Goodman Property lifts full year earnings 5.4% on revenue growth, cost clamp down

Goodman Property Trust [NZX: GMT] lifted annual earnings 5.4 percent as it reaped higher rental revenue while clamping down on costs.

Distributable earnings after tax, which strip out movements in the value of its property portfolio, rose to $97.9 million in the 12 months ended March 31, from $92.9 million a year earlier, the trust's manager, Goodman (NZ), says.

Net rental income rose 5.4 percent to $134.7 million. A change in its management fee structure, requiring Goodman (NZ) to use its base fee to subscribe to units in the trust, reduced cash costs for the property investor.

Net profit climbed 34 percent to $179.7 million, including a $75.3 million gain in the value of its property portfolio and a $4.5 million gain in the sale of assets. 

"Recycling capital into our development projects is a key component of an organic growth strategy that is enhancing the portfolio and growing GMT (Goodman Property Trust)'s underlying cash earnings," Goodman (NZ) chief executive John Dakin says.

"Financing new development and investment activity through asset disposals is facilitating the trust's growth and we've taken advantage of the buoyant investment market to sell eight assets for $148.8 million."

A cash distribution of 6.45 cents per unit will be made, up from 6.25 cents a year earlier, and the board expects to pay out 6.65 cents in the 2016 financial year.

The board is forecasting pretax distributable earnings of 9.4 cents per unit in the 2016 year, up from 9.16 cents in the 2015 year.

Units in the trust last traded at $1.14, and are unchanged since the start of the year. The stock is rated an average 'hold' based on six analyst recommendations compiled by Reuters.

Separately, Goodman Property says it plans to raise up to $100 million via secured, unsubordinated seven-year bonds to diversify its funding. The retail bond is targeting $75 million, with the ability to accept over-subscriptions of $25 million.

The trust's net borrowings are $694.2 million as at March 31, for a loan-to-value ratio of 34.2 percent, down from 35.9 percent a year earlier.

Goodman Property's property assets, made up of its investment property portfolio and development projects, were valued at $2.1 billion as at March 31, up from $2.04 billion a year earlier. Goodman has teamed up with Singapore government-owned GIC to develop the Auckland Viaduct Quarter, 

The property investor's average portfolio occupancy is 96 percent with a weighted average lease term (WALT) of 5.1 years as at March 31, down from 97 percent with a WALT of 5.5 years a year earlier.

(BusinessDesk)