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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Goodman Property Trust / Equity Bottom-Up

<h2>Goodman Property Trust</h2>
FY20 Result – Initial thoughts
Goodman Property Trust (GMT) has produced a steady FY20 result with operating earnings after tax and management base fees of NZ$90.5m, down -0.4% on FY19 and in-line with our expectation of NZ$90.7m. Rental income (pre-IFRS16) was up 0.9% with the impact of FY19 asset sales (Wynyard properties) offset by acquisitions and developments as well as strong underlying growth (~4% like-for-like rental income). GMT’s distribution pay-out was stable at 107% of cash earnings over the period.
The main talking point from the result is GMT’s revised distribution policy. Distributions will now be 80-90% of cash earnings with guidance of FY21 DPS of 5.3cps, or -20% vs. 6.65cps in FY20.
Key take-outs
<ul>
<li>Guidance for flat cash earnings: GMT have guided to cash earnings being flat at 6.2cps in FY21.</li>
<li>Dividend policy changes reduces distributions 20% to 5.3cps in FY21: GMT have updated their dividend policy to better align distributions to cash earnings. Distributions are now expected to range between 80-90% of cash earnings. FY21 DPS guidance is for 5.3cps (vs. our current forecast for a COVID impacted 5.2cps), this is a 20% a reduction on the 6.65cps in FY20 which was 107% of cash earnings.</li>
<li>COVID-19 impact: GMT proved resilient during the government enforced lockdown, collecting c.90% of rental due during April and May. Targeted support for vulnerable tenants has been provided in the form of rental abatements and deferrals. Looking ahead, GMT has put some development projects on hold until tenant commitment has been secured. To support suppliers, GMT is paying bills more regularly, rather than using credit terms as a payment guideline.</li>
<li>Asset backing stable NZ$1.727: NTA per unit was flat vs. 1H20 with a slight devaluation in the stablished portfolio offset by retail offer proceeds and gains on development completions.</li>
<li>Gearing remains low at 18.9%: Acquisitions and development spend were offset by asset revaluations and the Sep-19 equity raise. On a fully committed basis gearing lifts to 20.6% and remains below GMT’s medium term target of 25-35%.</li>
</ul>
Conference call 10:30am, Webcast:&nbsp;<a href="https://edge.media-server.com/mmc/go/goodman-fyr20/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://edge.media-server.com/mmc/go/goodman-fyr20/&amp;source=gmail&amp;ust=1590711174745000&amp;usg=AFQjCNGT7WBD-2KpVoqnpeldgkg3MkgA7g" rel="noopener">https://edge.media-server.com/mmc/go/goodman-fyr20/</a>
FY20 result summary (NZ$m)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1667882221161340484&amp;th=1725820b1782de44&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_uMsYQqFEbCYQRzsI8lvsz-27KzmXPV-SHyZRss1KU0O2NZgxmE-69ZLyYHDEvFdaq3yo2rhUOF12OHJ4bk42hsdjwu_tjL_JOAZhBKtJZ4Em2-dgZjg-b4X4&amp;disp=emb" width="516" height="307" class="editor-image img-responsive" data-image-whitelisted=""></figure>
&nbsp;Source: Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities Forsyth Barr Limited&nbsp;
P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Goodman Property Trust
FY20 Result – Initial thoughts
Goodman Property Trust (GMT) has produced a steady FY20 result with operating earnings after tax and management base fees of NZ$90.5m, down -0.4% on FY19 and in-line with our expectation of NZ$90.7m. Rental income (pre-IFRS16) was up 0.9% with the impact of FY19 asset sales (Wynyard properties) offset by acquisitions and developments as well as strong underlying growth (~4% like-for-like rental income). GMT’s distribution pay-out was stable at 107% of cash earnings over the period.
The main talking point from the result is GMT’s revised distribution policy. Distributions will now be 80-90% of cash earnings with guidance of FY21 DPS of 5.3cps, or -20% vs. 6.65cps in FY20.
Key take-outs

Guidance for flat cash earnings: GMT have guided to cash earnings being flat at 6.2cps in FY21.
Dividend policy changes reduces distributions 20% to 5.3cps in FY21: GMT have updated their dividend policy to better align distributions to cash earnings. Distributions are now expected to range between 80-90% of cash earnings. FY21 DPS guidance is for 5.3cps (vs. our current forecast for a COVID impacted 5.2cps), this is a 20% a reduction on the 6.65cps in FY20 which was 107% of cash earnings.
COVID-19 impact: GMT proved resilient during the government enforced lockdown, collecting c.90% of rental due during April and May. Targeted support for vulnerable tenants has been provided in the form of rental abatements and deferrals. Looking ahead, GMT has put some development projects on hold until tenant commitment has been secured. To support suppliers, GMT is paying bills more regularly, rather than using credit terms as a payment guideline.
Asset backing stable NZ$1.727: NTA per unit was flat vs. 1H20 with a slight devaluation in the stablished portfolio offset by retail offer proceeds and gains on development completions.
Gearing remains low at 18.9%: Acquisitions and development spend were offset by asset revaluations and the Sep-19 equity raise. On a fully committed basis gearing lifts to 20.6% and remains below GMT’s medium term target of 25-35%.

Conference call 10:30am, Webcast:&nbsp;https://edge.media-server.com/mmc/go/goodman-fyr20/
FY20 result summary (NZ$m)

&nbsp;Source: Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities Forsyth Barr Limited&nbsp;
P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Goodman Property Trust: FY20 Result – Initial Thoughts