Goodman Group (ASX: GMG) is an S&P/ASX 200 Index (ASX: XJO) share that could experience plenty of growth according to a fund manager.
For readers that haven't heard of Goodman before, it's a business that owns, develops and manages large industrial and logistics properties around the world.
The fund manager in question is Milford Asset Management, with the ASX 200 idea being presented by Roland Houghton.
Deglobalisation
Milford thinks that the next decade will be dominated by three key themes: decarbonisation, deglobalisation and demographics.
Goodman Group fits into the deglobalisation theme – the fund manager said that geopolitical divides are creating a growing focus on self-dependency. Milford points to an investment boom in Western countries, as well as Mexico, India and Vietnam.
The fund manager said that the ASX 200 share is a global leader in industrial real estate, with a "strong position in global gateway cities that are land constrained".
Houghton believes that Goodman has good development opportunities, as well as strong rental growth prospects. The fund manager also noted that management has been excellent at executing the business strategy.
Latest quarterly update
Goodman recently told investors about how it performed in the third quarter of FY23. Due to a "strong operational performance", the FY23 operating earnings per security (EPS) growth is now expected to increase to 15%.
At 31 March 2023, the business had $13 billion of development work in progress across 79 projects, with completed development projects being 99% committed.
The ASX 200 share's rental profit is doing well – in the third quarter, it reported 4.4% like for like net property income (NPI) growth on properties in its partnerships. The ASX 200 share also said that it had 99% occupancy across the partnerships.
Goodman's total assets under management (AUM) continue to grow over the long term, which can drive the underlying value of the business thanks to growing management fees – AUM was $80.7 billion at 31 March 2023.
The CEO of the ASX 200 business, Greg Goodman, said:
The scarcity of space in our locations, and customer need for more productive and sustainable solutions is supporting underlying property fundamentals. These are driving development demand and rental growth. Despite the global macroeconomic volatility, we have almost zero vacancy and continue to execute on our development strategy with annual production rate for FY23 averaging around $7 billion.
Headwinds from cap rate expansion are being mitigated by continued growth in rents in most markets. The portfolio is expected to continue to grow organically, primarily through development activity. The strong financial position of the Group and Partnerships allows us to adapt to the environment and pursue opportunities.
Goodman share price snapshot
As we can see on the chart below, the ASX 200 share has risen by more than 14% since the start of the year.
