Capital gain for Goodman

GOODMAN GROUP has created a potential income stream with the formation of a $500 million funds management joint venture with Malaysia's Employees Provident Fund.

GOODMAN GROUP has created a potential income stream with the formation of a $500 million funds management joint venture with Malaysia's Employees Provident Fund.

Under the global relationship, up to $400 million has also been allocated in the form of six industrial logistics assets sourced equally from Goodman and its wholesale managed funds.

The venture is 40 per cent owned by Goodman and the rest is with EPF. One of the assets included in the deal is Greystanes Industrial Estate. The others have not been identified, but are Australian. Other overseas properties may be included in the future.

The Goodman chief executive, Greg Goodman, announced recently that the group was looking to expand into the US and Brazil to complement its business in Europe as well as the expansion into Japan and China.

Goodman has a strong relationship with the Amazon group, which is said to be looking to open warehouses in Australia to cater to the demand for online shopping products.

Peter Zuk, an analyst at Goldman Sachs, said the key to the deal was that Goodman had introduced a new capital partner to its suite of investors.

"This provides it with another potential source of capital (or capital recycling opportunity) to grow its funds under management and development businesses globally - including the anticipated expansion into the US and Brazil," Mr Zuk said.

"We suggest this new relationship creates scope for further capital recycling opportunity for Goodman in the event it sells more of its Australia and non-Australia assets into the new EPF/Goodman venture."

Mr Zuk said he doubted the deal would have any material impact on Goodman's earnings as the venture was only transferring external funds under management from one entity to another and basically replacing some direct property income with indirect income.

Mr Goodman said adding EPF to the group's global platform was another step in the expansion of the fund's management platform.

"Major global investors continue to target high-quality income-producing investments in a structure that provides access to a specialist team with strong alignment," Mr Goodman said.

The deputy chief executive (investment) of EPF, Dato' Shahril Ridza Ridzuan, said his group intended to increase its exposure to real estate "by investing with best in class property groups around the world".

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