How Greg Goodman navigated the pandemic (and made record profits)
For Goodman Group founder Greg Goodman, a global pandemic proved a different sort of challenge to the global financial crisis the developer of industrial property battled through and survived more than a decade ago.
“My biggest job has been to keep our teams [around the world] healthy and in good order,” he told AFR Weekend after Goodman Group reported record full-year operating profits of more than $1 billion for the year to June and beat its earnings guidance for the ninth year a row.
For Mr Goodman, who founded the company 31 years ago with eight assets and a market capitalisation of just $35 million and who has since grown it to one valued at $33 billion (three times the value of its nearest A-REIT competitor, Westfield mall owner Scentre Group) the past six months “definitely haven’t been easy” despite Goodman’s financial success.
“We’ve focused on doing the basics really well..and we’ve had the right human capital and infrastructure in place around the world to be able to adapt quickly.” he said.
Jefferies equities analysts Sholto Maconochie and Andrew Dodd labelled Goodman “pandemic proof” as its $51.6 billion portfolio of prime logistics assets benefited from rising warehouse space demand as more people stayed at home and shopped online and from rising investor competition for industrial assets which added $2.9 billion to its property values.
“Goodman delivered record profit…while reducing gearing and growing return on equity, demonstrating its resilient business model, which has been a net beneficiary of COVID-19,” said the Jefferies analysts.
Being a global business – Goodman employs 900 staff in 25 offices from Los Angeles to Auckland – has helped the group prepare and adapt more quickly to the pandemic then those with only local operations.
“We were seeing the coronavirus in late January and February in China and Hong Kong and then Japan (where about a third of Goodman’s assets under management are located),” Mr Goodman said.
“By the time it came round to Australia and Europe, we’d already had a practice run. So we’ve been in the right head space to operate this way.”
To date less than five Goodman employees have contracted COVID-19 and all have since recovered.
A frequent flyer who would visit Goodman’s overseas operations once a quarter prior to the pandemic, Greg Goodman took to working remotely from home as the pandemic hit Australia’s shores in March.
Since then he’s used technology to keep in touch with management teams around the world with the focus on regular, clear and unambiguous communication.
“We’ve increased the frequency and breadth of communication – daily calls with the group management team, bi-weekly calls with global management and monthly calls with full teams in the regions,” said a Goodman spokeswoman.
“Previously Greg would get around to each of the regions at least once a quarter.
“The feedback we’ve been getting from people in the regions is that they feel more connected to what’s happening at a global level because they’re hearing from both local and global management more often, “she said.
Staff have been quick to praise Mr Goodman’s personable approach. “He starts off [virtual]meetings by asking people if they are well…and ends it by telling them to stay safe,” said one colleague.
With restrictions easing in NSW, Mr Goodman has taken to working three days a week at its head office on Castlereagh Street in the Sydney CBD, and the other two from home.
Usually home to 300 people, only about 30 people now work across the two floors Goodman occupy. Some employees are using Goodman’s smaller satellite offices – like one in Macquarie Park – which are closer to customers.
Regardless of which office they use, all are required to undertake a temperature check and login via a special app. Hand sanitiser is everywhere as are visual reminders to maintain appropriate social distancing.
“We want to do the right thing and get everyone through this,” Mr Goodman said.
On the business side, the success Goodman has experienced before and during COVID has come as no surprise to long-term investors – Goodman’s rolling one year total return is about 22 per cent compared to negative 8 per cent for the ASX 100 accumulation index.
All will point to Greg Goodman’s long-held focus on developing, owning and managing assets for the likes of Amazon, DHL and JD.com close to major urban centres around the world, where ecommerce demand is strongest ,
Goodman’s development pipeline, which underpins future profits will reach $7 billion in the second half of the year, and includes a 200,000 sq m fulfilment centre to be built in Sydney for Amazon.
‘”Greg and the team have spent the last five years preparing the company for current environment,” said Peter Davidson, head of listed property at global investment group Pendal, who first met Greg Goodman in 1995
“Greg was talking about this recession or the tectonic shift to online retail long before it really got under way here in Australia.
“The team have done an excellent job of positioning the company for the current environment and that is borne out in the stock price performance,” Mr Davidson said.
