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Goodman Group GMG

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Morningstar’s Analysis

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Customer Demand Swells Goodman Group’s Development Pipeline; FVE Up 5% to AUD 16.40

Alexander Prineas Equity Analyst

Analyst Note

| Alexander Prineas |

We lift our fair value estimate for narrow-moat Goodman group by 5% to AUD 16.40 following a quarterly operating update, which saw Goodman increase its guidance for fiscal 2022 operating EPS growth to a minimum of 15%, from 10%. The primary drivers of our increased valuation are significant portfolio revaluations that prompt us to upgrade estimates for funds management performance fees and base fees, and higher-than-expected development commencements, which should contribute to a sustainably higher level of development work.

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Company Profile

Business Description

Goodman Group develops and manages industrial property investments worldwide. Rather than taking all risks on its own balance sheet, most Goodman developments are on behalf of end-user tenants, and funds management clients. A typical deal involves purchasing land for a tenant who wants to occupy the site, and/or an investor who will own the asset via a Goodman investment vehicle. Goodman charges leasing fees for locking in tenants, and fees for managing the development. Completed projects reside in Goodman investment vehicles, and Goodman charges asset and investment management fees to investors, in return for collecting rent and managing the site. Goodman retains a minority stake in many projects, generating rental income and aligning its own interests with its funds management clients.

1-11 Hayes Road, The Hayesbery
Sydney, NSW, 2018, Australia
T +61 292307400
Sector Real Estate
Industry REIT - Diversified
Most Recent Earnings
Fiscal Year End Jun 30, 2022
Stock Type
Employees 1,240