Temporary earnings dilution is expected to occur during the completion of the GPT funded development pipeline. The $800 million project is expected to gain its momentum in the following years according to Credit Suisse analysts. The accomplishment of the development will also help fund GPT’s investment in commercial property around Sydney’s Darling Harbour and drive a number of logistics projects.
To gain more favorable outcome, GPT modified its 2019 financial guidance from more than 4 per cent growth in earnings per share down to more than 2.5 per cent. The 4 per cent growth in distribution is being maintained.
Credit Sussie analysts noted that EPS dilution was anticipated since GPT was trading at a 13 per cent premium to pre-raising net tangible assets $5.58 per share. "Residual funds will be allocated towards funding GPT’s future $1.5 billion-plus office, logistics and retail development pipeline, which will help drive incremental EPS upside in outer years."
According to Citi analysts, the impact of transactions on EPS is expected to take effect by 2020 as GPT collects a full year of income from Darling Park investments.
Image and article source: https://www.afr.com/real-estate/commercial/earnings-dilution-after-gpt-s-mega-raising-short-term-say-analysts-20190620-p51znl
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