This article is from the Australian Property Journal archive
GPT suffered a loss of $249.4 million for the six months to 30 June 2024 and analysts are expecting further headwinds in the office sector.
The loss result includes investment property devaluations of $566.8 million. GPT posted FFO of $309.1 million or 16.14 cents per security, down 2.4% from $316.7 million in 2023.
With adjusted funds from operations of $258.4 million, down 2.8% from $265.8 million this time last year, and an interim distribution of 12.0 cents per security.
The group’s net loss after tax of $249.4 million comes after a loss of $1.1 million this time last year.
“GPT’s first half performance reflects the strength of the Group’s diversified portfolio and our disciplined approach to capital management. We remain on track to deliver on 2024 full year guidance provided earlier in the year and declared a distribution of 12.0 cents per security for the first half,” said Russell Proutt, CEO at GPT.
“With a $34.4 billion Management Platform, including $22.1 billion across funds, partnerships and mandates, and deep operational capability, our business is in an excellent position to meet the challenges and opportunities of the market.”
GPT’s net tangible assets were at $5.36 per security, with $1.4 billion in liquidity and net gearing of 29.6%.
Over the six-month period, GPT posted an incremental FUM of $2.4 billion, with a 7.4% funds management yield.
The group’s portfolio boasted a 98.1% occupancy, with a 5.7% WACR, 3.0% comparable income growth, with a 5.4% property investment yield.
The retail portfolio boasted occupancy of 99.6%, with comparable income growth of 5.8%, WACR of 5.44% and an average lease term of 5.2-years. 271 lease deals were completed over the period, with a leasing spread of 4.3%. Retail Funds Management income increased by $2.7 million to $15.4 million.
The office portfolio occupancy was at 92.4%, with a WALE of 4.9-years, WACR of 6.06% and comparable income growth of -1.3%. Over the half, 80,700sqm of leasing across 78 deals was achieved, with more than 90% of space renewed. Office Funds Management income was down by $1.1 million to $19.1 million.
Logistics portfolio occupancy was at 99.4%, with a WALE of 5.4-years, WACR of 5.55%and comparable income growth of 5.9%. 62,400sqm in logistics leasing was completed over the period with leasing spreads averaging 36%. Logistics Funds Management income increased by $1.1 million to $2.5 million.
Moody’s Ratings vice president and senior analyst Saranga Ranasinghe said GPT’s results are in line with expectations with the group benefiting from its asset diversification and quality.
“Overall occupancy in GPT’s portfolio remained strong at 98.1%. The office segment’s occupancy remained at around 92.4% despite a challenging office market and much weaker occupancy across the broader market,”
However Ranasinghe believes GPT will face further challenges within the office sector in the year ahead.
“We expect GPT’s office segment to continue to face headwinds over the next 12-18 months. Meanwhile, the retail segment has recovered strongly and the logistics segment continues to benefit from robust demand.
“Despite falling asset values mostly in the office portfolio during the period, GPT’s net gearing remains within its stated gearing range. GPT’s overall interest cost will continue to increase, weakening interest coverage ratios. However, we still expect GPT to maintain headroom, albeit reducing, against our rating tolerance levels for its interest coverage.” Ranasinghe said.
GPT had a weighted average debt term of 5.6 years and a weighted average cost of debt for the period of 4.9%, with 99% hedged in 2024.
“Our ambition is to position GPT to become Australia’s leading diversified real estate investment manager, dedicated to providing exceptional value, innovation, and sustainable growth for our investors and stakeholders,” added Proutt.
“This is an evolution of our strategy, with an acceleration and emphasis on our investment management segment.”
GPT has provided a 2024 FFO of approximately 32.0 cents per security and a distribution of 24.0 cents per security.
