Goodman’s Multi-Storey Brownfield Strategy Propels Profits


Rapidly accelerating e-commerce demand has propelled Goodman Group’s full year results, booking a 15 per cent lift in profits to $1.22 billion.

The industrial property giant recorded a $5.8 billion valuation gain across its global portfolio of distribution and fulfilment centres during the past financial year.

The group said that while repositioning stabilised assets had been central to its strategy, multi-storey developments on brownfield sites now made up half of the 73 projects in its $10.6-billion pipeline, $6.6 billion of which have been added recently.

Goodman Group chief executive Greg Goodman said the group’s disciplined focus on location in tandem with the rise of the digital economy had meant 98 per cent occupancy across more $58 billion in industrial assets.

“The prolonged impacts of the pandemic continue to accelerate customers’ propensity to online shopping,” Goodman said.

“[This] strong demand and the ongoing transition to infill locations has allowed the group to increase our development pipeline to $10.6 billion as of June.”

Goodman Group
▲ Logistics and data storage assets have benefited from shifting consumer behaviours, increased data usage and greater focus on supply chains.

Goodman said the group had leased 3.9 million square metres across the platform during the financial year, equating to more than $500 million of rent per annum with a weighted average lease expiry of 4.5 years.

In February, Goodman Group upgraded its full-year earnings guidance for the seventh year in a row.

It delivered on its forecast, with full-year operating profit of $1.2 billion or 65.6¢ per security—up 14.1 per cent on the previous financial year.

The group has gone on to increase its assets under management by 12 per cent, delivering average returns of 17.7 per cent.

It is now expected to exceed $65 billion by 2022 supported by $18.1 billion available in equity commitments, cash and debt.

It paid an unchanged 30¢ per security and forecast the same payout in the 2022 financial year and forecast operating profit of $1.36 billion, or 72.2¢ per security up 10 per cent.

Moody’s Investors Service senior vice president Matthew Moore said the company’s low gearing levels and conservative financial policies had propped up its strong development activity and operating profit.

“While development earnings are more volatile through the cycle, we expect earnings from this segment to remain elevated over the next two to three years,” Moore said.

Goodman also achieved carbon neutrality for its global operations with the measure certified by the federal government’s Climate Active program.

The company said it was also actively reducing carbon within its development process by working out how much carbon its workbook emits and offsetting the amounts in order to build carbon-neutral buildings.

Goodman plots mega facility in Melbourne’s west

After the announcement of its full year results Goodman dipped back into the market, picking up a 125ha industrial-zoned development site in Truganina, in Melbourne’s western industrial heartland, for an undisclosed price.

Goodman Group general manager Jason Little said the acquisition would allow the group to cater to new customers seeking larger footprints and wanting to reach the “highest levels” of delivery demand.

“This area is a rich industrial and distribution destination with numerous benefits beyond its connectivity, including its high catchment of consumers and employment generation,” Little said.

Goodman Group Truganina
▲ The Goodman deal is the second largest deal by hectare in the past decade.

According to Little, the site, on Riding Boundary Road, was selected due to its location; 35 minutes from Melbourne CBD, 30 minutes from Australia’s busiest port in Port Melbourne and 25 minutes from Melbourne’s International Airport.

Selling agent Pierre Ghougassian of Cushman and Wakefield said Goodman’s transaction marked the second largest deal by hectare in the past decade in the west.

Goodman has mooted plans for a sprawling industrial estate across, which should be in high demand as pre-leasing activity spikes across the country.

According to Knight Frank, industrial pre-leasing activity in the second quarter of 2021 surged by 141 per cent, mainly on Australia’s east coast, where the long-run average is 80 per cent above usual take-up volumes.

It follows an exceptionally strong 2020 for the sector during which 2 million square metres was add—well up on the 10-year average of 1.4 million square metres.

The number of industrial properties sitting empty also fell 23 per cent during the same quarter, the largest decline since 2010.

The absorption follows a record 2.2 million square metres of new facilities currently being built across the country.

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