This article is from the Australian Property Journal archive
INDUSTRIAL monolith Goodman Group (ASX: GMG) is set to continue riding the e-commerce boom that has fuelled demand for sheds, warehousing and logistics facilities, and propelled the industrial property giant to a 25% increase in operating profit to $1.52 billion.
Annual operating earnings per security lifted 24% to 81.3c per security, while statutory profit was $3.414 billion.
Earnings per security growth is expected to be 11%, which Grant McCasker of UBS said was “strong” but below market expectation of 15%.
Distributions will remain at 30.0 cps.
“While interest rates and inflation may impact consumers, they continue to seek faster and more flexible delivery,” said group chief executive officer, Greg Goodman.
“This requires ongoing intensification of warehousing in urban locations to optimise delivery and we’re working closely with our customers to maximise productivity and sustainability in their facilities.”
Goodman has $73 billion worth of assets under management, a rise of 26%. Property investment earnings increased 20% to $494.6 million, underpinned by low supply,
$8.5 billion of revaluation gains and a global portfolio occupancy of 98.7%.
Like-for-like net property income growth was 3.9%.
Goodman’s portfolio weighted average lease expiry lifted from 4.8 to 5.2 years due to longer lease term on development completions. Some 4.5 million sqm was leased, equating to $552 million of annual property income.
Development work in progress jumped 28% to $13.6 billion, across 85 projects, with a forecast yield on cost of 6.6%. Works in progress have a weighted average lease expiry of 14.2 years and are 62% pre-committed.
Moody’s Investors Service senior vice president, Matthew Moore said Goodman’s “strong” results are credit positive.
“All segments benefitted from robust earnings growth as demand for industrial and logistics assets in key infill locations remains strong, supported by the increased adoption of e-commerce globally, and the need for greater supply chain efficiencies and productivity. The good quality and location of Goodman’s assets, together with low supply in its key markets, will continue to help grow rental rates and the valuation of its portfolio.”
He said Goodman’s financial metrics remain at strong levels for its ratings, reflecting substantial earnings growth, the group’s low gearing levels, strong liquidity and its conservative financial policies.
“While development earnings are more volatile through the cycle, we expect earnings from this segment to remain high and above its 30% to 40% historical share through the cycle.
“Furthermore, we see margins remaining strong as rental growth is outpacing the increase in construction costs. The completion of development projects will provide higher and more stable management and investment income, further supported by high pre-commitments on completion.”
Goodman’s gearing is at 8.5%, and the group has $2.8 billion in liquidity.
Net tangible assets was up 25% to $8.37 per security.
