Goodman Group: Higher and better use for portfolio assets protect value

About the author:

Liam Schofield
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By Liam Schofield
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Date posted:
21 August 2023, 7:00 AM
Sectors Covered:

  • Goodman Group (ASX:GMG) delivered another solid result with Operating EPS (OEPS) continuing to grow at a healthy rate (+16%), more than offsetting any impact on cap rates from the higher interest rates.
  • Management remain laser focused on infill sites across gateway markets, avoiding commodity industrial assets. GMG’s strategy has seen them avoid much of the interest rate pain, with the portfolio benefiting from market rental growth, low vacancy and the continued demand for under-developed industrial sites suitable for higher and better use (multi-level industrial | data centres | multi-unit residential).
  • At an FY24f PER of c.20x, GMG is certainly not cheap, but quality companies rarely are. GMG is arguably an industry leader, focused on what remains the most contested real estate sub-sector – industrial. To this end, GMG’s pipeline of development sites across Tier 1 cities should benefit from increased demand for densification and proximity to end customers.

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