This article is from the Australian Property Journal archive
GOODMAN Group has posted double-digit profit growth of 12.5% to $1.06 billion for the full year buoyed increased customer demand for logistics and warehousing, particularly for last mile distribution in urban infill locations, during the pandemic as more consumers turn to online shopping.
Operating earnings per security (EPS) for FY20 was 57.5 cents, up 11.4% on FY19. Statutory profit was $1,504.1 million, which includes the $2.9 billion valuation gains, non-cash items and derivative and mark to market movements. Net tangible assets (NTA) was $5.84 per security, up 9.4% from FY19.
The group announced a distribution of 30.0 cents per stapled security in line with the group’s capital management strategy.
CEO Greg Goodman said it has been an extraordinary year, with the impact of the global pandemic continuing to have a profound impact on the world.
“Through this time, Goodman has remained resilient, continuing to execute our long-term strategy with our people adapting to the new operating environment with limited disruption.
“The events of the last year have resulted in global changes in behaviour including an acceleration of e-commerce adoption, a shift to remote working and a significant increase in the demand for technology and big data. The location and quality of our properties means that Goodman is well positioned to leverage the opportunities that this new operating environment presents,”
“This has provided opportunities for the group with operating earnings in FY20 remaining ahead of guidance. We saw development WIP increase by 59% on last year to $6.5 billion and we expect it to exceed $7 billion in the first half of FY21. This development activity is flowing through to our AUM which increased 12% to $51.6 billion in FY20, including $2.9 billion in revaluation gains. With strong income and capital growth, our partnerships delivered average returns of 16.6%,” he added.
Goodman expects to maintain a strong performance in the year ahead. The group’s forecast operating profit for FY21 is $1.16 billion, up 9.9% on FY20, and operating EPS of 62.7 cents per security, up 9% on FY20. Forecast full year distribution for the coming year is 30 cents per security.
S&P Global Ratings’ analysts Craig Parker and Aldrin Ang said Goodman has benefitted from the surge in ecommerce activity.
“We expect continued demand for urban infill locations as online and omnichannel retailers seek to fulfil “last mile” distribution functions and increase their market share. Goodman’s key tenants are global operators in the freight, distribution, data management, and e-commerce industries. Disruptions, currently in global supply chains, will prompt consolidation and further support demand for strategic industrial sites.
“In addition, we anticipate that a heightened and sustained level of capital deployment into the logistics and warehouse sectors will be required as increased e-commerce activity and technology utilization shape consumer behaviour. This should support Goodman’s development pipeline and the delivery of key projects, while funding these projects consistent with the group’s operating strategy,” they said.
Goodman said the group is well-capitalised, with available liquidity of $2.8 billion, including $1.8 billion in cash, in addition to the $16.3 billion equity commitments, cash and debt available within its partnerships.
This strong capital position will enable the group to grow, particularly focussing on infill locations.
“We are seeing increasing customer demand for space in our strategic locations from several industry segments. Logistics and warehousing has provided critical infrastructure enabling distribution of essential goods during the pandemic, while more consumers continue to shift to online shopping.
“Continued strong customer demand has translated into high levels of pre-commitment from customers which is at 76% for projects in WIP and reached 85% for those completed in FY20. The average lease term on WIP is now the longest it’s been at 15.1 years, reflecting strong customer demand for, and the scarcity of, well-located sites and the technology investment customers are making in their facilities, and underpinning long-term value of the assets.
“The group has incrementally progressed sites through planning and undertaken infrastructure work over a number of years to enable sites to be available now to meet customer demand. Around the world, the group continues to target higher and better use through re-zoning or increased floor space ratios with multi-level warehousing facilities. These initiatives will provide long-term, value-enhancing development opportunities in the supply constrained markets where we operate,” he continued.
Goodman said COVID-19 will continue to significantly impact the way we live and work for the foreseeable future.
“The pandemic has reinforced the consumers’ need for convenience, and heightened use of technology – which have accelerated the adoption of e-commerce and increased the need for data storage.
“Notwithstanding the challenges of the pandemic, we’re well positioned to take advantage of these key trends. We are continuing to increase the levels of development activity and will exceed $7 billion of work in progress in the first half of FY21. Customer demand in our markets is also translating into high occupancy, rental growth, higher AUM and ultimately strong returns across our property investment and management businesses,” Goodman concluded.
