The Goodman Group (ASX: GMG) share price is rising today as the company announced an operational update for the first quarter of FY21. Goodman’s share price is currently up 2.91% to a price of $19.48.
What Goodman does
Goodman Group is a REIT (real estate investment trust) with operations throughout Australia, New Zealand, Asia, Europe, the United Kingdom, North America and Brazil.
As such the group owns, develops and manages real estate properties. This includes warehouses, large scale logistics facilities, business and office parks globally.
The group was formed following the merger of Macquarie Goodman Industrial Trust and Macquarie Goodman Management in 2005. Goodman operates four divisions: property investment, fund management, property services and property development.
Quarterly update
The company was able to deliver a strong first quarter despite the implications of COVID-19.
For the quarter, Goodman reported that it had $51.7 billion total assets under management. The company spoke of the limited supply in markets and how growing demand is reflected in stable occupancy at 97.8%. It also helped drive an increase in net property income of 2.9%.
In terms of development, Goodman reports the strong demand from customers has continued into this quarter, giving the group confidence to further increase its development activity. As such, the company’s work in progress metric has risen to $7.3 billion and is expected to increase further throughout the year. Yield on cost has remained stable at 6.7%.
What now for the Goodman share price?
While the pandemic continues to disrupt markets, Goodman has been one of the few REITs to overcome the challenge. Therefore, while the Australian S&P/ASX 200 Real Estate (ASX: XRE) sector has fallen 17% for the year. In contrast, the Goodman share price has gained 36%, outpacing its sector by a huge 53%.
To this end the company has reaffirmed its earnings guidance for the year ahead. Its guidance for FY21 is 62.7 cps, up 9% on the prior year, and a full year distribution of 30cps.
Goodman also notes that it retains a significant cash balance, liquidity and a strong balance sheet. The company continues to retain profits to fund its share of future capital commitments.
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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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