Goodman Growth in Development
Goodman have provided an update to the market on their Q3, 2019 performance and outlook re-affirming the positive outlook for the sector.
The Group CEO, Greg Goodman says that "the structural trends of urbanisation, rising consumerism and the ever-increasing need for convenience, continue unabated - driving demand for industrial property in key urban centres. Customer demand is outstripping supply for urban logistics globally as our customers continue to invest in improving the efficiency of their supply chains. This is leading to consistently high occupancy, steady growth in rents and an increase in development work in progress. The scale of these projects is growing over time, given the high-value nature of urban sites, and we are continuing to expand our landbank to secure quality locations for our customers for the long-term.”
For Goodman, the location of their assets remains a critical factor to success as they seek to support their customers’ evolving supply chains as they in turn invest in technology to improve their customer service and provide convenience for the end consumer.
Being ahead of the curve allows Goodman is reflected in their strong underlying real estate fundamentals across our portfolio, with consistently high occupancy (98%) and steady growth in rents (up 3.3% like for like) off the back of strong leasing activity (2.6m square metres over the period).
Goodman's focus on developing infill markets where demand is strongest, has seen WIP increase to $3.7 billion at 31 March and growing.
The Group is focused on incrementally expanding the land bank through strategic acquisitions in the high barrier to entry markets where their portfolio is concentrated. These land banks will provide opportunities for their customers in the future and extend the scale of developments and the pipeline in the medium to long-term. High demand combined with lack of land supply in most markets is giving Goodman confidence to commence more projects on a speculative basis, with occupancy on completion remaining consistently strong. This type of site procurement takes patient capital and provides us with diversified opportunities for the future.
The Group expects that the portfolio will continue to perform strongly and it reaffirms forecast FY19 operating earnings per security of 51.1 cents, up 9.5% on FY18, and distribution per security of 30 cents, up 7% on FY18.
As the chart below demonstrates, the performance of Goodman compared to the rest of the ASX 200 AREIT market has been outstanding, with an increase in unit price over the pas 12 months of 43% compared to the rest of the index at just 10.1%.
GMG Trading Chart vs ASX200 AREIT Blue - GMG, Purple ASX200 AREIT Last 12 months