Goodman Loosens Development Throttle on Surging Demand. FVE up 10% to AUD 11.20

In what has now become a recurring theme of underpromising and overdelivering, Goodman Group has upgraded fiscal 2019 earnings guidance to growth of 9.5% from 7% previously. The raised guidance is mostly due to a step up in performance fees as the returns for wholesale investors in Goodman managed funds were materially above benchmark, a major catalyst being ultra-loose monetary policies and falling bond yields. After years of tight reins on its development business, Goodman has said the high demand supports a more aggressive stance and development work in progress will exceed AUD 4.0 billion after hovering around AUD 3.5 billion in recent years. The faster rate of development will have a multiplier effect on earnings, increasing development fees, but also accelerating the growth rate in external funds under management, the firm’s highest return on equity activity.