GMT goodman property trust (ns)

Ann: HALFYR: GMT: GMT interim results, acquisitio

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    • Release Date: 13/11/12 11:10
    • Summary: HALFYR: GMT: GMT interim results, acquisition and equity raising
    • Price Sensitive: No
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    GMT
    13/11/2012 09:10
    HALFYR
    
    REL: 0910 HRS Goodman Property Trust
    
    HALFYR: GMT: GMT interim results, acquisition and equity raising
    
    Goodman (NZ) Limited, the manager of Goodman Property Trust ("GMT" or
    "Trust") is pleased to announce the Trust's audited interim financial result,
    a proposal to acquire the remaining interests in Highbrook Business Park and
    new funding initiatives targeting $80.0 million of additional equity.
    
    Result overview
    The Trust has recorded a sound financial result, for the six months ended 30
    September 2012, with improved profitability and a distributable earnings
    result consistent with earlier expectations.
    
    Key highlights include:
    + Profit after tax of $31.6 million, a $2.5 million or 9% increase from the
    previous corresponding period.
    + Distributable earnings before tax of $41.0 million or 4.07 cents per unit.
    + A stable valuation result following the independent valuation of the
    property portfolio.
    + The commencement of 35,900 sqm of new development projects, with a total
    cost of $61.2 million, which are expected to provide a weighted yield on cost
    of 8.8% once completed and fully income producing.
    + Strong leasing results with over 88,000 sqm of space (around 9% of the
    total investment portfolio) secured on new or revised terms.
    + An average occupancy rate of 96% and a weighted average lease term of 5.4
    years at 30 September 2012.
    + Active capital management with $28.4 million of sale proceeds reinvested
    into the business.
    + A strong balance sheet position with the Trust having a loan to value ratio
    of 35.4%, an interest cover ratio of 2.5 times and weighted average
    remaining term across all its debt facilities of 3.2 years at 30 September
    2012.
    + Net tangible assets of 93.1 cents per unit, compared to 92.9 cents per unit
    at 31 March 2012.
    
    Net property income has increased 4.0% to $57.6 million while distributable
    earnings before tax increased by 2.0% to $41.0 million. The increase from the
    prior period is mainly attributable to the contribution from recent
    development completions and modest rental growth, partly offset by the impact
    of asset disposals.
    
    John Dakin, Chief Executive Officer of Goodman (NZ) Limited said, "The
    quality of the Trust's investment portfolio has supported another strong
    operating result and driven the very pleasing increase in profit. Improving
    investor sentiment, as demonstrated by the positive sales results and stable
    valuation that was recorded, have also contributed to the strong
    performance".
    
    Adjustments for these and other non-cash items including deferred tax,
    changes in the cashflow hedge reserve and fair value changes in interest rate
    derivatives provide the reconciliation between distributable earnings and the
    after tax profit of $31.6 million.
    
    Further information, including the reconciliation between distributable
    earnings and profit after tax, is provided in GMT's audited interim financial
    statements which have been provided as an attachment to this release.
    
    Next distribution
    The current operating environment with only modest economic growth is
    consistent with the Board's earlier assumptions and pre-tax distributable
    earnings, on a weighted average issued Unit basis, of around 8.2 cents per
    unit are expected for the full year. The Board intends to maintain GMT's tax
    paid distribution at 6.25 cents per unit or around 80% of distributable
    earnings after tax.
    
    The record date for the second quarter distribution is 28 November 2012 with
    payment on 20 December 2012. The distribution will include a cash component
    of 1.5625 cents per unit with 0.1693 cents per unit of imputation credits
    attached.
    Unitholders are advised that the Distribution Reinvestment Plan remains
    suspended.
    
    Highbrook Acquisitions
    An important acquisition has also been announced with the proposal that GMT
    is to purchase the balance of the award winning Highbrook Business Park.
    
    Keith Smith, Chairman and Independent Director of Goodman (NZ) Limited said,
    "The scale and quality of Highbrook Business Park means that it is already a
    significant contributor to the Trust's financial performance. Full ownership
    and the progression of the development programme will ensure that Highbrook
    becomes one of the principal drivers of GMT's investment returns."
    
    Key aspects of the proposal include:
    + The acquisition of the remaining interests in Highbrook Development Limited
    and Highbrook Business Park Limited, the joint venture entities that own the
    estate, from investment partners Goodman Group and Fisher for a total
    investment of $186.6 million (the "Acquisitions").
    + A mixture of Units and cash paid as consideration, including a significant
    deferred settlement component.
    + The Acquisitions are subject to Unitholder approval to be sought at an
    extraordinary meeting on 7 December 2012.
    
    Further detail, including the consideration structure, is provided in
    Appendix 1 to this announcement and in the advance draft copy of the Notice
    of Meeting and Explanatory Memorandum that has been provided to the NZX.
    
    John Dakin, Chief Executive Officer and Director, Goodman (NZ) Limited said,
    "With a current value in excess of $650 million, Highbrook Business Park is
    New Zealand's development showpiece. It has won awards across a range of
    criteria including financial returns, land subdivision, landscaping and urban
    design. This is a strategic investment opportunity that is expected to
    provide immediate and longer term benefits to the Trust as its full
    development potential is realised."
    
    These benefits include:
    + enhancements to GMT's already high quality property portfolio;
    + increased exposure to prime industrial and business space assets,
    investment segments that are expected to deliver consistent returns across a
    variety of market conditions;
    + an expanded development capacity at a point in the property cycle where
    development activity and property values are improving;
    + a favourable consideration structure, with an element of deferral that aims
    to maintain the Trust's distributable earnings profile on a weighted average
    issued Unit basis;
    + a strengthened register with both Goodman Group and Fisher reinvesting back
    into GMT, maintaining strong alignment through their respective equity
    investments;
    + the ability for GMT to achieve operational savings as a result of
    simplified ownership structures; and
    + increased scale and liquidity, with GMT's market capitalisation expected to
    increase to $1.3 billion as a result of the Acquisitions and the equity
    funding initiatives discussed below.
    
    These benefits are described in further detail in the advance draft copy of
    the Notice of Meeting and Explanatory Memorandum that has been provided to
    the NZX.
    
    The Acquisitions are conditional on Unitholder approval (as discussed below),
    Overseas Investment Act consent, and completion of the private placement
    discussed below. They are interdependent, and so must complete together. The
    Notice of Meeting and Explanatory Memorandum sets out further detail on these
    conditions and other terms of the Acquisitions.
    
    Unitholder meeting
    Unitholder approval of the Acquisitions is required due to the relationship
    between the Trust and each of Goodman Group and Fisher and the consideration
    structure that has been agreed with these joint venture partners.
    
    The extraordinary meeting is to be held at 11:00am on 7 December 2012 in the
    Kingston Room of Rydges Hotel, 59 Federal Street, Auckland.
    
    The Notice of Meeting and Explanatory Memorandum, including an Independent
    Appraisal Report prepared by Deloitte, will be mailed to investors on 19
    November 2012 once information on the associated equity initiatives has been
    incorporated.
    
    Equity funding initiatives seeking up to $80.0 million.
    An underwritten private placement to institutional, wealthy and experienced
    investors is being undertaken today to raise $60 million of additional equity
    to part fund the Acquisitions. A trading halt in GMT Units has been granted
    by NZX for one business day to facilitate the equity raising.
    
    A copy of the placement presentation has been provided to the NZX.
    
    The issue price of $1.015625 represents a 4.4% discount to the volume
    weighted average price over the five preceding trading days. The placement is
    underwritten by Macquarie Securities (NZ) Limited and Craigs Investment
    Partners Limited.
    
    The new Units will be allotted on 16 November 2012 and will rank pari passu
    with existing Units. They will be eligible for the second quarter
    distribution to be paid on 20 December 2012.
    
    The Trust is also proposing to undertake a Unit Purchase Plan allowing New
    Zealand resident investors to participate in the capital raising. The offer
    is targeting $20 million of new equity with eligible Unitholders able to
    purchase parcels of Units with a value of $1,000, $2,500, $5,000, $7,500,
    $10,000 or $15,000.
    
    The offer is expected to open on 30 November 2012 and close on 31 December
    2012 and the record date will be 29 November 2012.
    
    The Unit Purchase Plan is subject to a cap of $30 million so applications
    could be scaled depending on demand (with applications scaled on a
    proportionate basis). The allotment date of the Units issued under the Unit
    Purchase Plan will be on or around 8 January 2013. The Units will not be
    eligible for the second quarter distribution to be paid on 20 December 2012.
    
    Therefore the proposed issue price will be equal to the lesser of:
    a) $1.00 per unit, being the issue price under the placement of $1.015625
    less the second quarter cash distribution of $0.015625 per unit; and
    b) the average end of day market price during the period 12 to 18 December
    2012 (rounded down to the nearest cent).
    
    The issue price of the Unit Purchase Plan will be confirmed to the NZX on 19
    December 2012. There are limited circumstances where the Unit Purchase Plan
    may not proceed and may be terminated.
    
    It should also be noted that while the private placement will help fund the
    Acquisitions, both it and the Unit Purchase Plan are independent of the
    Acquisitions and do not require Unitholder approval.
    
    For further information please contact:
    John Dakin
    Chief Executive Officer
    Goodman (NZ) Limited
    (09) 375 6063
    (021) 321 541
    
    Andy Eakin
    Chief Financial Officer
    Goodman (NZ) Limited
    (09) 375 6077
    (021) 305 316
    
    Keith Smith
    Chairman
    Goodman (NZ) Limited
    (021) 920 659
    
    Attachments provided to NZX:
    1. NZX Appendix 1 GMT's audited interim financial statements
    2. NZX Appendix 7 GMT quarterly distribution payment
    3. NZX Appendix 7 GMT Unit Purchase Plan
    4. Independent Auditors' Report
    5. Placement presentation
    6. Advance draft copy of the Notice of Meeting and Explanatory Memorandum
    End CA:00229640 For:GMT    Type:HALFYR     Time:2012-11-13 09:10:51
    				
 
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