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Goodman property distributable earnings edge up

Wednesday 18th May 2011

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Goodman Property Trust reported a $500,000 rise in full year distributable earnings after tax to $78 million, as net property income and financing costs rose.

Net rental income for the year to the end of March was up 2.4% to $108.7 million, while interest rose 17.3% to $23.7 million. The revaluation loss of $24.8 million in the $1.6 billion portfolio was about half of the previous year's loss.

The rise in income included contributions from new acquisitions and completed development projects.

Refinancing initiatives during the year extended the term and diversity of the trust's debt facilities, but contributed to increased financing costs, trust manager Goodman (NZ) said today.

"These higher costs were anticipated and the trust has achieved a distributable earnings result in line with market guidance."

Portfolio occupancy had averaged 96% over the 12 months, and was 97% at March 31 with a weighted average lease term of 5.6 years.

While property markets in this country had followed global trends, they were less volatile and more resilient than other market, while New Zealand property was also higher yielding, Goodman said.

A final quarterly distribution of 1.935c per unit would be made, taking the total cash distribution for the year to 7.74cpu.

Movements in non-cash items resulted in an after tax profit of $36.7 million, compared to a profit of $2.8 million in the restated previous corresponding period. The lift in profits reflected a stabilising investment market, Goodman said.

Maintaining high occupancy levels across the trust's investment portfolio had helped mitigate some of the impact of the cyclical downturn in property markets.

"Although the portfolio has recorded a small devaluation, we're encouraged by improving investor sentiment and a more positive valuation outlook for the prime industrial and business space sectors," Goodman (NZ) chief executive John Dakin said.

The 1.5% decline in the value of the portfolio comprised a 0.4% fall in the value of the investment portfolio and a 9.5% reduction in the value of the trust's development portfolio.

During the year $18.3 million of new development commitments were secured, and that was extended in April with the announcement of mixed use project The Crossing at the Highbrook Business Park in Auckland

Initial stages of The Crossing, to be built in the next 18 to 24 months had a total project cost of $43.5 million, with the trust's share being $21.8 million.

The trust had also amended its distribution policy, to a payout of 80% of distributable earnings from the previous 90%.

The amended policy is to apply from the first quarter distribution of the 2012 financial year, when distributable earnings are expected to be between 7.7c per unit and 7.9cpu after tax.

Dakin said the medium term outlook was increasingly positive with improvements in economic activity and investment sentiment expected to benefit the trust.

An improving economy would lift occupier demand and drive the trust's development programme, but a highly competitive leasing market limited the prospect of short term income growth, Dakin said.

The longer term outlook was more positive with steady rental growth anticipated, particularly in the industrial sector.


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