Goodman Group leads REIT results with 11% profit increase

Goodman Group (ASX: GMG) reported a strong increase in operating earnings despite a property market downturn.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Goodman Group (ASX: GMG) share price is up 4.48% this morning after the real estate investment trust (REIT) reported an 11.4% increase in operating profit.

a woman

What were the REIT's full-year highlights?

Goodman Group's operating profit climbed 11.4% higher on the prior corresponding period (pcp) to $942 million while operating earnings per share (EPS) surged 10.5% to 51.6 cents per share (cps).

Goodman's gearing increased by 460 basis points (bps) to 9.7% for FY19, while management increased the distribution per security by 7% on pcp to 30.0 cps.

Goodman's earnings remain well-diversified across the globe, with 37% in Australia and New Zealand, with Asia (29%), UK and Continental Europe (26%) and Americas (8%) also significant contributors.

What about operational highlights?

Goodman's Property Investment segment saw strong returns across the year including like-for-like net property income growth of 3.3% in FY19.

However, the Aussie REIT did cite increasing demand from e-commerce, data centre users and urban renewals as potential headwinds for land usage in some of its core investment markets.

Also taking the edge off the result was the minor fall in Property Investment earnings, falling from $384.8 million to $372.1 million in FY19.

In its Development segment, Goodman reported strong WIP at $4.1 billion with higher development activity and strong risk-adjusted returns recorded during FY19, despite the minor earnings drop.

Management earnings soared 48% on pcp to $469.7 million despite one less partnership, as external assets under management (AUM) climbed to $42.9 billion.

Positively for shareholders, Goodman reported 98% occupancy and a weighted average lease expiry (WALE) of 4.7 years for FY19.

Over the last 12 months, Goodman reported valuation growth of $3.8 billion with $13.6 billion available in undrawn debt, equity and cash due to new commitments and asset sale proceeds in FY19.

In terms of its balance sheet, Goodman reported a strong cash and liquidity situation with substantial headroom on its financial facility covenants.

Foolish takeaway

While net profit plummeted in FY19, Goodman has retained a strong financial position and the potential to expand its portfolio further in FY20.

An increase in operating earnings is a positive for investors, however, a significant portion of the REIT's statutory earnings still comprise property valuation upgrades.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a sour end to the trading week this Friday.

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Broker Notes

Guess which ASX stock could more than triple in value according to Morgans!

A 285% return could be on the cards here according to the broker.

Read more »

A happy youngster holds a giant bag of carrots at a supermarket fruit and vegie section, indicating savings made by buying in bulk.
Opinions

2 ASX shares I'd buy if the market fell another 10%

Pullbacks are great times to buy...

Read more »

A group of friends push their van up the road on an Australian road.
52-Week Lows

This ASX 200 stock just hit a multi-year low. Here's what's behind the slide

CAR Group shares hit a multi-year low as selling continues.

Read more »

A man sitting at his dining table looks at his laptop and ponders the share price.
Materials Shares

ASX lithium shares 'compelling' as top broker adjusts ratings

UBS predicts the global oil shock caused by the war in Iran will drive higher demand for electric vehicles.

Read more »

a woman wearing a sparkly strapless dress leans on a neat stack of six gold bars as she smiles and looks to the side as though she is very happy and protective of her stash. She also has gold fingernails and gold glitter pieces affixed to her cheeks.
IPOs

The newest ASX gold company makes a strong debut on the bourse, up more than 20%

Shareholders would have to be happy with this first day.

Read more »

A cool young man walking in a laneway holding a takeaway coffee in one hand and his phone in the other reacts with surprise as he reads the latest news on his mobile phone
Dividend Investing

8% yield: The ASX is getting a new dividend stock that pays out monthly

This soon-to-be stock has averaged an 8% yield since 2016...

Read more »