This article is from the Australian Property Journal archive
Macquarie Goodman is set to launch its $500 million Pan European logistics fund, after successfully entering into the Asian and Europe markets.
The group has reported another strong year with net profits after tax soaring 649.8% to $500.3 million AIFRS adjusted for year ending June 30, 2006.
The group’s distributable income was $400.3 million for the year – less $103 million in revaluation gains. Macquarie Goodman’s revenue was $646.3 million.
Macquarie Goodman’s chief executive Gregory Goodman said 2006 was a formative year with the group laying the foundation for growth by moving into new Asian markets and Europe.
He added that the group is on track to launch the proposed $500 million Pan European logistics fund this year.
“The establishment of this fund represents a major initiative for the group as it brings together the balance sheet, the UK management capability and the recently acquired European logistics development capabilities of Eurinpro,” Goodman said.
“Through the acquisition of Arlington Securities Plc and Eurinpro International SA we have established a platform for development and management that is akin to our Australian existing operations.
“The interaction between these business units provides us with many strategic and financial advantages. Our development workbook now stands at $2.5 billion which provides our securityholders and our equity partners in third party funds, opportunities to acquire high grade real estate,” he added.
As at June 30, 2006, the group has an investment property portfolio valued at $4.6 billion. Macquarie Goodman’s market cap has jumped 68.4% from $5.7 billion in 2005 to $9.6 billion in 2006.
Macquarie Goodman’s Australian activities continue as the foundation of the business and underpin its financial security with the total property investment portfolio contributing 77% of earnings before interest and tax.
The core Australian portfolio, which now stands at 86 properties valued at $3.8 billion, experienced solid growth on a “like for like” basis. This was achieved with 368,248 sqm of space leased converting to $41.5 million in rent per annum and achieving 3.0% increase on passing rentals.
Goodman said the results have been achieved despite the sale of quality assets from our portfolio into our managed funds.
Macquarie Goodman’s total assets under management increased by 310% to $28.5 billion in June. This growth was primarily as a result of the acquisition of Arlington in December 2005. In addition, it was assisted by 35% growth in the Group’s continuing operations, which included the establishment of wholesale funds in Australia and Hong Kong.
The UK funds management platform has performed solidly since acquisition recording a 16% increase in AUM and met financial expectations.
During the year, the Macquarie Goodman Property Trust in New Zealand acquired nine properties totalling $285.6 million and increased total assets by 91.9% to over $0.8 billion.
MGPT is now ranked as the second largest listed property trust and one of the top 25 entities on the New Zealand Exchange. The trust has projected a 3.4% increase in distributions for the next financial year.
Meanwhile in Singapore, the Ascendas Real Estate Investment Trust has reported a 76% increase in gross revenue and acquired 28 properties for valued at $543.0 million. Ascendas has $2.4 billion total assets under management.
Goodman said the financial gearing ratios of the key funds remain comfortable providing them with the capacity to take advantage of opportunities as they arise as well as maintaining prudent financial risk profiles.
Macquarie Goodman’s development business continues to progress with the completion of $916 million worth of development projects at an initial yield of 8.5% and an average lease term of 6.7 years.
A further $1.6 billion in new lease commitments were secured for both the group itself and its managed funds. These assets will provide an initial yield of 8.1% and an average lease term of 7.6 years.
Goodman said the development programme is a critical function in the long term growth of the business. This programme, which currently has $2.5 billion of works in progress, provides the Group and its partners in the third party managed funds access to a suite of blue chip investment opportunities in a market where securing value add investments is becoming increasingly difficult.
Looking ahead, Goodman said the ongoing demand for efficient real estate by global customers will underpin demand for its owned and managed properties as well as opportunity for its global development business.
“Macquarie Goodman also believes that its ability to manage and develop property provides it with significant comparative advantages in relation to servicing a third party funds management operation. Demand for well managed funds is also expected to continue as real estate capital markets evolve around the world to meet the demands of property investors.
“The group remains comfortable with the market consensus EPS of 31.5 cents for the year ending 30 June 2007, representing an 18% increase on June 30, 2006. The Group is well positioned to maintain its earnings composition, generating over 80% of its earnings from stable sources. The establishment of the European platform and the expansion of the Asian operations provide a level of geographic diversity that assists in its ability to manage risk,”
Goodman said the group will utilise its balance sheet capacity to seek new growth opportunities whilst remaining focussed on efficient capital management strategies.
“We have positioned the group to expand into markets where our core strengths in property investment, services, development and capital management can be successfully deployed, to maximise return on investment and manage the risks to all stakeholders,” he concluded.
The group will pay distributions of 27.5 cents per security for the year, in line with recent forecasts.
By Adam Parsons
