This article is from the Australian Property Journal archive
INDUSTRIAL real estate giant Goodman Group upgraded its guidance for a second time in FY24 as it looks to move further into the booming data centres sector, while it has also struck a mammoth $780 million deal to offload a portfolio of warehouses in Sydney and Melbourne.
With its third quarter update, Goodman upgraded its expected full-year operating earnings per security growth for FY24 to 13%, having upgraded guidance in February to 11%.
“Our active asset management continues to optimise returns for our investors as we deliver essential infrastructure for the expanding digital economy,” Goodman said.
“The location and quality of our properties enables increased productivity, driving demand as our logistics customers are seeking to improve their supply chain efficiency using automation and offering faster transit times. We continue to develop large-scale, high value, data centres, and expand our global power bank to address growing data centre demand as AI usage and cloud computing expands.”
Goodman has $12.9 billion of development work in progress across 82 projects. Data centres accounted for 40% of those projects, up from 37% at the midway point of FY24.
Some $800 million worth of developments were completed in the March quarter, with 96% of year-to-date completions committed.
“Competition for land in our markets from a wide range of alternative uses is continuing to provide opportunities for the group. In particular, data centre demand is significant, driven by strong growth in cloud and AI requirements, and migration of data globally,” the group said.
“We believe our competitive advantage is based on our access to secured power on our sites and proven track record in development and program delivery, to meet the growing demand in an environment of limited supply. We’re progressing our work with utilities, planning bodies, customers, and capital partners to maximise this opportunity.
$780m portfolio sale
In the first major industrial portfolio sale of the year, Goodman Group has offloaded a $780 million portfolio of assets in Sydney and Melbourne, including warehouses occupied by Amazon and Metcash, to Rest Super and US investment manager Barings.
The 12 assets have a combined lettable area of 340,000 sqm on 70 hectares of land. The biggest is a Metcash warehouse of 115,000 sqm in Melbourne’s western suburb of Truganina, which will become the new wholesale distribution centre for the company’s Victorian IGA supermarkets.
Tenants in the portfolio also include ASX-listed Super Retail Group, Iron Mountain, and Pack Rack.
“The acquisition of this portfolio reflects Barings’ positive outlook for the industrial sector in Australia and aligns with our investment strategy of targeting to buy existing leased buildings with significant underlying land value at attractive pricing,” said Shaun Hannah, Barings’ executive director, real estate.
“The newer, larger, longer leased assets are more likely to provide stable defensive cashflows and the shorter lease Sydney infill assets unlock the opportunity to improve the ESG features and capture rental reversion.”
Rest Super’s chief investment officer, Andrew Lill, said, “After investing successfully in the US industrial property sector and committing to a venture targeting the UK and Europe, we’re pleased to now increase our presence in the Australian market where there is continued strong demand for industrial property”.
Barings and Rest teamed up in November for a $1 billion industrial property partnership, seeded with a $94 million Truganina warehouse complex.
Barings acquired $6 billion Sydney-based real estate platform Altis Property Partners in 2022.
