Goodman Group 1Q25 Earnings Call Highlights

Goodman Group (ASX: GMG) reaffirmed its full-year guidance as part of its first-quarter FY25 update, which outlined further progress across a range of logistics and data centre opportunities.

1Q25 Earnings Summary

• Like-for-like net property income growth of 4.9%

• Portfolio occupancy of 97.4%

• Portfolio weighted average lease time (WALE) of 5.0 years

• Development work in progress of $12.8 billion across 74 projects

• Data centres represent 42% of work in progress

• Reaffirmed FY25 operating EPS growth of 9.0%

Earnings Call Highlights

The below topics have been answered by

1Q25 earnings: “The entire Goodman team is focused on execution, and we confirm our forecast FY25 operating EPS growth of 9%, which equates to over $2.2 billion of operating profit and a full year distribution of $0.30 per share.”

Data centers and industrials performance and trends: “Goodman has continued to progress a range of logistics and data center opportunities this quarter, which sets us up very well for a strong 2025.”

Pipeline trends: “Our strategy of delivering essential infrastructure involves the development of both our warehouses and data center pipeline. And we have a significant global workbook of $12.8 billion underway in key cities around the world.”

Geographic breakdown: “We have strong development starts in train that should significantly expand assets under management over the coming years, providing solid returns for our capital partners and investors.”

Demand for data centers: “Demand has continued unabated with expectations for it to double over the next five years. The group is well positioned to support this demand.”

Power supply: “This quarter, we've expanded our secure power bank to 2.6 gigawatts out of 5, which provides access to power on our existing sites. The remaining 2.4 gigawatts are in advanced stages of procurement.”

Occupancy rate breakdown: “The portfolio is strong. We have assets under management of around $80 billion. Like-for-like rental growth of close to 5%. High occupancy over 97%.”

Industrial land values and outlook: “Development activities are forecast to continue to provide attractive margins supported by resilient warehouse rents in our markets, limited supply and reduced competition.”

Data center growth outlook: “Data center continues to grow as a portion of our global workbook now making up over 40%.”

Investor interests: “We're expanding, we're upskilling our teams across design, technical, operational and commercial aspects to support our customers so they can deploy capacity to their customers in the quickest time possible.”

Analyst Q&A Highlights

More details or quantify the anticipated data center and industrial starts in 2025: “What we will do in 2025, there's a number of data center starts around the world ... I think there's still $7 billion of industrial going on around the world ... So we see those markets still being pretty strong on starts ... particularly in 2026, 2027 around industrial."

How comfortable are you with securing the remaining 2.4 gigawatts of power for future projects: "In regard to the 2.4 gigawatts, the answer is yes. We're very comfortable and we're working on a number of times bigger than that ... So we're comfortable in some of that application lodged will go into secured when we come into 2025."

Turnkey or powered shell projects for 2025: “We're anticipating and expecting the planning is around turnkeys ... you don’t need to start many for the book to be building substantially. What we're focused on is doing it right, taking your time ... I think you'll find Europe is a very, very good market for us. Australia ... Japan ... I think you might see a US.”

Explain the occupancy decline: “It's an aberration ... weighting in China where I think China is not around 90% to 93% dragging down the average. But Europe, for example, was 99%. Japan is actually 100%. Australia's around 97.5%, 98% ... we're expecting that will tighten up a little bit over the next year or two.”

How do data centre returns compare to traditional industrial real estate: “If you look at a stable industrial asset... you'd expect those returns to be... around the 9% range... I believe you'd expect operational [data center returns] to be higher than that.”

How is the global capital market viewing logistics given declining industrial market rates: “Pretty well at the moment ... Goodman is doing a ton of work ... If you're getting for good buildings in good markets, 19% total returns ... you would have seen out western Sydney ... industrial land is getting squeezed.”

This article was generated with the support of AI and reviewed by an editor.