How this ASX REIT finished 2020 in positive territory

While ASX REITs largely struggled to collect rent and pay dividends, Goodman Group (ASX: GMG) managed to finish 2020 in great shape.

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The Goodman Group (ASX: GMG) share price was one of few ASX real estate investment trusts (REITs) to finish 2020 well into positive territory. Let’s take a closer look at how the sector overall performed in 2020.

Pandemic woes for office and retail spaces 

Retail and office-centric REITs struggled last year as COVID-19 shut down most shopping centres and the workforce largely shifted to working from home. Rent collections became a huge point of contention with rent cash collections falling significantly during the months of April and May 2020. 

Scentre Group (ASX: SCG), for example, saw its rent collections fall as low as 28% and 35% in April and May respectively, before a gradual recovery to 88% and 96% by September and October respectively. Despite a recovery in rent cash collections, and in metrics such as centre visitation and in-store sales growth, the Scentre Group share price finished 2020 down by 30%. 

A similar narrative took place for other office and retail ASX REITs including DEXUS Property Group (ASX: DXS), GPT Group (ASX: GPT), Stockland Corporation Ltd (ASX: SGP) and Vicinity Centres (ASX: VCX).

Industrial ASX REITs reign supreme 

The Goodman share price outperformed its ASX REIT peers many times over, surging almost 40% in 2020. Goodman’s property portfolio is highly selective and, according to the company, focused on high quality properties including warehouses, large scale logistics facilities and office parks around the world.

COVID has reinforced the consumer need for convenience and heightened the use of technology. These trends have continued to accelerate the adoption of physical infrastructure necessary to support e-commerce, including warehouse and data centre space.

Goodman’s development work in progress reached $6.5 billion in June 2020, accelerated to $7.3 billion in September 2020 and is expected to increase further in FY21. Greg Goodman, Group CEO, said the company is seeing strong levels of pre-commitment and long lease terms being sought by customers, as they secure essential infrastructure to support their operations.

The strong growth in Goodman’s pipeline, combined with the company’s 97.8% occupancy as at 30 September 2020, gave this ASX REIT the confidence to reaffirm its forecast FY21 operating earnings per share of 62.7 cents, up 9% on FY20. 

Goodman is also one of few ASX REITs paying a dividend, after going ex-dividend on 30 December 2020. The company will be paying a 15 cent distribution, or dividend yield of 1.60% at today’s prices. 

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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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