% from $42.7 million in the previous corresponding period. The trust puts this down to the increased interest costs it has been forced to front up with.

The value of the portfolio also suffered during the six months to the end of September, falling $22 million according to independent valuations.

Its net profit for the period was $13.2 million.

The buildings in its portfolio are now only 95% full, compared to 97% at 31 March.

Its gearing is currently 35.5% - it says its target range is 35-40%.
Now the trust’s property assets are valued at $1.5 billion, down from the $1.6 billion it was six months previously.

The trust listed an operating revenue of $53.5 million, a boost of $2.6 million or 5%.

Following a rent review program, the trust’s annualised rental growth increased by 2.9% in the six months to the end of September.

“Achieving operating earnings of 4.54 cents per unit is a pleasing performance given the subdued business environment that has existed and the higher financing costs corporate borrowers now incur,” the trust’s chief executive John Dakin said.

“A continuing focus on active management has ensured the investment portfolio has delivered an operational result in line with expectations.”

In the six months to September 30, Goodman has sold more than $100 million of property assets and has put all proceeds towards reducing debt. These sales include Pernod Ricard NZ House for $26.6 million and Aurecon House for $26.7 million.

Currently, it is building a new 10,355sq m property at its M20 Business Park for Ingram Micro.

It recently amended its distribution policy to retain 10% of its earnings. The cash distribution for the current year which it now forecasts is 8.5cents per unit.

For the second quarter 2.12 cents per unit with 0.06 cents imputation credits attached. Its distribution for the first six months of the current financial year is 4.54 cents.

Just moments after released its results for the six months to September 30, Goodman Property Trust announced to NZX that it was considering a $100 million bond issue expected to open on November 16 and close on December 10.

The outlook for the rest of the year remains challenging but “positive”, Mr Dakin said.

At press time its shares were trading at $1.03 per unit.