Goodman Forecasts FY22 EPS Growth of 23%

16 May 2022

Goodman has maintained a strong operating performance in the third quarter reporting EPS growth heading for 23%

Goodman continues to adapt to the ongoing challenges of COVID-19 and growing global geopolitical tensions. These are placing pressure on already constrained global supply chains, inflating costs and increasing the complexity of execution.

Consumers continue to seek faster and more flexible delivery. This requires intensification of warehousing in urban locations, and an increase in automation and technology to optimise delivery and improve efficiency.

Goodmans’ global business is concentrated in key urban locations and focused on delivering opportunities through planning, change of use, sustainability features and higher intensity use. Goodman claim customers achieve greater value and enhanced productivity from the space, mitigating the higher cost.

The execution of Goodman strategy in urban infill markets is reflected in their significant and globally diversified development book, high occupancy of our development completions (99%), consistently high portfolio occupancy (99%) and continued strong average market rental growth.

Goodman expect WIP to remain around current levels at 30 June 2022 and continues to work through brownfield sites and regeneration of existing assets and while construction costs are increasing. The outlook for returns remains sound with the YOC across current WIP at 6.5%.

AUM growth will be primarily supported through development completions over the next few years and is expected to exceed $70 billion by 30 June 2022.

Goodman’s confidence is reflected in their FY22 forecast for operating EPS of 23% , and a full year distribution of 30cps.

Greg Goodman, Group CEO said “Goodman has had another strong quarter with our operating results reflecting the highly targeted location of our portfolio. This has continued to produce high occupancy, cashflows, and development activity.

The business environment is changing, with increased interest rates, inflation, geopolitical risks and the ongoing impacts of the pandemic, however, the long- term structural drivers of demand have not changed.

We’re continuing to work with customers to maximise productivity from their properties and add value to their operations.

Our focus is on providing our customers with sustainable properties that will suit their needs over the long-term. With our portfolio concentrated in key high barrier to entry markets, we continue to prudently deploy capital alongside our partners.”

Key Highlights

  • $13.4 billion of development work in progress (WIP) across 89 projects
  • 3.7% like-for-like net property income (NPI) growth in our managed Partnerships
  • 98.7%3 occupancy across the Partnerships
  • Low gearing of 7.2% (as at 31 December) and liquidity of over $2 billion maintained
  • $68.7 billion total assets under management (AUM)
  • Forecast FY22 operating EPS growth of 23%

Available space remains restricted across Goodman’s key markets. Consequently, Goodman continue to see significant market rental growth across many locations globally with like-for-like NPI growth of 3.7% and high occupancy of 98.7%.

Development completions by Goodman for the nine months were $4.7 billion, with a further $0.8 billion completed post March and approximately $6 billion of completions expected to be completed over the 12 months to 30 June 2022.

Construction costs are increasing globally and Goodman are not immune to the challenges. Projects completed in the nine months to March were 99% leased with cash yield on cost (YOC) of 6.9%. Cost pressures have reduced the YOC for the current WIP to 6.5%.

The Group continues to mitigate risk through a globally diversified workbook and investment partnering. 84% of current WIP is presold or being built for third parties or our Partnerships.

Total assets under management increased to $68.7 billion at the end of the March, despite a negative FX impact, and is expected to be in excess of $70 billion by June 2022.

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