---
endpoint: analytics
pattern: Property
status: done
latency_ms: 341090
conversation_id: 24e6c2c8-ef3b-4999-b9e1-f93209b57aca
citations: 24
created: 2026-05-31 20:50:01Z
---

# Provide a one‑year narrative of Goodman, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# Goodman Group (GMG-AU): One-Year Narrative (Jun 2025 – May 2026)

The past twelve months for **Goodman Group** were a study in deliberate transformation: a logistics REIT visibly remoulding itself into Australia's flagship data-centre platform, while investors oscillated between rewarding the pipeline and discounting the execution risk. Sentiment compressed from "growth-priced confidence" in mid-2025 into a more skeptical "show-us-the-leases" stance by early 2026, even as the structural thesis was reinforced by every disclosure.

---

## I. Setting the stage (May–June 2025): Roadmap of catalysts and a premium re-rate

Entering this window, GMG was a **High-Conviction Outperform** on CLSA's coverage with a target of **A$39.77**, trading on **24x forward PE — a 34% premium to the ASX 200**, which was actually *the bottom end* of the post-FY19 premium range (typically closer to 50%) [3]. The thesis had decisively shifted from "industrial logistics REIT" to "**5GW data-centre platform underwriter**", with an end-value of **A$100–A$200bn over 10 years** and the first **0.5GW set to start before June 2026** [5].

CLSA's pre-3Q-FY25 piece on 15-May ("Looking for a signal") flagged a possible 1% EPS upgrade as a "**positive signal that management has confidence about the earnings visibility over the next couple of years**" given that 1H FY25 had been **annualising at 19% EPS growth versus consensus at 11%** [1]. Crucially, the analyst signalled that **WIP would trough** in 3Q — 56% of A$12bn WIP was industrial and falling on weaker demand — with **DC starts of A$1–3bn** likely from LAX1 and European projects, partially offset by ~A$1bn of Hong Kong completions [4].

---

## II. The 3Q FY25 inflection (28-May 2025): WIP troughs, no upgrade, narrative pivots to "roadmap"

The 3Q FY25 update produced the first significant deviation from the bullish setup: **no EPS upgrade**, against the historical pattern of upgrading at this quarter [6]. The key reasons were operational rather than structural — management was **delayed in selling down its North American development assets into a fund** (a profit event) given **tariff-policy uncertainty**, and DC leasing timing was now expected ~**9–12 months after a build starts**, slowing near-term profit recognition because leases are typically required before sell-downs to funds [9].

The hard numbers de-risked the trough thesis:
- **Development WIP rose to A$13.7bn (+5% QoQ)** — visibly troughing
- **A$1.9bn of new development starts at a punchy 9% yield**
- **DC yield on cost guided to 9–12%**; logistics 7–8%
- Logistics cap rates **starting to compress again**, providing ballast to the funds management platform
- Management aggressively **restocking the logistics development pipeline with very large acquisitions** [7]

CLSA trimmed earnings by **1–4% across FY25–28**, lowered the target **3% to A$38.54**, but reiterated High-Conviction Outperform. The reframing was important: a **roadmap of catalysts** — significant DC starts in August, new DC capital partnerships in November, pre-lease news in February 2026 [6]. The four-year EPS path was articulated as **FY25 +10% → FY26 +12% → FY27+ +15%** [8], reflecting a backloaded growth profile that justified the **25.1x PE / 38% premium to ASX 200** [10].

Sector context was also constructive: CLSA's June note on REIT asset values projected **flat valuations across industrial, office and retail at 30 June** but called for **12–25bps of industrial cap-rate compression in 2H** [12] — directly supportive of GMG's funds-management business. **GMG and Vicinity were named the key picks** [11], while the June "Who's who in the zoo II" piece reaffirmed **Goodman as the top-ranked large-cap REIT on CEO approval and employee engagement** [13].

---

## III. The FY25 result (20–22-Aug 2025): The first sentiment break

GMG's full-year FY25 result delivered on the numbers but **fell short on the forward guide**, which crystallised an immediate de-rating:

| Metric | FY25 Actual | Consensus / Y-o-Y |
|---|---|---|
| Operating EPS | A$1.18 | Met FactSet A$1.18 (range A$1.17–1.19) |
| Operating Profit | A$2.31B | vs FactSet A$2.49B |
| Statutory NPAT | A$1.67B | vs prior-year loss of (A$98.9M) |
| NTA/security | **A$11.03** | vs A$8.80 y/y (+25%) |
| Final DPS | 15.0c | Flat y/y |
| **FY26 OEPS guidance** | **+9.0% y/y** | **vs FactSet +11.0%** |
| FY26 DPS guidance | 30.0c | — |

[14]

The 200bp shortfall on FY26 OEPS guidance versus consensus was the key disappointment — it signalled that the deferred profit-recognition mechanics flagged at the 3Q (DC leasing timing, slower fund sell-downs) were now embedded in the actual outlook. The market reaction was swift:

- **UBS downgraded to neutral from buy** on 21-Aug (target lifted to A$36.63 from A$36) [15]
- **Ord Minnett downgraded to lighten from hold** on 22-Aug, citing valuation, with target A$32 [16]
- Stock action on 22-Aug: **GMG -3.2% to A$34.48**, marking a high-water-mark exit from the mid-A$36 level traded into the result

The narrative gap that opened here — between the **structural NTA accretion (+25%)** and the **near-term EPS deceleration** — would define investor positioning for the next six months.

---

## IV. Q1 FY26 trading update and AGM (Nov 2025): Sentiment stabilises

GMG's Q1 FY26 update on 5-Nov was characterised as **"limited surprises and firm guidance"** with **industrial demand subdued**. Key details:
- **Development WIP trimmed slightly**
- **FY26 outlook upgraded slightly**
- **No new data centre starts** — partnerships still forming
- **Secured power expanded strongly**, boosting future DC capacity [17]

The market initially reacted negatively (**-3.7% to A$31.29**), but the response from broker desks was sharply different from August. Within the same session:
- **UBS upgraded back to buy from neutral**, target A$36.41, citing 17% upside [18]
- **Macquarie upgraded to outperform from neutral**, target A$34.73 [19]

The signal: the de-rating from A$36+ to ~A$31 had compressed valuation to the point where the structural pipeline was once again the dominant variable. At the **AGM on 10-Nov**, management formally **reaffirmed FY26 guidance** (OEPS +9.0%, DPS A$0.30) — closing the small remaining gap to FactSet consensus of +9.9% [20].

---

## V. 1H FY26 result (19-Feb 2026): Beat-but-no-upgrade — the second sentiment break

The interim result was paradoxically *both* a positive surprise *and* a negative share-price event:

- **H1 operating earnings ahead of consensus**, driven by development income and favourable interest outcomes [21]
- **Development margins improved**; data-centre capacity expansion viewed positively; balance-sheet strength supportive [21]
- **But management reiterated FY guidance and did not upgrade**, citing limited new detail on data-centre leasing [22]
- **Shares fell 7.2% to A$28.88** on the day

The Street post-mortem on 20-Feb captured the bifurcation [22]:

| Broker | Action | Target | Stance |
|---|---|---|---|
| UBS (Cody Shield) | Trim | A$36.98 (from A$37.14) | Buy |
| CLSA (James Druce) | Trim | A$35.59 (from A$37.05) | High-Conviction Outperform |
| Jarden (Tom Bodor) | Trim | A$36.80 (from A$40.10) | Buy |
| JPMorgan (Richard Jones) | Hold | A$39.00 | Overweight |
| **Sell-side aggregate (13 analysts)** | — | **A$36.59 (-1.2%)** | **Buy 85% / Hold 15% / Sell 0%** |

The valuation also compressed materially:
- **NTM P/E 21.5x** vs **5-yr average 24.0x** (range 16.0–34.0x)
- **EV/EBITDA 20.8x** vs 5-yr average 23.0x [22]

The CLSA Druce note captured the bull-case framing — **"market overly focused on lease timing"**, with site quality, execution speed and "multiple leasing irons in the fire" as the offset. The bear case (echoed by Jarden) was that the absence of leasing detail and a higher share of speculative/on-balance-sheet projects raised execution risk.

---

## VI. The recent tape (late Feb – May 2026): Data-centre sector beta dominates

By **23-Feb 2026**, GMG had become a vehicle for the broader **data-centre sector trade**, falling **3.3%** alongside NextDC (-5.1%) as DC names were singled out as the day's laggards in APAC [23]. The implication: GMG's idiosyncratic story had largely been priced; from here, sector beta to AI capex sentiment was the marginal driver.

A structural artefact captured in the **FY25 Annual Report** clarified the model: GMG is **establishing regional investment vehicles alongside the workbook** for its 10-year, multi-GW data-centre build-out [24] — i.e. the funds-management leg is being purpose-built for DC capital recycling, the same way it was for logistics.

---

## VII. Synthesis — how performance, conditions and actions shaped sentiment & valuation

**1. Business performance — high-quality, but back-loaded.**
The FY25 result delivered on EPS (A$1.18 met consensus), a +25% NTA jump to A$11.03, and a strengthening balance sheet [14]. But the FY26 guide of OEPS +9% vs Street +11% [14] established a multi-quarter pattern: management was prioritising **long-term DC optionality over near-term EPS optics**, deferring profit recognition to align with the 9–12-month lease-after-start cadence [9].

**2. Market conditions — supportive for the platform, mixed for the building blocks.**
Industrial cap rates began compressing again in 2H 2025 [12], underpinning the funds-management AUM. But **industrial development demand was subdued** [17], shrinking the legacy WIP base just as the DC pipeline was ramping. Tariff uncertainty in mid-2025 specifically delayed the US logistics JV sell-down [9] — a direct earnings drag for FY25.

**3. Company actions — pivoting the entire platform onto DC rails.**
- **Pipeline scaled from 3GW → 5GW** with A$1.9bn of starts at 9% yield in 3Q FY25 [5][7]
- **DC yields on cost guided 9–12%** vs logistics 7–8% — i.e. the new business is structurally higher-margin [7]
- **Regional investment vehicles** being established for DC capital recycling [24]
- Workbook of development applications expanding (e.g. **600MW across Sydney/Melbourne**, Artarmon approved) [4]
- **No upgrades** at 3Q FY25, 1Q FY26, or 1H FY26 — a deliberate signalling discipline that broke from the historic "upgrade-at-quarterly" pattern [6][17][22]

**4. Investor sentiment & valuation — a structured compression.**

| Date | Share Price | CLSA Target | Notes |
|---|---|---|---|
| ~Pre-3Q FY25 (early-May 25) | A$36+ area | A$39.77 | Premium re-rate intact [2] |
| 28-May 25 | — | A$38.54 (-3%) | "Roadmap becoming clearer"; HC O-PF held [6] |
| 20-Aug 25 (FY25 result) | A$36.14 | — | OEPS A$1.18 met, FY26 +9% missed [14] |
| 22-Aug 25 | A$34.48 (-3.2%) | — | UBS, Ord Minnett cut ratings [15][16] |
| 5-Nov 25 (1Q FY26) | A$31.29 (-3.7%) | — | UBS & Macquarie *upgraded back* [17][18][19] |
| 10-Nov 25 (AGM) | A$30.76 | — | FY26 reaffirmed [20] |
| 19-Feb 26 (1H FY26) | A$28.88 (-7.2%) | — | Beat but no upgrade [21] |
| 20-Feb 26 (post) | — | A$35.59 (CLSA -A$1.46) | Consensus avg A$36.59 [22] |
| 23-Feb 26 | DC sector -3.3% to -5% | — | Sector beta dominates [23] |

The multiple **compressed from ~24x to ~21.5x forward PE** [3][22] — i.e. roughly the same 5-year-average territory, **but at a much lower share price** because Street EPS estimates were also pared:
- FY26 EPS consensus revised down 0.1% to A$1.29
- FY27 EPS consensus revised down 0.4% to A$1.44 [22]

The de-rate was **not a thesis break** — sell-side stayed **85% Buy / 15% Hold / 0% Sell** [22] and the average target of A$36.59 implied 22% upside even at the trough. Rather, it reflected the market repricing for **leasing-conversion risk and timing risk** rather than terminal-value risk.

---

## VIII. The forward bull/bear case (as of 31-May 2026)

**Bull (CLSA, JPMorgan, UBS, Jarden, Macquarie):**
- 5GW pipeline underwrites double-digit EPS growth for 5+ years [5]
- DC yields on cost at 9–12% vs logistics 7–8% — accretive mix shift [7]
- NTA accretion (A$11.03, +25% y/y) confirms underlying asset values are working [14]
- Multiple leasing irons in the fire; site quality and execution speed are differentiators [22]
- Valuation now 21.5x PE — below 5-yr average of 24x [22]

**Bear (Ord Minnett, sceptical desks):**
- Conversion of leasing negotiations into binding commitments is the critical near-term step [22]
- Rising share of on-balance-sheet and speculative DC projects raises execution risk [22]
- Industrial demand subdued limits the legacy bridge [17]
- Data-centre stock co-movement (Feb 26 selloff) means GMG now wears sector-sentiment beta [23]
- Management's "no upgrade" discipline removes near-term re-rating catalysts

**The net pattern over the year**: investors gradually re-priced GMG from a *premium logistics compounder* (24x PE, 50%+ ASX premium) to a *high-conviction-but-undelivered data-centre platform* (21.5x PE, in line with growth peers at ~11% EPS CAGR), with the dispersion of broker targets (A$32–A$41.50) widening to reflect the binary risk in DC lease conversion. The structural thesis — **A$100–A$200bn end-value pipeline over 10 years** [5] — was reinforced at every disclosure, but the time value of waiting compressed the multiple.

---

**Sources**

[1] Goodman - HC O-PF (Looking for a signal) — CLSA (15 May 2025) — 607959575LinqAlpha.PDF
[2] Goodman - HC O-PF (Looking for a signal) — CLSA (15 May 2025) — Target A$39.77, 15% EPS CAGR
[3] Goodman - HC O-PF (Looking for a signal) — CLSA (15 May 2025) — PE / premium analysis
[4] Goodman - HC O-PF (Looking for a signal) — CLSA (15 May 2025) — WIP / DC pipeline
[5] Goodman - HC O-PF (Looking for a signal) — CLSA (15 May 2025) — Investment thesis, 5GW pipeline
[6] Goodman - HC O-PF (Roadmap becoming clearer) — CLSA (28 May 2025) — 607960765LinqAlpha.PDF
[7] Goodman - HC O-PF (Roadmap becoming clearer) — CLSA (28 May 2025) — 3Q operating details
[8] Goodman - HC O-PF (Roadmap becoming clearer) — CLSA (28 May 2025) — Earnings trajectory FY25–27
[9] Goodman - HC O-PF (Roadmap becoming clearer) — CLSA (28 May 2025) — US JV delay / tariff uncertainty
[10] Goodman - HC O-PF (Roadmap becoming clearer) — CLSA (28 May 2025) — Valuation, 25.1x PE
[11] Australian Property (Industry views on asset values) — CLSA (16 Jun 2025) — 607962124LinqAlpha.PDF
[12] Australian Property (Industry views on asset values) — CLSA (16 Jun 2025) — Industrial cap rate compression
[13] Australian property (Who's who in the zoo II) — CLSA (19 Jun 2025) — 607962339LinqAlpha.PDF
[14] StreetAccount — Goodman Group reports FY OEPS A$1.18 (20 Aug 2025)
[15] StreetAccount — Goodman Group downgraded to neutral from buy at UBS (21 Aug 2025)
[16] StreetAccount — Goodman Group downgraded to lighten from hold at Ord Minnett (22 Aug 2025)
[17] StreetAccount — Quick Take: Goodman Group (-3.7%) on Q1 update (5 Nov 2025)
[18] StreetAccount — Goodman Group upgraded to buy from neutral at UBS (5 Nov 2025)
[19] StreetAccount — Goodman Group upgraded to outperform from neutral at Macquarie (5 Nov 2025)
[20] StreetAccount — Goodman Group reaffirms FY26 operating EPS +9.0% at AGM (10 Nov 2025)
[21] StreetAccount — Quick Take: Goodman Group (-7.2%) on H1 results that topped expectations (19 Feb 2026)
[22] StreetAccount — Street Takeaways: Goodman Group H1 Earnings (20 Feb 2026)
[23] StreetAccount — APAC morning themes include Data Center weakness (23 Feb 2026)
[24] Goodman Group H2 2025 Annual Report — regional investment vehicles alongside workbook

## Citations

- [1] **607959575LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607959575LinqAlpha.PDF>
- [2] **607959575LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607959575LinqAlpha.PDF>
- [3] **607959575LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607959575LinqAlpha.PDF>
- [4] **607959575LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607959575LinqAlpha.PDF>
- [5] **607959575LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607959575LinqAlpha.PDF>
- [6] **607960765LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960765LinqAlpha.PDF>
- [7] **607960765LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960765LinqAlpha.PDF>
- [8] **607960765LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960765LinqAlpha.PDF>
- [9] **607960765LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960765LinqAlpha.PDF>
- [10] **607960765LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960765LinqAlpha.PDF>
- [11] **607962124LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962124LinqAlpha.PDF>
- [12] **607962124LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962124LinqAlpha.PDF>
- [13] **607962339LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962339LinqAlpha.PDF>
- [14] **Goodman Group reports FY OEPS A$1.18 vs FactSet A$1.18** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4379054&_doc_date=2025-08-20&_doc_product=SA>
- [15] **Goodman Group downgraded to neutral from buy at UBS** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4380468&_doc_date=2025-08-21&_doc_product=SA>
- [16] **Goodman Group downgraded to lighten from hold at Ord Minnett** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4380644&_doc_date=2025-08-22&_doc_product=SA>
- [17] **Quick Take - Goodman Group (3.7%) on Q1 update with limited surprises** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4453817&_doc_date=2025-11-05&_doc_product=SA>
- [18] **Goodman Group upgraded to buy from neutral at UBS** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4456332&_doc_date=2025-11-05&_doc_product=SA>
- [19] **Goodman Group upgraded to outperform from neutral at Macquarie** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4456344&_doc_date=2025-11-05&_doc_product=SA>
- [20] **Goodman Group reaffirms FY26 operating EPS +9.0% y/y at AGM** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4467529&_doc_date=2025-11-10&_doc_product=SA>
- [21] **Quick Take: Goodman Group (7.2%) on H1 results that topped expectations** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4564557&_doc_date=2026-02-19&_doc_product=SA>
- [22] **Street Takeaways - Goodman Group H1 Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4566898&_doc_date=2026-02-20&_doc_product=SA>
- [23] **APAC morning themes include Data Center weakness** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4568521&_doc_date=2026-02-23&_doc_product=SA>
- [24] **Goodman Group, H2 2025 Report** · external

