Goodman Group shares rise on strong operating result
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More news: Goodman Group shares nudged a high of $37.07 in early morning trade, a 2.57% boost compared to Wednesday's closing price, as investors welcomed news of upward revaluations in its existing mainly industrial property portfolio and a strong pipeline of data centre development sites spread across the US, Europe and Australia.
On the earnings call, analysts quizzed CEO Greg Goodman on which data centre developments that recently secured permits were due to begin construction first. Goodman wouldn't name specific sites, and said the development business was managed as a "portfolio", but that any project going ahead needed to be able to be completed by 2027 in order to attract prospective equity partners.
Goodman's data centre strategy involves using industrial property land banks that it already owns in major metropolitan areas to develop data centres which are located close to user demand from large technology and other corporate customers, and therefore have a low-latency because the data travels less far compared to larger data centres in regional areas.
Once data centres are at a late-stage of development, Goodman then seeks capital partners for the asset, typically the large technology companies that the industry terms "hyperscalers". The group is actively seeking new partners for data centres in Sydney, and the US, and recently secured new investors at of its European sites.
The stapled real estate developer and property trust is in the early stages of a pivot towards data centres while conditions remain muted in the industrial and logistics property space.
What they said: "We're all positioned to capitalise on opportunities ahead, whether it's delivering more sophisticated logistics facilities with advanced robotics or building low latency data centres to power the digital infrastructure of modern life," Goodman told analysts.
"We have the right land, power, people, project and partners to deliver Goodman has the planning capability, the skill sets and the proven ability to build complex infrastructure our intensive data centre development programme over the next year," he added.
Goodman Group posts $1.7b full-year profit, rebounding from FY24 loss
The news: Goodman Group has bounced back to a $1.67 billion full-year statutory profit, rebounding from a $98.9 million loss in the preceding financial year when the property group was hit with huge portfolio revaluation declines.
The numbers: The result missed the $2.09 billion market consensus estimate, according to Visible Alpha. Revenue came in at $2.31 billion, 16.5% higher than the $1.98 billion generated in FY24.
Operating earnings, the real estate investment trust's preferred measure of profitability, leapt 13% to $2.3 billion compared to FY 2024, narrowly behind analysts’ 13.3% consensus figure which was revised downwards in July.
The closely-watched operating earnings per security ratio (OPES) rose 9.8% to 118 cents per security, just ahead of the company’s stated 9% growth target.
The higher statutory profit reflected a $300 million one-off gain as the group upgraded its valuations for several industrial and data centre properties in its portfolio after they were sold. The valuation gain is line with growing demand from technology customers that has fed into higher valuations across the sector.
A total $1.6 billion revaluation was spread across Goodman and its partner shareholders in the data centres. The higher valuations boosted Goodman’s portfolio value by 9% to $85.6 billion in FY25, compared to a 3% decline in its value in the prior period.
The context: While Goodman is actively pursuing the development of new data centres as a strategic priority, the majority of its current $85.6 billion portfolio comprises industrial properties, including logistics warehouses.
At the end of the financial year, development work in progress stood at $12.9 billion across 57 sites, with data centres representing 57% of the development pipeline. The total megawatt capacity of data centres under development, or “power bank”, stood at 5 gigawatts, of which just over half had secured approvals to connect electricity.
Goodman now has 350 MW of installed or committed solar rooftop arrays that it mainly uses to power industrial properties, and a 96.5% portfolio occupancy level.
