Goodman shines in crisis

Logistics property giant Goodman Group is charging through the COVID-19 crisis, expanding its $55bn global empire.

Goodman Group CEO Greg Goodman. Picture: James Croucher

Logistics property giant Goodman Group is charging through the COVID-19 crisis, expanding its $55bn global empire as consumers switch to e-commerce while under lockdown.

The company said its developments were growing towards $5bn globally, and it is one of the few property companies to reaffirm its earnings and distribution guidance, as most others are weighed down by struggling shopping centres.

“Despite the challenging global environment, customer demand in the online, logistics, food, consumer goods and digital economy is supporting portfolio fundamentals and development activity,” chief executive Greg Goodman said.

He said major customers around the world relied on domestic markets and even during trade wars they sourced products by realigning their supply chains.

“We’re relying on the growth of domestic economies,” he said, adding that there was an emphasis on grocery and supermarket operations.

Mr Goodman pointed to the group’s development pipeline in China, which is gaining momentum after the virus was contained in that country, saying that inquiry levels had picked up in April.

While there would be an economic recovery globally, he warned there would be low growth for a number of years, albeit accompanied by low interest rates.

Goodman is benefiting from both the rise of home shopping that consumers have embraced, the greater sophistication of warehousing, and plans by companies to rip costs out of their businesses.

In an update on Thursday the company said it had lifted assets under management to $55.1bn and had 3 per cent like-for-like net property income growth in its network of partnerships spanning Australasia, the US and Europe.

It had $4.8bn of development work in progress with 76 per cent undertaken in partnerships and it kicked off $2.5bn of projects. The company reaffirmed forecast fiscal 2020 operating earnings per security of 57.3c, up 11 per cent on fiscal 2019, although the company said its markets had been affected by the virus.

“We are also working on a one-on-one basis with our customers who are genuinely suffering financial distress as a direct result of COVID-19,” Mr Goodman said.

“We have experienced increased demand for both temporary and permanent space from customers in the food, consumer goods and logistics sectors, particularly related to e-commerce operators and those transitioning to online,” he said.

Goodman had only relatively limited closure or disruption of warehouse facilities in the past few months and it leased 2.4 million square metres.

Almost alone among property companies, Goodman has deleveraged over the past decade, selling off $23bn worth of assets since 2013, and focused on major cities.

Gearing remains at the lower end of its target range and available liquidity is currently $2.5bn, reflecting cash of $1.4bn and undrawn facilities of $1.1bn. The company said this would be supported through the continuation of its 50 per cent payout ratio and it also has $18.8bn of liquidity available in its fund partnerships.  Macquarie analysts said that rising demand was a positive and development was solid.

“A solid operational update particularly in the current market and better than we had expected, showing strength of the asset class and platform. Balance sheet is sound as previously flagged,” Macquarie analysts said.

Not all industrial landlords will perform as well as Goodman, even in Australia, where the virus had had a relatively mild impact.

Colliers International associate director, research, Luke Crawford, said industrial and logistics property was well placed to ride out the short-term uncertainty.