Goodman launches Hong Kong fund centred around data centres

The fund owns four data centres, while another two are being developed. Goodman Group will own a 20 per cent of that $US2.7 billion fund.

In 2023, Goodman also established an unlisted data centre fund focused on Japan, which has $US1.1 billion in assets.

Asked whether it was possible Goodman Group’s private data centre funds could be combined and listed on the sharemarket, founder and chief executive Greg Goodman said it was possible.

“It’s a really good question. It’s something I won’t comment on, but it’s not a bad stab. It’s all possible in the future,” he told AFR Weekend. “We see a lot of value in the entity, more value than just the sum of the parts.”

While the Goodman platform manages $85 billion of commercial property and data centre assets, most of that is held in a series of unlisted vehicles and wholesale funds. It doesn’t control any other listed vehicle after the New Zealand-listed Goodman Property Trust internalised its own management last year.

“We’re very adept at understanding capital markets and obviously appealing to the capital markets,” Goodman said.

“We understand the listed and unlisted markets as well, and over the course of [the next] 10 years many things will change and opportunities will present themselves.”

Goodman Group has devoted more than half of its nearly $14 billion global workbook this year to building data centres, tapping the exploding demand for data storage required by cloud computing and artificial intelligence.

The company has a global land bank of powered sites – a crucial element for guaranteeing delivery of operating data centres – which when fully developed could be worth as much as $100 billion.

To deliver those data centres Goodman needs capital, and this year it has already successfully raised $4 billion, one of the biggest single raises since the pandemic.

On Friday, Goodman unveiled the next leg in its capital strategy, announcing its Hong Kong fund. Four of the six data centres going into the fund will be transferred from Goodman’s existing Hong Kong logistics fund.

Backing the new fund are some of the world’s best known institutional investors, including Dutch pension funds, PGGM and APG, Canada’s CPPIB and an unnamed Middle Eastern investor.

While the company has a smaller unlisted venture in Japan, the Hong Kong initiative represents its first major partnership in the sector, and should be seen as “precursor” to similar partnerships in North America, Europe, Asia and Australia, Goodman said.

The company’s development pipeline for data centres spans 13 global cities – from Los Angeles to London, Frankfurt, Milan, Hong Kong, Tokyo and Sydney – and it has a massive five gigawatts worth of powered sites under its control.

“We’re working on those partnerships now. This is the first one that was ready to go,” Goodman said.

Soaring demand

”This is a bit of a window to the future of what we’re doing: separate partnerships and significant investors. There’s stabilised assets in it [the Hong Kong vehicle], plus brand new developments coming out of the ground.

“When you look at it in totality, you can imagine Goodman doing it in a number of countries around the world, as we have done with our industrial [portfolio] globally the last 20 years.”

The sheer scale of Goodman’s pipeline puts it in the company of some of the world’s major data centre companies such as Equinix and Digital Realty.

Meanwhile, blistering demand for a piece of the data market has sparked an arms race among big investors.

Last year, Blackstone bought local start-up AirTrunk for $24 billion and two years before that Australian super fund investor IFM teamed up in a deal to buy US operator Switch for $17 billion.

Goodman has flagged 9 per cent earnings growth this year and its decision to lean harder into its data centre prospects excites investors and analysts.

Last month, Goldman Sachs launched its coverage of the stock with a buy call, hailing the company’s “strategic pivot from industrial developer to global infrastructure provider”.

On Friday, Morgan Stanley analysts described the Hong Kong initiative as “good news” and not just because it showed Goodman was beginning to validate its data centre aspirations.