"The proposed equity raising demonstrates Goodman's disciplined approach to maintaining leverage at present levels, and will allow for a higher forecast level of development activity to be sustained with no material impact on leverage," says Maurice O'Connell, a Moody's Vice President and Senior Analyst.
"The Goodman operating model allows development activity of as much as AUD2 billion annually to be funded substantially through retained earnings, undertaken via funds or capital partners," says O'Connell. "However, a higher level of development opportunities -- in this case, up to around AUD2.5 billion annually, and including its newly announced joint venture in Brazil -- would require additional funding."
"In this context, today's announcement shows that shows additional funding will come from equity rather than increased debt, an approach that facilitates the process of managing higher growth rates in a sustainable way and within the tolerance levels for its Baa2 rating," adds O'Connell.
Moody's expects that Goodman will maintain leverage at or below present levels with the look-through ratio of net debt/EBITDA expected to trend below 6 times in the next 2-3 years, a level that is supportive of the Baa2 rating.
The principal methodology used in rating Goodman Group was Moody's Approach for REITs and Other Commercial Property Firms published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
The Goodman Group, based in Australia, is an internally managed, integrated property group, with ownership of a substantial portfolio of Australian industrial property assets. In addition, the group has a number of strategic investments in various industrial property funds globally. It also derives earnings streams from providing funds management and property management services together with property development activities.
Maurice O'Connell Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Terry Fanous Associate Managing Director Corporate Finance Group JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Releasing Office: Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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