The Brickworks Limited (ASX: BKW) share price is having a positive finish to the week.
At one stage today, the building products company's shares were up 4% to $21.00.
The Brickworks share price has since pulled back but remains up 1% to $20.30 at the time of writing.
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Why is the Brickworks share price rising?
Investors have been bidding the Brickworks share price higher today after the company announced the launch of the Brickworks Manufacturing Trust.
According to the release, it is a new 50.1% owned joint venture manufacturing property trust with Goodman Group (ASX: GMG) that will initially house a portfolio of 15 manufacturing plants with an asset value of $416 million.
These will be tenanted by the company's Australian Building Products businesses, such as Austral Bricks, Bristile Roofing, Austral Masonry and Austral Precast, on long leases. In fact, the weighted average lease expiry (WALE) will initially be 16 years.
Brickworks will retain 50.1% ownership of the new trust, with the remaining 49.9% interest sold to Goodman.
Trading update
In addition to the Brickworks Manufacturing Trust announcement, the company provided an update on its performance in FY 2022.
Brickworks advised that it expects to report record Property earnings in FY 2022, with Property EBIT likely to be in excess of $620 million. This compares to Property EBIT of $253 million in FY 2021.
The company's CEO, Lindsay Partridge, explained that this was driven by major developments and changes to account policies.
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. In a change of accounting policy, and consistent with our JV partner Goodman, we now recognise developments within the Trust at fair market value, if they are approaching practical completion, at the end of each period.
In addition, management revealed that its Building Products EBIT in both Australia and North America are expected to be higher in FY 2022 compared to the prior year. Partridge said:
EBIT from our Australian Building Products business is expected to be in excess of 20% higher than the prior year, not including the additional profit from the sale of properties into the new Brickworks Manufacturing Trust.
[In] North America, we expect EBIT in financial year 2022 to be more than double the prior year, including the impact of a number of quarry sites sold during the second half.
