Goodman upgrade earnings and head to $70bn of AUM by June

3 November 2021

Goodman has made a strong start in FY22 with the continuation of structural changes, significant customer demand and intensification of use of sites in Goodman’s target markets, prompting the group to lift the earnings outlook by 15%.

Greg Goodman, Group CEO said “The results of the deliberate positioning of our portfolio over the last decade to adapt to and leverage the changes in the digital economy, are now being realised. Customer demand for high-quality properties close to consumers has never been greater.

This is resulting in rental growth, increased development activity, stronger than expected performance from our Partnerships and generally higher levels of profitability, leading to upgraded earnings guidance for FY22.”

Underlying property fundamentals remain strong globally with like-for-like NPI growth of 3.2%. The growth in demand is driving higher utilisation of space as customers seek to improve their supply chains. Consequently occupancy remains high at 98.4%.

Well-located industrial real estate are recognised as essential infrastructure for the digital economy and making it a highly sought-after asset class. Recent market transactions and strong demand from capital markets is driving cap rate compression. This together with significant rental growth, is expected to support further valuation growth consistent with FY21 levels.

Assets under management were $62.0 billion at 30 September 2021 and based on Goodmans current outlook the Group expect AUM to continue growing to around $70 billion by June 2022.

Increased customer demand has resulted in an acceleration of development, particularly in infill locations. Work in progress was $12.7 billion at 30 September 2021, with an annual production rate for the year expected to average approximately $6.8 billion.

The continued evolution of the digital economy and resulting growth in customer and development demand is driving strong margins and yield on cost currently at 6.8%.

Regeneration of existing brownfield sites is providing more sustainable development opportunities, closer to consumers. Goodman expect this activity to continue to be a major source of development into the future.

Goodman are continuing to execute their strategy, focusing on infill markets to deliver sustainable opportunities for customers and investors, while securing cashflow growth for the long-term.

Commenting on the outlook, Greg Goodman said, “High utilisation of space, barriers to entry and limited supply in our markets are underpinning occupancy and cash flow growth in our portfolio, with strong rental growth occurring globally.”

COVID related disruptions in FY22 have been managed such that they have had less impact on the full year projections than we had initially assumed. In addition, given the strength of our development projects, leasing success and the stronger than expected performance of our Partnerships, the outlook for the new financial year is ahead of previous forecasts.

Consequently Goodman are upgraded their market guidance for FY22, with Operating EPS growth expected to be in excess of 15%.

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