BR deal loss fails to faze Goodman

Goodman Group will continue to pursue its expansion into Brazil, despite losing out on the proposed acquisition of an industrial portfolio from BR Properties.
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Last week Global Logistic Properties (GLP) announced that it had finalised the deal with BR Properties to acquire the portfolio at the same price as had been proposed by Goodman last November of R$3.18 billion ($1.5 billion).

BR Properties announced with the deal that the sale to GLP ended the November 2013 agreement with WTGoodman.

Goodman Group announced on November 22 last year that it and its Brazil partner, WTorre, were in exclusive due diligence with BR Properties to acquire 34 industrial assets.

BR Properties said late on Wednesday that the deal with GLP was concluded after the end of the exclusive period granted to WTGoodman.

According to real estate analysts, the about-turn was a surprise, but would not be a hinderance to Goodman’s plans to expand into the region.

Simon Wheatley, of Goldman Sachs, said that there was no price impact on the Goodman stock at the time the exclusive due diligence was announced, suggesting that investors were not pricing any expectation of higher funds management income.

”Similarly, we had made no allowance for the successful conclusion of the asset acquisition from BR Properties in our Goodman estimates and there are no implications for our estimates or valuation,” he said.

”It does mute the assets under management growth outlook versus what it could have been. However,it means that Goodman remains in a relatively immature exposure to the Brazil logistics market, albeit that all Goodman’s Brazil exposure is through development opportunities.”

The change in circumstances comes as the Australian industrial market continues to gain traction.

Another round of asset sales is tipped in coming months, more likely from the main players of Stockland, DEXUS, GPT and possibly Australand as they send cash and staff to the higher-margin residential and office sectors.

During the final quarter of last year, JLL recorded industrial asset transactions of $771.7 million in NSW alone, the highest quarterly value total since the firm began recording data over a decade ago.

JLL’s NSW managing director and national head of industrial, Michael Fenton, said it was largely a result of a high level of investor activity, complemented by a lack of quality product available in the Australian industrial market.

Fenton said he expected yields would continue to tighten.

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