Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Goodman Group (GMGSF) is launching a $4 billion capital raising to fund the next phase of growth, particularly in data centers.
• The company has a robust business model with solid financial outcomes and quality assets.
• Goodman Group (GMGSF) has expanded its power bank to 5 gigawatts across 13 major global cities, enhancing its infrastructure capabilities.
• The company reported over $1.2 billion in operating profit for the first half of FY25, indicating strong financial performance.
• Management revenue increased by $102 million over the prior corresponding half year, reflecting growth in leasing activity and rents.

Negative Points

• The impacts of the data center opportunity have not yet been fully reflected in the financial numbers.
• FX movements had an $11 million negative impact on the translation of foreign denominated operating results.
• Realized development earnings for the half year were down by $104 million compared to the prior corresponding period.
• The company's development work progress dipped over the past two years, leading to a lower volume of completions in the short term.
• The North American market is currently just 'okay,' indicating potential challenges in that region.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Sign with GMGSF.

Q: Prior to the commencement of data center assets, will you have customers locked in, or will you start on spec and then bring in customers? A: (Gregory Goodman, CEO) We are advancing programs globally, spending on power infrastructure, and pricing shells. We will start some shells and are in discussions at all sites mentioned.

Q: How do you plan to fund the medium-term pipeline beyond the initial 500 megawatts? A: (Gregory Goodman, CEO) We aim to use capital that makes sense for the long term, rotating capital as needed. The $4 billion raised provides flexibility and time to execute our plans. We will grow a significant infrastructure and asset business, leveraging our development programs.

Q: What percentage of the nine projects are on your balance sheet versus in the funds? A: (Nick, CFO) About 70% is the weighted average economic interest we have.

Q: Has there been a shift in the timeline for project commencements? A: (Gregory Goodman, CEO) No significant shift; we are ensuring we proceed sensibly and properly. We are going vertical on a couple of projects soon, focusing on our competitive advantages in land and power bank.

Q: How do you view the funding of future data center projects? A: (Gregory Goodman, CEO) We are ensuring financial flexibility to handle the next-level capital required for infrastructure. We aim for sustainability and will work with investment partners to deliver first-class returns.

Q: What is the expected timeline for the commencement of the 0.5 gigawatts of data centers? A: (Gregory Goodman, CEO) We anticipate a busy 2025, with projects starting soon. Speed to market is crucial, and we are preparing to move forward efficiently.

Q: What is the expected ownership percentage for the development pipeline? A: (Gregory Goodman, CEO) Ownership will vary; some assets may be kept on a 50-50 basis, while others may have different ownership structures. We will make decisions based on capital expediency and partner returns.

Q: How do you see the balance of data center starts evolving over time? A: (Gregory Goodman, CEO) We will align product placement with demand, particularly in metro areas for cloud growth. We aim for a stable infrastructure piece for Goodman, accelerating where possible while maintaining prudence.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.