Goodman Group (ASX: GMG) shares are catching the eye on Tuesday.
In morning trade, the industrial property giant’s shares are down over 5% to $28.73.
Why are Goodman shares tumbling?
Investors have been selling the company’s shares following the release of its third-quarter operational update.
Goodman released a comprehensive update, which revealed how the company is performing across its industrial property and data centre operations.
It notes that its data centre program continues to advance, with development activity and capital partnerships positioned to deliver at scale into strong customer demand across supply-constrained metro markets. Pleasingly, its projects are on track and customer commitments are at an advanced stage.
Goodman’s global power bank has increased to 6.4GW, with 3.6GW of secured power and 2.8GW in advanced stages of procurement.
The company is expecting to have 0.5GW of powered shells and fully fitted projects in work in progress (WIP) by June 2026 and total data centre WIP of >$14 billion.
Looking at its property investments, management revealed that underlying property fundamentals remain stable. This is being underpinned by low vacancy, rental growth, and limited new supply across its markets.
In addition, strong rental reversions from passing to market continue to drive like-for-like (LFL) net property income (NPI) growth. Market rental growth was slightly positive on average.
And while LFL reversion from passing to market in China was negative during the quarter and may continue as rents reset, management believes the China market fundamentals in its locations have stabilised.
This ultimately led to annual LFL NPI growth of 4.1% (6.1% ex Greater China), portfolio occupancy of 95.7% (97% ex Greater China), and a stable total portfolio at $87.1 billion.
Outlook
The company’s CEO, Greg Goodman, provided an update on its guidance, revealing that he expects Goodman to at least deliver on expectations. He said:
The Group set a target of 9% Operating EPS growth for FY26 and is currently on track to deliver at least this level of performance.
Goodman also spoke positively about the company’s outlook. He added:
The Group has progressively repositioned its portfolio toward large, infrastructure-scale industrial assets and data centres. At the same time concentrating on urban infill logistics and low latency sites in major metro data centre markets. These sites are located where demand is most durable and are becoming harder to replicate. The focus remains on positioning the portfolio to meet the evolving requirements of customers across both asset classes.
Hyperscale capex is accelerating, with our metropolitan portfolio positioned at the centre of cloud and AI demand, and the shift towards low-latency dependant AI inferencing. Supply remains constrained by grid capacity, water availability, site complexity and capital intensity. With secured power and water, significant capital capacity and projects ready to commence, customer discussions are advancing across our sites, and we are well positioned to build into this current demand and capture future growth.
It seems that the market was looking for an earnings guidance upgrade with today’s update, and the lack of one has put pressure on Goodman shares.
The post Why are Goodman shares tumbling 5% today? appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has positions in Goodman Group. 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.