Deep Supply chain Demands Fuel Goodman’s Global Growth

19 February 2021

Goodman Group have announced an operating profit of $614.9 million, up 16% on the prior corresponding period and operating earnings per share (EPS) of 33.1 cents, up 15% on the same period last year as the supply chain demands fuel growth for the business.

Group Chief Executive Officer, Greg Goodman said: “The logistics and warehousing sector are playing a significant role globally in providing essential infrastructure to the digital economy. On average, global online sales increased by 30% in 2020 and are expected to show strong growth over the next five years. We are experiencing strong demand from customers as they meet increasing consumer requirements and higher utilisation of properties.

Our development activity is reflecting these trends and the flow-on effects in the digital space. As a result, we have again increased the levels of development work in progress to $8.4 billion. Maintaining a strong balance sheet and retaining income has provided us with significant liquidity, stability and financial resources for sustainable growth.”

Goodman is clearly well placed to take advantage of the changes in the supply chain that were occurring pre-covid and have since been super-charged during covid.

With property level income growth, yield compression, a long development pipeline, and the ability to attract partner capital, Goodman continue to be a stand out manager.

Financial Highlights

  • Operating profit of $614.9 million, up 16% on 1H20
  • Operating earnings per share (EPS) of 33.1 cents, up 15% on 1H20
  • Statutory profit of $1,041.5 million
  • Distribution for the half of 15.0 cents per stapled security (DPS) in line with the Group’s capital management strategy
  • Gearing at 4.8% (look through gearing at 16.6%)
  • Available liquidity of $2.3 billion available in cash and undrawn debt
  • Net tangible assets (NTA) per security of $6.03 per security, up 3.3% (since June 2020)

Operational Highlights

  • Total assets under management (AUM) of $51.8 billion – up 5% and external AUM of $48.5 billion up 6% on 1H20
  • $1.5 billion of revaluation gains across the Group and Partnerships with a global weighted average cap rate (WACR) of 4.7%
  • Quality portfolio maintains high occupancy of 97.9% and like-for-like net property income (NPI) growth of 3.0%
  • Development WIP of $8.4 billion across 56 projects in 12 countries, with a yield on cost of 6.6%

Property investment

There has been a continued shift towards higher penetration of retail sales online and growth in digital and technology-related demand which have increased requirements of supply chains.

Key Property Investment highlights include:

  • High occupancy maintained at 97.9% and WALE of 4.4 years
  • Leased 1.9 million sqm equating to $269 million of annual rental property income across the Group and Partnerships
  • Completed $2.2 billion of asset sales across the Partnerships in the period
  • Like for like NPI growth at 3.0%

Earnings from investments reflects the acquisitions and development completions offset by asset sales. These sales will provide funding for development activities, driving higher total returns and higher allocation to the remaining preferred and stronger markets.

The competition for assets and undersupply of quality properties in the selected markets where Goodman operates, as well as strong investment conditions, has seen the weighted average cap rate (WACR) across the portfolio compress by 17bps to 4.7% since June 2020.


The Group’s development activity reflects ongoing structural changes in consumer behaviour. Goodman expect these levels of customer-led activity to be prolonged, driving higher revenues and higher needs for working capital requirements in the next few years.

Key Development highlights include:

  • WIP of $8.4 billion across 56 projects with a forecast yield on cost of 6.6% and 69% leased
  • WALE on WIP of 14.0 years
  • 80% of current WIP is being undertaken within Partnerships
  • Completed development projects worth $1.5 billion, with 95% leased
  • Commenced $3.5 billion in new developments.

Strong customer demand and desirability of sites has translated into continued high pre-commitment on WIP at 69% with projects completed averaging 95% committed. Diversification of risk has been maintained with 80% of developments undertaken within the Partnerships.

Scarcity of land and growing environmental considerations are driving increased intensity of use from existing sites. This is providing value add opportunities through brownfield developments, multi-storey logistics, data centres and other commercial uses, while contributing to our net zero / carbon neutral targets.


External assets under management have grown 6% on 1H20 to $48.5 billion, due predominantly to development completions, acquisitions and valuation gains partially offset by foreign exchange. AUM growth over the next few years is expected to be primarily supported organically by increased
development activity and revaluation gains.

Key management highlights include:

  • $19.0 billion available in equity commitments 6, cash and debt
  • Average Partner commitment $660 million
  • Weighted average cap rate (WACR) compressed 17bps to 4.7% over the year

Environmental, social, governance (ESG)

Goodman’s approach to environmental sustainability is about long-term thinking and leadership and in this regard, Goodman is on track to be carbon neutral well before 2025.

In the first half of FY21, the Group has:

  • Increased our target for solar on rooftops from 100 megawatts to 400 megawatts by 2025 with an estimated cost of $400 million
  • Been awarded Global Sector Leader and Regional Sector Leader in the 2020 GRESB survey for three Goodman Partnerships (GJCP, GAP, GAIP).

Group Chief Executive Officer, Greg Goodman said: “We view our approach to sustainability as one that leads to positive economic, environmental and social outcomes for our business, stakeholders and the planet. We are focussed on energy efficiency, climate resilience and the wellbeing of our
customers and people. Customer demand for strategically located space, close to consumers that makes a positive contribution towards a more sustainable world has never been more important.”


Commenting on the outlook, Greg Goodman said: “The Group has significant human capital and expertise, financial resources and a strategic real estate portfolio to generate opportunities in changing operating conditions. Our business is performing strongly. The continuing shift in use and requirements from our customers, driven by the long-term trends in the digital economy is supporting continued demand for our properties.”

Goodman have upgraded the FY21 forecast operating profit to $1.2 billion (up 12% on FY20), however the forecast distribution for FY21 will remain at 30.0 cents per security.

Our Views

Goodman’s growth reflects a focused and well disciplined business, which enjoys the significant structural changes to supply chains around the world.

The income distribution yield from Goodman is low at just 1.75% and whilst this is likely to grow, the underlying earnings per share reflects a 4.6% yield which appears to be fair value.

Goodman are on our recommend list.