Goodman Group sticks to operating earnings growth outlook

Goodman Group sticks to operating earnings growth outlook
Goodman Group sticks to operating earnings growth outlook

Industrial property firm Goodman Group said it was sticking to its full-year forecast of a 7.5 percent growth in operating earnings over the previous financial year.

The group said in an ASX announcement for the quarter ended March 31 that its “strong performance” was due to benefit from the urbanisation of cities around the world and the concentration of consumers in these locations.

It forecast FY2017 full year operating earnings per security of 43.1 cents, up 7.5 percent on FY2016.

Goodman said it expects demand for prime industrial space to stay strong across key locations.

Earlier this year, the group pre-leased an additional one million square feet of logistics space to Amazon at its Goodman Commerce Center Eastvale, California.

“The business is positioned to take advantage of the structural and cyclical influences in the market, particularly in locations positively impacted by the expected increase in urbanisation and rising consumerism,” said the ASX release. 

Goodman’s total assets under management (AUM) were at $34.6 billion with valuation growth offset by asset sales ($2.1 billion for the nine months to 31 March 2017 excluding urban renewal).

The group leased 2.5 million sqm for the year to date, equating to $296 million of annual rental property income.

During the quarter, the group sold $200 million of assets but noted that the pace of sales is expected to moderate. It has completed $2.1 billion of asset sales in the nine months of the financial year to March 31, which will be used to fund its development pipeline.

“We’re continuing to realise the benefits of our strategy which has consistently been to invest and develop in quality locations, close to the consumer,” said chief executive Greg Goodman.

“We believe demand for quality industrial properties will be strongest in these locations and scarcity of land will see higher values, supporting sustainable long-term growth.”

Its development pipeline is across 75 projects with a forecast yield on cost of 7.7 percent and pre-commitments on completions of 86 percent.

The group’s credit rating was upgraded by both S&P and Moody’s, aided by its lower gearing targets.

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