Investors Like Goodman's Sale Of Gpi

Sydney Morning Herald

Saturday May 10, 2008

Carolyn Cummins

INVESTORS have welcomed Goodman International's sale of its wholly owned subsidiary Goodman Property Investors and its associated investments in GPI managed funds to Aberdeen Asset Management PLC.

JPMorgan said the deal had given Goodman a more simplified and streamlined business. "The sale has been a positive transaction showing the Goodman model is well and truly working and the group is now full speed with its Chinese and Japanese expansions, both of which are expected to result in new funds being launched in early 2009," the broker said.

The founder and chief executive of Goodman, Greg Goodman, told the Herald that the two funds would each be worth $500 million-plus with the aim reaching about $1 billion each in the coming years.

Goodman has a $1 billion fund in Hong Kong as well as its new Japanese fund. Brokers said they expected Goodman to look to buy Macquarie Bank's interest in a joint venture in Hong Kong and Japan, to more fully align those businesses to Goodman.

Mr Goodman said that his group bought GPI upon the acquisition of Arlington Securities in 2005 and had continued to expand and grow the business since then.

"We agreed to the divestment of GPI for about #109 million [$226 million] plus a further #12.5 million in performance-based payments over the next two years, contingent on the level of new investor commitments to the combined GPI and Aberdeen Property Investors business," Mr Goodman said at the time of the deal.

"A portion of the proceeds relating to certain fund interests will be received by Goodman within nine months of completion resulting in a net upfront cash payment of #91 million.

"Since the acquisition of Arlington in 2005, we have continued to grow our fully integrated, customer service model both organically and via acquisitions."

Mr Goodman said there was a robust European platform with continued growth potential for logistics and business parks and Europe remained fundamental to the company's business model, contributing a high proportion of earnings.

"As part of ongoing operations we conducted a strategic review for GPI in 2007. We concluded that the best way to optimise value for the underlying investors in the GPI platform was for it to be combined with a strong specialist with a highly complimentary business model. Aberdeen was a highly strategic fit and was viewed as the best long term owner of GPI."

Merrill Lynch said that while GPI was a highly regarded business, it was no longer considered crucial to Goodman's business plan.

© 2008 Sydney Morning Herald

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