This article is from the Australian Property Journal archive
INDUSTRIAL real estate giant Goodman Group has updated its earnings guidance for a second time this financial year, as demand for data centres fuel the warehousing boom.
Goodman, which has $80.7 billion of assets under management and has been riding the huge e-commerce and logistics wave of the past few years, upgraded its FY23 earning per security growth forecast from 13.5% to 15% with its quarterly update.
“Demand for space in our portfolio across a broad range of customers, continues to be driven by their desire for more productive and sustainable assets. Data centre users are also particularly active,” said Goodman CEO, Greg Goodman.
“The significant continued growth in data requirements, network connection and difficulty procuring power is creating strong demand for available opportunities and is likely to remain that way for the foreseeable future. These factors continue to support our development activity and future earnings.”
About 30% of its $30 billion development pipeline is data centres.
Reflecting the recent demand for prime infill sites for last-mile logistics, it has a 99% portfolio occupancy, and it is recording 4.4% like-for-like net property income growth.
Downwards pressure on commercial real valuations caused by higher interest rates is being offset by continued rental growth. The weighted average cap rate across the group and partnership portfolios is 4.3%.
“The economic outlook remains uncertain and increasing cost of capital continues to see capitalisation rates expand with further expansion likely over the next 12 months. However, the group is in a strong position, with high occupancy, rental growth and profitable developments largely mitigating the impact of higher capitalisation rates on valuations,” Goodman said.
Potential rent reversion to market across the portfolio has continued to increase in most markets with North America at 66%, Australia and New Zealand at 37%, Continental Europe and the UK 17% and Asia at 2% as Greater China improves post-reopening.
Goodman leased 3.3 million sqm across the platform over the 12 months to the end of the March quarter, equating to $434 million of rental income. Its portfolio weighted average lease expiry is 5.4 years.
“We remain focused on accessing scarce long-term opportunities, based around key pieces of infrastructure servicing large populations. It’s increasingly challenging to supply space in these locations given tight planning controls, access to power, the scale of our properties, and continued investment in sustainability initiatives,” Goodman said.
“We believe this should support the resilience, growth in cash flows, demand for, and the value of our portfolio.”
“We have significant liquidity, low gearing, extensive hedging, and our partnerships remain in a strong financial position to leverage opportunities as they arise.”
Its gearing at the end of March was 8.4% while it had $1.7 billion of undrawn bank lines.
