Goodman raising $4bn for data centre expansion as profit jumps

The industrial landlord turned digital infrastructure giant’s hefty capital raising will help drive its plan to get 500 megawatts of capacity under construction by next year as earnings soar.

Goodman Group boss Greg Goodman. Picture: John Feder/The Australian

Industrial landlord turned digital infrastructure giant Goodman has raised $4bn as it doubles down on a plan to get 500 megawatts of additional data centre capacity at least under construction by mid-2026.

The company undertook the largest ever raising in the Australian real estate investment trust sector as it goes through “its next evolution”, which will see the 35-year-old landlord develop sites for robotics, automation and the artificial intelligence boom.

Goodman is expected to trade strongly on Thursday after major investors piled into the book to back the equity raising, which was handled by investment banks Morgan Stanley, JPMorgan and RBC. It sold 119.4m shares at $33.50, with the discount of about 6.9 per cent drawing investors ranging from top superannuation funds to offshore pension funds.

That $4bn figure will be poured into the company’s digital transformation, as it looks to compete with the likes of data centre providers AirTrunk, NextDC and CDC, and to develop new data centres in global capitals.

Chief executive Greg Goodman sees an even brighter picture, with its 2026 ambitions expected to add around $10bn in end value once 70 per cent of those data centres were fully fitted.

“Goodman’s strategy of providing essential infrastructure for the digital economy – both through our logistics facilities and data centres – has set a strong foundation for the growth we expect to see by executing the global data centre opportunity before us,” he said.

Those 2026 plans include a 50 megawatt data centre in Los Angeles, in the US, a 100 megawatt data centre which was part of larger 1 gigawatt campus in Tokyo, Japan, a 90 megawatt data centre in Sydney and a 35 megawatt data centre in Melbourne which is part of a 100 megawatt campus.

The billionaire chief executive is bullish about the company’s direction. “We’re got a strong financial capacity, this just funds our future comfortably and allows some more acceleration if required and gives us financial flexibility if we need it,” he said.

The company is banking on a mixed use future that will see its warehouses and data centres built side-by-side on industrial sites.

Mr Goodman said the two went hand-in-hand and gave its large customers more flexibility and options.

The company reported its portfolio, which is mainly held in funds backed by global pension group, rose by 7 per cent to $84.4bn over the first half. Goodman’s statutory profit soared to $799.8m in the half, a turn around from a loss of $220.1m this time last year when it was hit by writedowns on industrial property.

The company has leased 2.9 million square metres of its owned assets, representing an occupancy rate of 97.1 per cent. They generated $415m of rental property income.

Goodman would continue to go full speed on data centre development, looking to transform a number of sites in its global portfolio of land and industrial sheds into data centres. About 46 per cent of current work in progress are data centres.

The group was confident it would be able to make strides in an increasingly competitive market thanks to its established portfolio of industrial sites, including land and warehouses.

Goodman Group's Tsukuba Tech Central in Japan.

“That is a very, very big competitive advantage having the capital of knowing how to build them, but also already owning the land and the power,” Mr Goodman said.

Goodman’s capital raise is the second billion dollar data centre market movement this week, following Commonwealth Superannuation Corporation selling a $2bn stake in Canberra-based competitor CDC to Future Fund and Infratil.

Mr Goodman told The Australian the company was looking beyond powered shells – unfitted data centres with basic power and infrastructure – to fully fitting and operating data centres on behalf of customers including hyperscalers.

“Three or four years ago our customers began to say it would be more efficient to build the build through and get us in even quicker,” he said.

This approach would be more cost efficient and “basically get them to market sooner” as data centre players race to nab land and power agreements to fuel AI growth.

Goodman would continue to target metropolitan locations for its next data centre projects.

The company said it has a global power bank of 5 gigawatts across 13 international cities. That total figure includes 2.6 gigawatts of already confirmed power and 2.4 gigawatts which the company said were in advanced stages of procurement.

About $2.7bn of the $4bn raising will be put toward the company’s capital needs to develop data centres over the next three years.

“This $4bn primarily gives us plenty of flexibility and plenty of time to execute what we need to execute,” Mr Goodman said.

Goodman has $13bn work in progress, with a 6.7 per cent yield on costs. About 64 per cent of its workbook had been pre-committed with an average 13-year lease term.

Resolution Capital chief investment officer Andrew Parsons noted that industrial market rents in many of Goodman’s jurisdictions were flat although Australia showed modest ongoing rises.

He noted the risks associated with long-dated projects to develop data centres, including on construction and leasing, but also called out the superior quality of Goodman’s management against its local rivals.

Mr Parsons observed the switch Goodman had made from being an industrial landlord to a global manager with a large project pipeline, saying it was now a development funds management business.

Artist's impression of date centre Goodman Group is set to build in Mascot, South Sydney

Euree Asset Management property director Winston Sammut said the capital raising may indicate Goodman Group’s cautious take on the data centre market.

“Greg Goodman is a very conservative individual, given past history. Data centres are the flavour of the month but the money is not really required until next year,” he said. “So why raise now? Maybe Greg sees trouble ahead given the geopolitical risks that abound and therefore raise now when you can ride out any problems that arise. In addition, the DeepSeek impact on AI flows are yet to be fully assessed.“

Mr Sammut said it was a “wise move” for Goodman to raise while the market – rightly or wrongly – is hungry for anything data centre-related.

Analysts at Jarden said Goodman had provided “softer-than-usual” guidance for this financial year and expect to see shares trade weaker.

“Effectively, Goodman Group seems to be taking more development risk on the balance sheet (alongside new data centre partnerships announced with the results) but investors may need to wait a little longer for this to impact the growth profile,” they said.

Goodman shares closed at $35.98 on Tuesday.