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Goodman (ASX:GMG) share price drops despite solid FY23 Q1

The Goodman Group (ASX: GMG) share price has dropped more than 2% after the large industrial property business announced its quarterly update.

Goodman owns, develops and manages industrial sites around the world.

Goodman FY23 Q1

The ASX industrial property business said that it delivered a strong operational result in the first quarter, despite the volatile economic environment.

Goodman explained that the long-term structural drivers of demand for well-located industrial real estate remains “intact”.

Demand is underpinning “high occupancy, continued positive rental growth” and development activity in its markets as it provides well-located properties to “improve productivity for its customers.”

The numbers

Goodman said that at 30 September 2022, it had $13.8 billion of development work across 85 projects.

The occupancy rate on completed development projects was 100%.

There was a 4% like for like net property income growth on properties in ts partnerships. It had a portfolio weighted average lease expiry of 5.4 years.

Goodman had $77.8 billion of total assets under management (AUM).

The business said that its forecast FY23 operating earnings per share (EPS) growth would be 11%.

Promising pipeline

Goodman said that customers are seeking to maximise their supply chain efficiency and are looking for sustainable, versatile properties that are close to consumers and optimised to house their investments in automation and technology.

The business boasted that its pre-commitments remain high across the workbook with completions 100% committed and work in progress 68% committed.

Goodman’s yield on cost with its work in progress is 6.4%.

Completions for the quarter were $1.9 billion and 100% occupied.

Goodman said that while it remains conservative with its assumptions, construction inflation appears to be “moderating”.

Outlook for the Goodman share price

Greg Goodman said regarding the outlook:

While the economic outlook appears uncertain, the group is in a strong position operationally and financially through the disciplined execution of our strategy. We have significant liquidity, low gearing and extensive hedging.

We are actively considering strategic opportunities around the world that are aligned with our strategy – those that are in select locations and positioned for long-term growth.

After a 35% fall of the Goodman share price in 2022, I think the business now looks like an attractive opportunity to take advantage of as it continues to invest and build impressive new properties.

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