By David Winning


SYDNEY--Goodman Group forecast another year of growth in annual operating earnings, signaling the resilience of industrial property such as warehouses in the face of rising interest rates around the world.

On Tuesday, Goodman said it expected operating earnings per security of 90.3 Australian cents (63.4 U.S. cents) in the 12 months through June, 2023. If achieved, that would represent growth of 11% on the just-ended fiscal year.

The company also said it expects to hold its distribution flat at 30 Australian cents per security to help fund its significant development workbook.

"Demand is currently exceeding supply in our markets, supporting our development-led growth strategy and producing well-located assets for the group and our partnerships," said Chief Executive Greg Goodman. "Our production rate, depth of customer demand and strong margins are supporting the outlook for development earnings into fiscal 2023."

Demand for industrial property has been especially strong over the past two years as the Covid-19 pandemic reshaped consumers' habits. As some people grew wary of shopping in store and bought more goods online, so companies needed more warehouse space to stock products and make deliveries.

While the loosening of pandemic restrictions has led shoppers to return to malls, many economies continue to experience periodic surges in Covid-19 cases. Still, one headwind for warehouse owners could be a softening in household spending over time as real wages fail to keep pace with inflation and mortgage repayments soar as interest rates rise.

Goodman's outlook was provided alongside a 48% rise in net profit to A$3.41 billion in the 12 months through June. Annual operating earnings per security of 81.3 cents beat guidance provided in May for 23% growth, itself markedly higher than an original projection of 10% growth at the start of its fiscal year.

Goodman said its property was 98.7% occupied at the end of June, with like-for-like net property income growth of 3.9% over the past year. Total assets under management rose 26% to A$73.0 billion.

Its gearing--a measure of debt relative to equity--was 8.5% at the end of June, up from 6.8% a year ago. Having a low gearing means Goodman is relatively well placed compared to many real-estate investment trusts to withstand the impact rising interest rates. Most of its debt is due to mature beyond mid-2027.

"By focusing our portfolio and A$13.6 billion development workbook on key infill locations, we have seen accelerating market rental growth, significant valuation uplift and subsequent outperformance of our partnerships," Mr. Goodman said.


Write to David Winning at david.winning@wsj.com


(END) Dow Jones Newswires

08-15-22 1928ET