Search for Yield Remains a Powerful Tailwind for Goodman. FVE Increases 7% to AUD 12

After raising fiscal 2019 earnings guidance to growth of 9.5% from 7% in February, we weren’t expecting any further upgrades as part of the third-quarter update. That said, narrow-moat-rated Goodman provided a mini-upgrade, advising assets under management, or AUM, will exceed AUD 45 billion by June 2019, up by at least AUD 2.1 billion or 4.9% since December 2018 when AUM was AUD 42.9 billion. Part of the uplift will be due to movement of development assets to completed assets, with the balance attributable to further asset value appreciation driven by rent growth and potentially a further reduction in market yields.