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Goodman Group bullish on prospects CAROLYN CUMMINS
May 22, 2010
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The chief executive of Goodman Group, Greg Goodman, is determined to end this financial year in a far better position than the same time last year.

In the past month, the country's largest industrial trust has re-signed its prime tenant, Channel Ten at the Pyrmont headquarters, formed a $400 million joint venture with the Canadian pension fund and signed a memorandum of understanding to expand operations further into China.

Brokers said the planned $400 million fund, the Goodman Australia Development Fund, provided the group with a portion of the capital required to build its $10 billion development pipeline, while expanding the relationship with the Canadian Pension Plan Investment Board (CPPIB).

Advertisement: Story continues belowThe fund has been launched with an initial equity commitment of $250 million (80/20 CPPIB/Goodman), a target gross asset value of $400 million and will be seeded by the Kmart development, which is due for completion next year and is valued at $66.3 million.

The analysts at UBS said the fund has been well flagged and they expect further announcements on fund-raising initiatives shortly with a focus on Britain/Europe.

Mr Goodman said his group was targeting full deployment of the fund within the next two years, with the fund to purchase precommitted developments from Goodman's Australian pipeline.

He said the opportunities were vast in China for property groups as demand for warehouses and industrial storage facilities was growing as quickly as the overall economy.

''We plan to roll out more funds with our association with the Canadian pension fund,'' Mr Goodman said.

Ian Randall from Deutsche Bank said the news provided further comfort on Goodman's ability to grow its funds-under-management base, which in turn should provide greater visibility for the group's ability to expand its development activities.

''At its first-half 2009-10 results presentation in February, Goodman indicated that it expects to deliver about $2 billion per annum of development completions in a normal market environment and that it believes that funding is currently available for that volume of development activity,'' he said.

''Our forecasts do not allow for Goodman's development volumes to reach this level until 2012-14 financial year. Given management commentary about the targeted development levels and planned additional third-party capital initiatives, we believe that the risk to our near-term estimates lies to the upside.''

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