Goodman flags $300m sell-off

The announcement follows an earnings upgrade this week on the back of a better than expected performance in Europe and Asia.

Chief executive Greg Goodman said the group would start more developments in Europe and that rental growth in Asia had been better than it had anticipated.

This was due to improved economic growth in Europe and Japan, Mr Goodman said.

“We’ll be going into the 2015 financial year with a very strong development book which will approach $2.9 billion to $3bn with a lot of significant new starts in Brazil and the US,” Mr Goodman said.

The Goodman Group expects operating earnings to rise 7 per cent to $600m, or 34.7c per security. Its medium and long-term growth target remains at 6 per cent.

Goodman’s distribution per security for the full year will be 20.7c — a 7 per cent increase on the same period last year.

Mr Goodman said more than $1bn worth of property would be sold by the group in the next 12 months, with up to $300m to be sold in Australia.

He said the high demand for residential apartment projects would be likely to see Goodman garner capital from selling sites that could be converted into unit developments. He also said that investor demand was strong for high-yielding properties and expected yields to fall to the 6 per cent range on premium warehouses.

Goodman Group has $26.6bn worth of assets globally. That amount will grow this year by about $3bn.

Bank of America Merrill Lynch analysts expect most of the sales would come from Goodman’s funds platform and be used to fund new development.

Morgan Stanley’s Louise Mylott said Goodman was being conservative in its long-term growth guidance of 6 per cent, instead expecting between 7 per cent and 8 per cent.

“A slowdown in development growth would be offset by leasing and funds management activities,” she said.

Mr Goodman said the 6 per cent forecast was predicated on the outlook of low global growth and low interest rates.

Goodman Group’s shares yesterday closed at $5.15, down 4c.