Morningstar | Ceasing Coverage of Goodman Property Trust. See Updated Analyst Note from 26 May 2019
We intend to cease coverage on no-moat Goodman Property Trust in July 2019. We periodically adjust our coverage as necessary based on stock outlook, client demand, and investor interest.With the New Zealand economy appearing to be on an upward trajectory, the outlook for market-based rents remains positive for the foreseeable future. We anticipate growth in earnings and distributions in the medium term, with high occupancy levels and rental increases, both fixed and linked to the consumer price index, across most of the portfolio. Nonetheless, the name screens as slightly overvalued versus our unchanged NZD 1.70 fair value estimate.
Goodman’s statutory earnings for fiscal 2019 were NZD 335 million, boosted by very material valuation gains, noncash development gains and disposal gains of NZD 202 million. These gains resulted in a material decline in group leverage, with the loan/value ratio falling to 19.7% from 25% a year prior.
Our fiscal 2020 forecasts align with management guidance for cash earnings similar to fiscal 2019 despite significant degearing. Guidance is for distributions to be maintained at NZD 6.65 cents per unit.
Goodman Property Trust is engaged in investment in real estate in New Zealand.
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