Why is the Goodman share price pushing higher today?

Goodman continues to expect solid earnings growth in FY 2024.

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The Goodman Group (ASX: GMG) share price is on the move on Monday morning.

At the time of writing, the industrial property giant's shares are up 1% to $22.27.

Why is the Goodman share price rising?

Investors have been bidding the company's shares higher today in response to the release of its first-quarter update.

For the three months ended 30 September, Goodman reported the following:

  • 9% like-for-like net property income (NPI) growth on properties in its partnerships
  • 99% occupancy across partnerships
  • $1 billion of developments completed in the quarter
  • $12.7 billion of development work in progress (WIP) across 80 projects
  • 25% of WIP relates to data centres
  • $82.9 billion of assets under management

What happened during the quarter?

Goodman advised that its NPI growth during the period was driven by underlying structural drivers within the digital economy which continue to support property fundamentals across its portfolio.

While market rental growth has slowed in most markets, Goodman advised that the average expected rent reversion to market across the global portfolio remains consistent with prior periods.

North America is 64%, Australia and New Zealand is 37%, Continental Europe and the UK is 17%, and Asia is 0.3%. This embedded rent reversion is expected to support NPI growth in future periods and management continues to expect upside in the market rents beyond current levels.

Goodman acknowledges that the recent increase in long-term interest rates is having a short-term impact on capital cost and availability which could negatively impact property values. However, this will not have a material impact on FY 2024 operating profit. It also highlights that it could present opportunities for the company given the strength of its capital position.

Outlook

Goodman's CEO, Greg Goodman, remains cautiously optimistic on the future. He said:

While global markets remain uncertain, the structural trends of the digital economy remain intact. As the cost of doing business in an inflationary environment increases, our customers continue to focus on maximising productivity from their space. They're looking for sustainable properties that are close to consumers and optimised for their investments in automation and technology. This continues to support development activity and our portfolio of high-quality, strategically located assets around the world, which have almost zero vacancy.

The continued and significant growth in data requirements, driven primarily by AI and cloud computing, is creating strong demand for our powered sites. Goodman has created a significant opportunity over the past decade to participate in this growing and essential segment of the market.

Goodman confirmed its previous guidance for FY 2024 operating earnings per share growth of 9% and a full-year distribution of 30 cents per share.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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