Market players were left unimpressed by a big profit rise at NZX-listed landlord Goodman Property Trust, saying management were the only ones gaining financially.
Brent Sheather of Private Asset Management, which no longer holds units in the trust, said investors were not being well served by payouts from the highly profitable business.
"Distributable earnings per share actually fell from 8.4c last year to 8.2c. For investors, it's earnings per unit that are relevant, not profit in aggregate," he said.
Adding buildings to the trust's portfolio was serving only the interests of the manager, ASX-listed Goodman Group. "Obviously, the big winner in any expansion of assets is whoever gets the management fees so we have seen a huge expansion in assets and a fall in earnings per share - not hugely inspiring in my view. That probably explains why the price has gone down slightly despite a 71.4 per cent increase in pre-tax profit," Sheather said.
Other investors attacked low returns, describing investing in Goodman as an unattractive proposition because guidance was given yesterday of a 6.25c a unit payout for the March 2014 year, which hardly reflected the huge uplift in the trust's fortunes or prospects.
Goodman almost doubled its profit and signalled an accelerated development programme in the current financial year. The March year profit rose from $40.5 million to $77.9 million and chief executive John Dakin said the business now had real estate valued at $2 billion, up on last year's $1.6 billion, and debt of 34.8 per cent, down from 35.7 per cent.
More development activity is now taking place and the business expects forecast economic growth to convert into more demand from tenants.
The trust has about 12 per cent of its property in raw land and indicated it had opportunities to drive further growth through development. Investors were told they would get at least 6.25c a unit, representing about 80 per cent of after-tax distributable earnings.
The business paid joint venture related parties $186.6 million for the share of Auckland's distribution and logistics centre, Highbrook Business Park, which it did not already own and Dakin said that had allowed restructuring and refinancing of bank facilities which would provide considerable interest savings in the current financial year.
Nine new projects had been started to create more than 4.8ha of net rentable area and the trust's portfolio was 96 per cent occupied, he said.
Chairman Keith Smith said the investment market had strengthened and valuations had turned around from last year's $19.5 millon devaluation of the trust's portfolio to a gain this year of $4.2 million.
The balance sheet had been strengthened by a $60 million private placement to institutional investors in November, a $30 million unit purchase plan in January, issuing $130.6 million of units to manager Goodman Group and restructuring and consolidating bank facilities into a single $600 million loan, recycling almost $35 million of capital, Dakin said.
The trust, with 250 tenants, specialises in industrial and business space.
Units closed up 0.5c yesterday at $1.165, well ahead of the 95c they were on at this time two years ago.