Goodman chief executive Greg Goodman. Picture: Sam Mooy Source: TheAustralian
INDUSTRIAL property powerhouse Goodman Group yesterday outlined an ambitious agenda to increase its $24 billion global investment and funds empire, with news breaking just before its annual general meeting that it is eyeing a mammoth deal in Brazil.
The group and local partner WTorre are making a play for $1.49bn worth of warehouse and logistics assets being sold by Brazilian real estate developer BR Properties as they look to expand in the fast-growing South American market.
Goodman chief executive Greg Goodman said the Australian group’s commitment to the Brazilian portfolio would be split with WTorre and backed by wholesale funds in line with its global business model.
“The development book is really what’s driving the funds management business and the quality of that development book, so then you can share those investments with your partners, which is the key to it,” he said.
The Brazilian portfolio includes multinational tenants that are existing Goodman customers worldwide. Mr Goodman noted the shift to operating with major players such as DHL, CEVA Logistics and Unilever.
Goldman Sachs analyst Simon Wheatley said Goodman’s move in Brazil might be being made to access the adjoining undeveloped land on some properties and to increase the venture’s exposure to new markets in Brazil.
He said Goodman might call in global pension fund backers to support the deal. “We expect that if not immediately, the majority of Brazilian investment exposure in time will be owned by third parties in a newly established fund,” Mr Wheatley said.
Mr Goodman said the group had a successful first quarter, raising $1.8bn of new equity commitments from its investment partners, bringing its undrawn equity and debt commitments to $6bn, which it planned to plough in to new development and investment ventures.
He said that over the next decade the group was targeting economies with strong consumption patterns. He singled out opportunities in China and Hong Kong.
“The growth of our business has now seen almost half of the group’s earnings come from our offshore operations. In turn, we expect to see the benefits of our global business increase significantly in future years,” Mr Goodman told security holders.
In China, the group’s development book had increased to more than $380 million, he said. “Goodman has a further $370m of new projects in planning (in China), with a land bank capable of delivering a development pipeline of approximately $2bn.”
Goodman Group has a development pipeline of more than $1bn in Japan, including developments in Osaka Bay, Nagoya and Tokyo Bay.
Mr Goodman said the group was maintaining solid activity levels in Europe with $400m of development work in progress, driven by demand from the e-commerce and logistics sectors.
Locally, Mr Goodman welcomed other industrial property floats but had no plans to follow suit with his $11bn worth of Australian holdings as wholesale investors investing in these properties had 10-year time horizons.
Mr Goodman confirmed the group’s full-year 2014 operating profit forecast of $594m and a distribution lift of 7 per cent.
Goodman shares added 6c yesterday to close at $4.96.
Source: The Australian
