Goodman (ASX: GMG) and the Canada Pension Plan Investments Board are establishing a $14 billion Europe data center partnership. The two entities will halve the initial capital commitment of $3.9 billion to develop four data centers across Frankfurt, Amsterdam, and Paris.

Why it matters: Goodman estimates its total data center pipeline, on a 100% basis, would be worth $13 billion and provide 1.8 gigawatts of power on completion.

  • By the end of fiscal 2026, the data center developer plans to have 0.5 GW under construction, out of which the four Europe sites will account for about 0.2 GW. The introduction of a capital partner accelerates project activation.
  • Selling down its stakes in these assets will contribute to Goodman’s fiscal 2026 earnings, which have already been factored into our forecast. We continue to expect operating earnings to grow 9% in fiscal 2026, to 129 cents per security.

The bottom line: We keep our fair value estimate at $29 per security for narrow-moat Goodman. Securities soared 8% on the day of the partnership announcement and are now modestly overvalued.

  • We think the market reaction was overdone. Goodman’s data center ambition has been communicated extensively for some time, and the earnings growth expectations have already been baked into the security prices.
  • We think the new partnership is delivering on previous promises, rather than bringing additional growth opportunities.

Between the lines: Access to capital is key. Between now and June 2026, Goodman hopes to break ground on its sites across Los Angeles, Tokyo, Hong Kong, Madrid, and Sydney.

  • We expect the group to continue bringing capital partners to these projects, adding to the existing partnerships in Tokyo and Hong Kong, and the new Europe partnership.
  • Goodman’s balance sheet is in good shape, thanks to an equity raise in early 2025 and the various capital partnerships. As of June 30, 2025, balance sheet gearing was 4%, the lowest among our sector coverage.

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