Daily ShareChat: Goodman Property Trust

By Jenny Ruth

Wednesday 21st October 2009

Goodman Property Trust has high quality properties, its banking position is under control, a favourable management fee structure and a very attractive yield, says Forsyth Barr analyst Jeremy Simpson.

Having divested $53 million of non-core office assets, the trust's development activity is ticking up again. In September, Goodman announced its first development for the current financial year, a $12.7 million design and build at its M20 business park in Wiri, Auckland which will be completed by May 2010 with an estimated 9% yield on cost.

Simpson says there is yield upside, given downward pressure on building costs.

"There is increasing tenant interest both in terms of new builds and existing properties and we would not be surprised to see further developments commenced in 2010," he says.

The two office properties Goodman has sold include a leasehold asset in Viaduct Harbour for $26.6 million, 3% below the March book value, and a freehold asset in Newmarket for $27.7 million, 6% below book value.

"While valuations appear to be stabilising for quality well-located and well-tenanted property, we continue to expect further downside to property valuations over the next 12 to 24 months," Simpson says.

But Goodman should be able to keep gearing around 35%, well within its banking covenants, he says.

BROKER CALL: Forsyth Barr rates Goodman Property Trust as accumulate.

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