Goodman Property Trust lifted annual distributable earnings but its annual payout to investors fell and is likely to decline` further because of the costs of its development program.
Keith Smith, chairman of the trust's manager, said distributable earnings rose 0.6 per cent to $78 million in a recessionary environment, tighter credit markets and a cyclical downturn in investment markets, said
However, after-tax distributable earnings per unit fell 3.4 per cent to 8.79 cents for the year ended March 31 from 9.1 cents the previous year, reflecting $66 million in new equity raised during the year.
The annual payout to investors fell a greater 8.9 per cent to 7.74 cents per unit from 8.5 cents the previous year, reflecting the manager's recent decision to cut annual distributions to 80 per cent - in the year ended March 2010, its payout ratio was 93.4 per cent of operating earnings.
The trust will pay a final distribution of 1.935 cents per unit with no imputation credits.
The manager said 2012 after-tax distributable earnings are expected to be between 7.7 cents and 7.9 cents after tax, attributing the decline to increased financing costs and higher tax charges.
The trust's bottom line profit of $36.7 million compares with the previous year's $2.8 million, mainly because the theoretical value of its properties fell only $24.8 million to $1.6 billion in the latest year compared with the previous year's $49.9 million writedown.
Chief executive John Dakin said the trust's medium term outlook is increasingly positive as the economy and investment sentiment improve but "a highly competitive leasing market limits the prospect of short-term income growth."
Longer-term, Dakin expects steady rental growth in the industrial sector in which Goodman specialises.
The trust bought the Carter Holt Harvey packaging facility in Hornby for $12.5 million and the remaining 50 per cent of the Show Place Office Part in Addington for $23 million during the year.
It also committed to $18.3 million of new developments totaling 12,000 square metres with committed tenants providing for a weighted average lease term (WALT) of 10.7 years and an 8.8 per cent yield on cost.
The trust extended its development commitments in April when it committed to The Crossing development at its Highbrook Business Park to be built over 18 to 24 months. The trust's share of the $43.5 million first stage of the $91.7 million development is $21.8 million.
The total portfolio's WALT at March 31 was 5.6 years and its occupancy rate was 97 per cent.
The manager refinanced and extended $487 million of bank debt and issued $45 million in bonds during the year, achieving a weighted average term to expiry of 3.4 years, and the trust's loan-to-valuation ration at March 31 was 36.7 per cent and its interest cover 2.4 times.
Dakin said the trust secured more than 135,000 square metres on new and revised lease terms during the year.
In April, the manager announced it was cutting the payout to unitholders to 80 per cent of distributable earnings because of the costs of its development program - in the year ended March 2010, its payout ratio was 93.4 per cent of operating earnings.
The trust will pay a final distribution of 1.935 cents per unit with no imputation credits, taking the year's payout to 7.74 cents per unit, down from 8.5 cents the previous year.
Goodman units are unchanged at 96 cents, in the middle of the tight 90 cent to $1.01 range in which they have traded over the last year.