Institutional investors in giant listed landlord Goodman Property Trust have praised its result, corporate governance improvements and the first dividend increase in six years.
Goodman pushed up annual after-tax profit 72.1 per cent, making $134.1 million in the March 31 year and pre-tax profit was $146.8 million, up on the $90.9 million last year.
Shane Solly of Harbour Asset Management said that was a solid result and he liked corporate governance changes to align management and investor interests.
"There is also evidence of improvement in rental market flowing through to earnings," he said.
Another institutional investor said 7.45 cents per unit (cpu) earnings beat analysts' forecasts of 7.40cpu, SMEC House in Newmarket was sold for $26.2 million when the latest valuation was only $20.9 million and guidance of 6.45cpu for the current financial year was a 3 per cent increase on this year, the first dividend rise in six years.
"Most impressive, however, are the changes to governance and fee structure. We have been arguing for a while now that investors should vote on independent directors and they have finally changed that – they are the last in the sector after Kiwi Income Property Trust internalised. And we will get a rebate on the fees charged on land," said the investor, adding that the institutional community had been asking for this for nearly two years.
"The manager will also get their fees in scrip which is also a positive for all unit holders as it is earnings accretive. Very good to see pro-active moves by external manager."
John Dakin, Goodman chief executive, said a strong investment market was supporting the trust's active sales programme and generating substantial gains. Goodman is active at its Highbrook Business Park at East Tamaki, where it is building a number of new projects, including for Steel & Tube.
The trust had market capitalisation of $1.2 billion at September 30 last year and is one of the NZSX's largest investment entities, in the top NZX 15 index.
Goodman is managed by the ASX-listed Goodman Group through its subsidiary Goodman (NZ). Goodman Group owns 17.5 per cent of the trust.
Dakin said increasing levels of economic activity were driving customer demand and 15 new real estate development projects had been announced in the past year, the biggest development work volume in more than five years.
The new developments had a combined total project cost of $165.7 million, Dakin said, and would bring 95,000sqm of industrial and office space, predominantly precommitted to high-quality customers on long-term leases, annual revenue of around $13.6 million once fully leased and income-producing and forecast valuation gains on completion of between 10 per cent and 15 percent.