Goodman Group (ASX: GMG) has just released its FY19 third quarter update to investors.
Goodman is an integrated property group is the largest industrial property business on the ASX and one of the largest in the world. It’s described as integrated because it develops, owns and manages property across the world. It has operations in Australia, New Zealand, Asia, Europe, the UK, North America and Brazil. The various properties in its portfolio includes warehouses, large logistics facilities (think Amazon), business and office parks.
Goodman’s FY19 Q3 Update
Goodman now has $44.1 billion of total assets under management (AUM), which is up from $38.3 billion at the end of FY18. AUM growth has been supported by “strong” development activity and revaluations, which has helped increase the underlying base management fee revenue. By June 2019, management expect AUM to grow above $45 billion.
The property business achieved 3.1% like for like net property income (NPI) growth when including assets that it directly owns and ones in partnerships it owns with others.
Across the whole portfolio it had a 98% occupancy across the Group and Partnerships, which is very high compared to real estate investment trusts (REITs).
Looking at the current projects, Goodman has $3.7 billion of development work in progress with $2.4 billion of development commencements with 83% undertaken in Partnerships. Location factors of the portfolio are also helping.
Management are focusing on properties that are in the right location to support customers’ evolving supply chains as they invest more in technology to improve service and convenience for their own customers. Goodman said this is why occupancy and rental growth has been so solid.
Goodman says its development activity is expected to reach $5 billion in FY20 and is looking for additional land bank opportunities in high barrier to entry markets.
The REIT re-iterated its forecast of FY19 operating profit per share of 51.1 cents (up 9.5% compared to FY18) and the distribution is expected to grow by 7% to 30 cents per share.
Goodman is definitely one of the best REITs on the ASX and is invested in attractive themes (like eCommerce), however it seems to be trading at such a large premium to its underlying assets (net tangible assets/NTA), based on the December 2018 NTA of $5.05, that it isn’t good value today. It looks expensive actually.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.