Goodman touts its AI credentials as it escapes write-downs
The increasing demand for data centres, fuelled by the growth of artificial intelligence, has become a major driver of development and earnings growth at industrial property giant Goodman Group.
As the country’s biggest real estate investment trust delivered operating earnings ahead of guidance and bucked the asset writedowns occurring across the listed commercial real estate sector, chief executive Greg Goodman said, “significant growth in data storage and AI in particular” was driving data centre demand.
“[Data centres are] now approximately 30 per cent of our $13 billion development workbook, and importantly we have a pipeline of over 3 gigawatts which has significant value over time,” Mr Goodman said.
“That’s tens of billions of dollars of development,” Mr Goodman said.
He compared the opportunity to creating projects equal to eight data centre companies.
Development of new logistics facilities is the engine room of Goodman Group earnings growth – over the 2023 financial year, Goodman completed $6.9 billion of projects.
Mr Goodman also flagged plans to rezone parts of its portfolio for build-to-rent housing use.
Boost for build-to-rent
“A lack of available housing means the urban renewal cycle is ticking up,” he told analysts this morning.
Goodman was not immune to the impact of higher interest rates on property values as statutory profit fell 54 per cent over the 2023 financial year to $1.56 billion due to lower valuation gains across its portfolio,
However, Goodman bucked the trend of asset write-downs occurring across listed commercial real estate due to the higher rents being achieved on industrial property, where demand is being driven by e-commerce.
It reported an $800 million gain over the group across the group and its investment partnerships as it completed $6.9 billion of new projects and lifted total assets under management grew 11 per cent to $81 billion.
Operating profit rose 17 per cent to $1.78 billion, delivering earnings per share growth of 16 per cent to 94.3¢ per security, ahead of guidance of 15 per cent (which was upgraded at the third quarter).
Driving earnings was the completion of projects, portfolio occupancy of 99 per cent and like-for-like net property income growth is 4.7 per cent as rents were re-set to new market rates.
Goodman forecast lower operating earnings per share growth of 9 per cent, though the group has a history of upgrading that during the year.
The forecast distribution for fiscal 2024 was an unchanged 30¢ per unit.
