INDUSTRIAL property trust Goodman Group has lowered FY09 earnings forecasts and at the same time raised $755 million whilst offloading some $500 million of assets.
The group yesterday has also bought Macquarie Bank’s Hong Kong interest in the Macquarie Goodman Asia platform comprising 50% of shares in MGA, the manager of Macquarie Goodman Hong Kong Logistics Fund and 25% interests in two
These latest transactions are part of the group’s four key strategic initiatives including reactivating the distribution reinvestment plan to raise approximately $200, will strengthen its balance sheet and increase its exposure to the growth markets of
“Recently the market has experienced unprecedented levels of volatility which has created an environment of instability in global financial markets. It is imperative that the group is well positioned to manage the current market fluctuations,” Chief executive Greg Goodman said.
“Streamlining our Asian business by acquiring the remaining 50% of the Macquarie Goodman Asia joint venture is consistent with our strategy to grow our Asian platform and to take advantage of the significant opportunities the region has to offer. We believe that the Asian region has a better growth outlook in the near term compared to the other markets in which we operate.”
“These initiatives both strengthen the group and our exposure to critical Asian markets, while giving us the flexibility to prudently manage the business in the current market conditions,” he added.
Goodman will seek new equity totalling approximately $955 million, including a $230 million Institutional Placement at $0.90 per security and $525 million Entitlement Offer at $0.90 per security.
Furthermore, $160 million of asset sales have been completed since June 2008 and a further $350 million of asset sales are expected to be completed by December 31.
Goodman said in the current market, the initiatives provide a number of benefits by improving its liquidity position, with $1.3 billion of available liquidity (before identified asset sales).
In addition, Goodman’s pro-forma headline gearing will reduce from 39.9% to 35.0% as at June 30 2008 (32.6% after expected asset sales).
But Goodman has forecast a lower FY09 earnings, the group is expected to deliver 19.4 cents compared to 34 cents in FY08.
Goodman this is a cautious assessment in the current market conditions and is calculated based on known transactions, rental income and base management fees are received for the balance of FY09.
“Given the current market turmoil, we believe it is critical for the group to continue to focus on its core business and earnings streams whilst maintaining a strong and robust balance sheet.
“Nonetheless, our approach to FY09 earnings, though cautious, continues to reflect the confidence we have in our own-develop-manage business model to not only deliver value in these difficult market conditions, but also over the long-term.
“Further, our revised distribution is reflective of our conservative capital management strategy which will position the group for longer-term growth,” he concluded.
Goodman shares were suspended at $1.00 yesterday.
Australian Property Journal
