Goodman Group sold $A1.9 billion of assets in the June year, and reinvested the lot to generate higher development returns.
It’s followed the same principle of recycling in NZX-listed Goodman Property Trust, but the potential for turning industrial sites over to urban renewal has proved far greater in Australia, where $A1.1 billion of sites had been conditionally contracted in the year to June and $A110 million settled in July.
The Sydney-based company increased operating profit 9% to $A653 million and made a $1.208 billion statutory profit million (including property valuations, derivative & foreign currency mark-to-market and other non-cash or non-recurring items), delivering a 7.1% increase in operating earnings/security.
Group chief executive Greg Goodman said the company had taken advantage of market conditions to sell $A1.9 billion of assets and reinvest this capital into its growing $A3.1 billion development workbook, enhancing asset & income quality and generating higher investment returns at this point in the cycle.
With the current market conditions expected to continue, Goodman is forecasting earnings growth of 6% in the 2016 financial year, while further reducing gearing.
- Operating earnings/security A37.2c, up 7.1%
- Total distribution A22.2c/stapled security, up 7%
- Balance sheet gearing 17.3%, interest coverage ratio 6.0 times
- Net tangible assets/security up 20% to $A3.46, with a significant contribution from urban renewal projects
- Group liquidity at $A1.8 billion, weighted average debt maturity 4.7 years
- Total assets under management $A30.3 billion, up 13%, reflecting increased valuations
- Development work in progress $A3.1 billion across 76 projects in 11 countries, 65% precommitted & 71% presold to third parties or managed partnerships, generating a forecast yield on cost of 8.8%
Attribution: Company release.