Data Centre Pipeline Buoys Solid Result for Goodman

Buoyed by the performance of data centres as demand for artificial intelligence and cloud computing skyrockets, Goodman Group has posted solid half-year results.

The group reported a statutory loss of $220 million, in part due to property valuation losses as a result of higher interest rates, driven by higher longer-term government bond yields.

Revaluation movements meant it lost $3.4 billion while total assets under management were $79 billion, down by 2 per cent. 

However, operating profit reached $1.1 billion, up 29 per cent on the corresponding 2023 half-year. 

Portfolio occupancy remained high at 98.4 per cent and Goodman also reported like-for-like net property income growth of 5 per cent. 

Goodman, which recently lodged $1.4-billion plans to develop the former ABC television studios on Sydney’s North Shore as a data centre, said it was “strategically positioned to benefit from the growth in essential infrastructure required to service the digital economy”. 

It reportedly has $12.9 billion of development work in progress across 85 projects—37 per cent are data centres.

Goodman Group chief executive Greg Goodman said the group had delivered a strong operational result in the first half of the financial year. 

“As the digital economy expands with the growth of artificial intelligence and increased computing requirements, so does our ability to provide the essential infrastructure needed to support its progress,” he said in a statement to the ASX. 

▲ Goodman is planning a seven-storey data centre on a 1.4ha site at Artarmon, 5km north of Sydney’s CBD.

“Our growth in data centre capacity underscores our ability to deliver digital infrastructure, where we’re securing power on our sites and developing data centres in cities with high demand.

“Data centres will be a key area of growth and the acceleration of data centre activity is a catalyst for the group to consider multiple opportunities to enhance its returns.

“While capital partners remain cautious, logistics and digital infrastructure in the right locations remain valuable asset classes.”

Moody’s Investors Service analyst, Mariano Ferreyra, said Goodman’s results reflected solid rental growth and high occupancy. 

“We anticipate Goodman’s EBITDA will continue to benefit from the strong demand for its well-located infill industrial and logistics assets, underpinned by supply-chain efficiency needs, increased e-commerce adoption and growth of cloud computing and AI,” Ferreyra said.

“While asset values have declined in the first half to December 2023, low supply in Goodman’s key markets will support robust but moderating rental growth, which will ultimately limit further asset devaluations.”

According to data from Cushman & Wakefield last year, Sydney is expected to exceed 1 gigawatt of operational data centre capacity in the next two years, joining other major APAC players in data, Beijing and Shanghai.