Real Estate

Brickworks expects FY22 earnings to double, launches property venture with Goodman

Fri 22 Jul 22, 1:38pm (AEST)
REIT 13 Industrial Warehouse
Source: iStock

Stocks in article

bkw
MktCap:
-
gmg
MktCap:
-

Share article

Key Points

  • Brickworks shares fade from a brief 4.3% rally at open
  • The company will sell 49.9% of its 'Manufacturing Trust' to Goodman
  • Earnings are poised to double amid record property segment earnings and a recovering building products business

More than 100% property earnings growth in FY22 and a new manufacturing property trust with Goodman (ASX: GMG) has failed to inspire Brickworks (ASX: BKW) shares, up just 1.4% in early trade.

Investors are selling into the positive news, with the company's shares fading from a brief 4.3% rally when the market opened.

Brickworks intraday price chart
Brickworks intraday price chart (Source: TradingView)

Launch of $416m Trust

Brickworks on Friday announced the launch of the 'Brickworks Manufacturing Trust".

The trust will be 50.1% owned by Brickworks, with the remaining 49.9% sold to Goodman. The sale will net Brickworks $193m after tax and transaction costs, with the proceeds used to pay down debt.

Trust Overview

 

Ownership

Brickworks 50.1%, Goodman 49.9%

Properties

15 manufacturing sites

Location (by asset value)

Queensland 38%, Victoria 36%, Western Australia 14%, NSW 6%, South Australia 5%, Tasmania 1%

Debt and Gearing

No debt

Tenants

All tenants are 100% owned by Brickworks subsidiaries

Net rent

Initial rent of $17.75m, annual increases of 2.5% for most properties

Weighted average lease expiry

16 years

Property earnings boom

Brickworks expects its property division to deliver record earnings "in excess of $620m" in FY22 compared to $253m a year ago.

“During the second half of the financial year, we have made strong progress on a number of major developments within the Industrial JV Trust. At Oakdale West, new facilities for Coles, Woolworths, Australia Post and Telstra are all approaching practical completion," commented Managing Director Lindsay Partridge.

FY22 earnings likely to double

The $620m earnings expected from the property division alone will near double the Groups FY21 earnings of $383m.

In addition, management said they expect 20% growth from the Australian Building Products business (FY21 earnings: $44m) and more than double earnings growth from the North America division (FY21 earnings: US$6m).

Brickworks Ltd (ASX BKW) Share Price
Brickworks 12-month price chart

 

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

Get the latest news and media direct to your inbox

Sign up FREE