Property Trust to Deliver to Earnings Guidance

5 August 2009
Media Release
 
 
Robust Property Trust Expects to Deliver to Earnings Guidance
 
Goodman Property Trust told Unitholders at today’s annual meeting in Auckland that through its refinancing programme and capital management initiatives, the listed property trust was in a ‘robust’ financial position and expected to deliver a performance consistent with its ‘earnings guidance’.

Acting chairman, Keith Smith, said that the decision to renew all $900 million of its debt facility for a further three-year term well ahead of the required refinancing date was “one of the major achievements of the year”.

Since the facilities were renewed, credit markets had become ‘more difficult and more expensive’.

Chief Executive John Dakin said that the property trust’s current level of debt was at 35.3% of property assets, well within the 35% to 40% range with which the board was comfortable

“Being at the lower end of the preferred range provides a substantial buffer against banking covenants of 45% should asset values fall further,” he said.

Mr Dakin said that the Trust had introduced a range of measures to manage its capital, including strategic asset sales of $50.6 million, suspending uncommitted developments and lifting the investment return threshold for new developments.

In the current financial year Goodman Property had identified further property sales that it may pursue.

In a further move to strengthen its capital management even further, the trust has decided to fund part of the holding costs associated with the development portfolio out of distributable earnings.

“The board’s amended distribution policy will limit the level of cash distributions to around 90% of distributable earnings,” said Mr Dakin.

“The revised distribution policy results in a forecast cash distribution of between 8.3 and 8.6 cents a unit.

“We expect to deliver a cash distribution of 8.5 cents, which corresponds to a post tax yield of 8.6 percent on yesterday’s closing price of 99 cents, or the equivalent to a 12.8 percent pre-tax yield for a 33 percent tax payer.”

Mr Dakin said that with the Trust’s strong capital base and high quality portfolio, the board had confidence it had the solid foundations required in the current business environment.

“Careful financial management will continue to ensure the Trust has a well capitalised balance sheet and strong financial position.

“Our rental cashflows are secure and recurring, and we can forecast these with some confidence.

“With 90 percent of this year’s rental income already contracted we expect to deliver a strong operational performance consistent with our earnings guidance.”

 ends

© Scoop Media