By Jenny Ruth
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Wednesday 19th May 2010 |
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Goodman Property Trust's result was in line with expectations but the quality wasn't because it was boosted by lower tax costs while rental income was slightly below expectations, says Forsyth Barr analyst Jeremy Simpson.
Goodman's distributable profit was down 8% to $77.5 million for the year ended March and rental revenue rose 2%. The company's guidance for distributable profit for 2011 is between 8.6 cents per unit and 8.8 cents.
"We have pulled back our rental forecasts slightly resulting in 2011 forecast distributable profit dropping 2% to 8.6 cents per unit," Simpson says. He has also cut his valuation 3% to $1.08 per unit.
"Goodman's portfolio held up well over the last 12 months with occupancy (96%) and a weighted average lease term (5.8 years and one of the longest in the sector) relatively unchanged and property values (excluding development land) back only 1.6%," he says.
The lease expiry profile is relatively low risk through a combination of only 8.2% of the rent roll expiring in 2011 and the high quality tenant base. Rent arrears are at a record low of just 0.1% of annual income.
"Improving occupier demand and more competitive construction pricing, plus Goodman's landbank and expertise, leave it well-positioned to capitalise on any recovery," Simpson says.
BROKER CALL: buy.
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