The S&P/ASX 200 Index (ASX: XJO) blue-chip share Goodman Group (ASX: GMG) has risen around 60% in the past two years, as the chart below shows. But, its recent decline makes it seem like an interesting ASX stock to consider.

Goodman says it's a provider of essential infrastructure. It owns, develops, and manages high-quality, sustainable logistics properties and data centres in major global cities that are critical in the digital economy. It has operations in Australia, New Zealand, Asia, Europe, the UK, and the Americas.

It owns various types of industrial properties, including logistics and distribution centres, warehouses, light industrial, multi-storey industrial, business parks, and data centres.

A fall in a valuation alone doesn't necessarily make it a good investment. But, I think the below three reasons do make it a compelling consideration at this valuation.

Excellent rental operations

The ASX 200 blue-chip share is excellent at building industrial buildings, but as the business grows, it becomes increasingly important that its existing property portfolio performs well.

Goodman's portfolio is indeed doing well, which we saw in the six months to 31 December 2024. It reported that its occupancy rate is 97.1%, with a weighted average lease expiry (WALE) of 4.7 years.

Perhaps more importantly, the business reported that its like for like net property income growth was 4.7%, which I'd call a solid organic growth rate for a property business.

In my view, the business' decision to maintain a fairly low level of gearing has helped it continue to succeed during this era of higher interest rates. The ASX 200 stock had gearing of 16.8% in the HY25 result, so its interest costs have not been as high as they otherwise would have been if its gearing was between, say, 30% and 40% like some other real estate investment trusts (REITs).

Strong pipeline

Every year, Goodman is adding to its portfolio by completing the construction of billions of dollars of additional industrial properties. This is helping Goodman's assets under management (AUM) grow and boosting its ability to make more operating revenue and operating profit.

Goodman reported in its HY25 result that the estimated end value of development work in progress (WIP) is $13 billion, across 68 projects, with a forecast yield on cost of 6.7%.

The ASX 200 blue-chip share said data centres currently make up 46% of the development work in progress (WIP), with significant projects expected to start by June 2026. The global power bank is 5GW across 13 major global cities, of which 2.6GW is secured and 2.4GW is in advanced stages of procurement.

The ongoing expansion of AUM is helping grow the underlying ability of the business to make profit and increase its underlying value.

Further interest rate cuts?

Every interest rate reduction could be very good news for Goodman shares. Not only does it reduce interest costs, but it also may boost the value of real estate. Goodman is one of the biggest property owners on the ASX, so I think it's primed to benefit from possible further interest rate cuts in Australia and the northern hemisphere now that inflation has largely been brought under control.

As the legendary US investor Warren Buffett once said:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.