Goodman focus on 9% profit growth
The country's biggest industrial real estate investment trust on Thursday reported a 17 per cent jump in net profit to $544 million. The profit lift for the year to June led to an 8 per cent rise in distribution to investors of 19.4¢ a unit, of which 5.2¢ was fully franked. Payment is on August 26.
Chief executive Greg Goodman forecast a net profit of $594 million for the 2014 year, equating to operating earnings per security of 34.3¢, up 6 per cent on 2013.
UBS analysts called the result "solid" and the guidance of 6 per cent growth was expected.
"The balance sheet metrics continue to improve, with development work in progress growing, and capital in place for developments, with further initiatives pending," a UBS analyst said.
He said the group's global footprint was a natural buffer for volatility, although he cautioned that Europe remained sluggish. China's growth was likely to stablilise at about 6 per cent, and in the US conditions were slowly improving, he said. Despite the recovery it was still difficult to attract capital in that market.
In Australia, both south and western Sydney were competitive for commercial property operators looking for premium sites.
This was more pressing "as more bricks and mortar retailers move into buying and developing their own properties", Mr Goodman said.
But he said business was "well positioned" with the DHL Oakdale Estate in western Sydney and large slabs of land around in Melbourne. "The business is well catered for," he said.
One large site is at 506-530 Gardiners Road, Alexandria, in Sydney's inner south, which has been withdrawn from sale and will probably be developed into a two-storey warehousing facility.
Mr Goodman said the group was in discussion with several parties, but hosed down speculation that included the Amazon.
He said a global $2.5 billion development pipeline was expanding with its joint-venture partners, the Canada Pension Plan Investment Board in the US and Japan.
Over the past year Goodman has also raised $2.8 billion of new third-party equity, while overall earnings were also driven by organic growth, with new markets expected to contribute to 2014 profit.
Mr Goodman said it was unlikely new funds would be established, but added that growing funds under management was a key strategy to give the group firepower to enter new markets.
If the price suited, he said, selling land to residential developers was always an option.
Frequently Asked Questions about this Article…
Goodman said its global reach, a $2.5 billion development pipeline and growing funds under management should help it realise around 9% profit growth in the coming year. Separately, CEO Greg Goodman forecast net profit of $594 million for the 2014 year, which equates to operating earnings per security of 34.3¢ — up 6% on 2013 (UBS called the 6% guidance expected).
For the year to June Goodman reported a 17% jump in net profit to $544 million. That drove an 8% rise in distributions to investors of 19.4¢ per unit, of which 5.2¢ was fully franked, with the payment scheduled for August 26.
Goodman’s global $2.5 billion development pipeline is expanding with joint‑venture partners (including the Canada Pension Plan Investment Board in the US and Japan). Growing development work in progress and capital in place for developments improve balance‑sheet metrics and can drive future rental income and profit growth for investors.
Over the past year Goodman raised $2.8 billion of new third‑party equity. The company says growing funds under management is a key strategy to give it the firepower to enter new markets, even though it’s unlikely to establish new funds in the near term.
Yes. UBS analysts noted Goodman’s global footprint acts as a natural buffer to volatility. The article highlights regional differences: Europe remains sluggish, China’s growth is likely to stabilise around 6%, and US conditions are slowly improving though capital can be hard to attract.
Goodman says south and western Sydney are competitive for premium commercial sites as more retailers buy and develop their own properties. The group reports being well positioned with assets like the DHL Oakdale Estate in western Sydney and large land holdings around Melbourne.
The large site at 506–530 Gardiners Road in Sydney’s inner south has been withdrawn from sale and will probably be developed into a two‑storey warehousing facility, according to the article.
Goodman said it is in discussion with several parties but specifically denied that those talks included Amazon. The company also said selling land to residential developers is always an option if the price suits.
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