AS founder and chief executive of industrial property owner Goodman Group, Greg Goodman has been through a private hell as the market collapse savaged his company, wiping almost $10 billion from its value.
The crash has also shrunk the Goodman family's wealth, with its 6 per cent stake in the company, worth $756 million at the market peak, cut to about 3per cent, worth $87m.
Mr Goodman said he intended to rebuild the family fortune, just as he would rebuild the Goodman Group. "There was no point panicking", he said. "We couldn't do anything about what was happening in the world.
"We were caught up in it like a lot of other people. We went through it on a day to day basis," Mr Goodman said.
The family will swap a long-held Victorian property for Goodman shares, which could increase its stake to more than 3 per cent, depending on the value of the property.
"A good thing about life is you can't go back. There are plenty of things that we would do differently but don't have the opportunity, Mr Goodman said. "All that we can do is look forward and that is what we will do."
Last week, Goodman undertook its second capital raising, injecting $1.8bn into its balance sheet, and extended $4.1bn of debt. It now has no unfunded debt until 2012.
More crucially, two new strategic partners, China Investment Corporation and Canada Pension Plan Investment Board, were brought in, paving the way for future growth in Goodman's funds management business.
Former Goodman joint-venture partner Macquarie Group introduced the two groups 18 months ago, leading to last week's announcement.
Mr Goodman credits the corporate experience of his board and chairman Ian Ferrier for sound management through the horror year.
In the past 12 months, the group switched off development and focused on staying afloat.
Mr Goodman said the group, which managed some $19bn worth of assets, needed to move from a static state to growth, with an important rider: "without debt and leverage".
The size and maturity profile of Goodman's debt is still foremost in his mind. The company has brought its gearing down from almost 48 per cent to 26.7 per cent since the capital raising.
"We will not go over this level again," Mr Goodman said.
A lesson of the crisis is that short-term, three-year debt is not appropriate for a long-term property business.
Mr Goodman said the group would try to convert more borrowings into long-term debt in coming months.
"We will use private placements and the bond markets to access long-term debt," he said.
Analysts and fund managers said only the group debt was addressed, and Goodman's five wholesale trusts remained highly geared.
"We have increased the loan-to-value ratio and interest cover ratio. With all our funds, we have allowed for capitalisation rates going to 10 per cent plus."
The average cap rate of its assets was in the 8-8.5 per cent range, he said.
"The pleasing thing for me personally is the banks coming to the fore to support the group in a major way around the world by giving our funds more debt headroom."
With the group recapitalised, "it is business as usual", Mr Goodman said.
With its international platform still intact, Mr Goodman said, the group would restart development to feed into its funds. He also noted that the world would be a "less competitive place".
Goodman's two global competitors -- the US companies ProLogis and AMB -- are focusing on repairing their own balance sheets.
Investors who had shown renewed interest in the group wanted it to move forward.
Goodman would not change its business model because development and funds management were integrated businesses.
He expected funds management to be a growth engine for the group in the next five years.
Some analysts remain sceptical of the earnings growth potential, concerned that it is tied too much to development. The group's development earnings dropped from $299m in 2007-08 to $90m in 2008-09 and will fall again to an estimated $54m in the current financial year.
It has forecast -- perhaps conservatively -- an after-tax operating profit of $310m this financial year -- down from $408m in 2008-09.
Mr Goodman defended his forecast, saying he was talking about "bottom of the cycle development earnings" without development profits and funds management contributions.
GMG Price at posting:
$2.65 Sentiment: Hold Disclosure: Held
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