Goodman Group (GMG) – Arriving now

Goodman Group owns, develops and manages logistics and industrial properties and data centres in major global cities. Goodman’s key markets are Australia, New Zealand, Asia, Europe, the UK, and the Americas.

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Goodman Group introduced American data-centre group DataBank as a 50:50 joint venture partner in its $1.2 billion 32 megawatt (MW) LAX01 development in Los Angeles, one of the most competitive cloud-AI-enterprise colocation markets in the US and where data centre demand far outstrips supply. Under the deal, DataBank, which has more than 70 sites across more than 25 US cities, will own half of LAX01 and operate the site, and has first refusal rights over Goodman’s planned LAX02 and LAX03 developments.

The deal is a win for Goodman, allowing to realise circa $235 million of development earnings before interest tax (EBIT) in the second half of FY26, and introduces DataBank’s valuable intellectual property into its data-centre business. It also, assuming DataBank asserts its first refusal rights, derisks the capital requirements for the LAX02 and LAX03 developments.  The main negative is that LAX01 is not leased, although Goodman is currently in negotiations for around 10MW of installed capacity. Ord Minnett assumes DataBank will receive fees from leasing the centre as well as a fee for providing LAX01’s operational services, although these details have not been released.

We note Goodman and DataBank are looking at developments in other capacity-constrained (typically because of power supply issues or planning restrictions) markets in the US, with the model based on combining the Australian company’s development pipeline and American group’s operational capability and customer base. Ord Minnett made no changes to its earnings estimates post the deal, but highlights that Goodman will have to make more of these type of deals to meet market expectations for FY26 earnings. We maintain our target price of $29.15 and a Hold recommendation on Goodman.