Super funds drive Goodman's $1bn raising

Goodman Group's unlisted Goodman Australia Industrial Fund has completed its equity raising process, securing in excess of $1 billion.

Goodman Group's unlisted Goodman Australia Industrial Fund has completed its equity raising process, securing in excess of $1 billion.

The funds will be used to redevelop existing assets and for new acquisitions.

The fund originally raised $624 million in December, but the offer was extended due to increased demand from a number of existing GAIF investors, including super funds and large international investors.

Analysts said the raising indicated the amount of money from super funds looking for higher yielding investments, which the property sector is offering in the lower interest rate environment.

Goodman Group chief executive Greg Goodman said after the close of the equity raising Goodman would hold 30 per cent of the fund, which is consistent with its long-term target holding range.

John Kim, head of real estate research at CLSA, said Goodman had had a strong financial year so far in terms of third-party equity raised in its funds, as well as margin expansion in its funds management business.

"We see both of these continuing in the near-term, and this consistency to be further recognised by the market," Mr Kim said.

He has raised his target price for Goodman to $6.10, compared with $5.24 on Tuesday.

He based the rise on Goodman's more conservative balance sheet, with 34 per cent gearing, an improved development pipeline, increased demand for warehouse and distribution assets and the potential to sell some older assets to residential developers.

"Following a $75 million profit on the sale of a Sydney industrial site at 19-33 Kent Road, Mascot, to residential developer Meriton, we have identified $837 million (about 44 per cent) of Goodman's balance sheet assets that are prime for residential conversion, which may lift net asset values by about 8.7 per cent," Mr Kim said.

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