Industrial Portfolio

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Goodman Group delivered an operating profit of $465 million for the half year ended 31 December 2018, up 10.4% on 1H FY18.
Its statutory profit was $929.2 million.
The group has upgraded its forecast FY19 EPS to 51.1 cents per share, up 9.5% on FY18, maintaining its forecast full year distribution of 30.0 cents per security, up 7% on FY18.
Group Chief Executive Officer, Greg Goodman said the results reflect continued strong performance across the management and development businesses.
"Our deliberate focus on infill markets, where property fundamentals are robust, has driven partnership returns and significant growth in assets under management which are up 24% to $43 billion," Goodman said. 
Goodman noted structural changes driving customers’ businesses have fuelled the continued evolution of the industrial property sector.
"Supply chain efficiency is critical for our customers’ success, with increased importance placed on the location and role of logistics and warehousing space," he said. 
"This trend has resulted in significant valuation gains of $2.4 billion over the half for the group and partnerships, like-for-like growth in net property income of 3.2% and a robust development workbook of $3.6 billion, expected to exceed $4 billion in the near term."
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/14/goodman%201.jpg" alt="">
 
Source: Goodman Group
Valuation increases and development completions saw a valuation uplift of $2.4 billion across the group and partnerships.
The results continued strength in property fundamentals resulting in occupancy at 98%, weighted average lease expiry (WALE) of 4.7 years and like-for-like net property income growth of 3.2%.
Its development work in progress (WIP) was steady at $3.6 billion across 68 projects in 12 countries with a forecast yield on cost of 7.1%.
The management earnings were up 15% on 1H FY18 with average Partnership returns expected to be in the mid-teens for FY19.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/2/14/goodman%202.jpg" alt="">
Souce: Goodman Group
The concentration of its portfolio in key urban centres saw increased customer demand over the half, driving occupancy, rental growth and valuations. Coupled with continued supply constraints in Goodman’s markets, competition for sites and resulting increased intensity of use, property fundamentals are expected to remain robust.
Commenting on the outlook for the Group, Greg Goodman said their customers’ industries continued to experience considerable change which is driving opportunity.
"Most industries including e-commerce, traditional retail and third-party logistics, are re-evaluating supply chains, which is driving the evolution of the industrial property sector," he said. 
"Our strategic focus on infill markets is being met with strong customer demand which is generating long-term value. Barriers to entry remain high in our markets, but we have the management and infrastructure built over decades to facilitate the demand from our customers.
"Market conditions remain robust with the shift towards increased automation, consumerism and heightened service expectations. Consequently, we are experiencing high levels of profitability supported by these ongoing structural changes.
"We believe the opportunity to deploy capital at an attractive return is growing.
"As a result, FY19 EPS guidance is being increased to 51.1 cents per share, (up 9.5% on FY18) and FY19 DPS will be up 7% to 30 cents per security.”
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Goodman Group increases growth forecast to 9.5%

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A $250 million plus pure Sydney industrial portfolio is expected to attract significant interest among private, institutional and offshore buyer groups when it hits the market next month.
Colliers International’s Gavin Bishop and Tony Iuliano, in conjunction with Chris O’Brien and Matt Haddon of CBRE, have been appointed to sell a six-asset, 150,000sqm portfolio of prominently located and tenanted industrial properties in and around Sydney.
All the assets within the portfolio also have highly sought after locations close to key road and investment project infrastructure.
All properties fall within recognised institutional investment-grade locations popular with both private and institutional investors.
“The portfolio overall has a strong WALE of 6.75 years, with 43% of the portfolio having a lease expiry beyond 2020, providing strong security of income,” Mr Haddon said. “55% of the net income is evenly balanced between four out of the six assets, and the tenancy profile overall is very strong.”
The portfolio comprises of six assets located in the following suburbs::
<ul>
<li>Huntingwood: A modern warehouse and distribution facility with easy access to the M4 and M7 Motorways. Leased to long term tenant, DHL.</li>
<li>Minchinbury: A  high quality, functional warehouse facility with excellent access to the M4 and M7 Motorways, leased to Star Track Express.</li>
<li>Villawood: A functional warehouse and manufacturing facility  leased to Pact Group</li>
<li>Fairfield: This asset is considered the best logistics facility in Fairfield, leased to Fantastic Furniture and DB Schenker.</li>
<li>Kingsgrove: A modern office-warehouse facility, with easy access to the M5 Motorway and 10 minutes from the Port of Botany. Leased to Shriro Australia.</li>
<li>Blacktown: A highly functional warehouse and manufacturing facility to Snack Brands, close to the M7 Motorway.</li>
</ul>
Mr O’Brien said 51% of tenants are ASX-listed, 25% are multinational companies and 24% are major corporate occupiers.
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