This article is from the Australian Property Journal archive
RETURN to work mandates is leading momentum in the office sector, according to ASX-listed Growthpoint, which has been taking measures to pay down debt reduce gearing.
Growthpoint offloaded a 15.1% investment in Dexus Industria REIT earlier this month and around the same time it established the Growthpoint Australia Logistics Partnership (GALP) with a $198 million commitment from global asset manager TPG Angelo Gordon.
The capital partner will acquire a circa overall 80% interest in six Growthpoint industrial assets. Net capital released to the Group is $181 million and will be used initially to repay debt.
Together with the proceeds of the GALP transaction, 1Q25 pro forma gearing will reduce to 37.9%, from 41.7%, at the lower end of Growthpoint’s target gearing range of 35 to 45%.
Growthpoint said there is “progressively positive office sector sentiment with an increase of return to work mandates, population growth and economic rents restricting supply and growing demand”.
“As a result of these dynamics, Growthpoint believes that its high quality, well occupied assets, are set to benefit over the short to medium-term.”
Its office portfolio weighted average lease expiry (WALE) and occupancy rate were relatively consistent with FY24. Nine leases were completed representing 1.6% of the office portfolio income, with an average term of 5.3 years and a weighted average rent review of 3.5%.
In the industrial portfolio, occupancy reduced slightly over the quarter to 98%. The WALE increased to 5.3 years following a five-year lease extension with key customer Woolworths of its Perth Regional Distribution Centre at Perth Airport to October 2030.
Growthpoint has entered into 11 leases since FY24. Eight were with new customers to the portfolio and three were renewals, representing a total of 96,044 sqm and equating to 5.5% of portfolio income.
Growthpoint maintained FY25 FFO guidance of 22.3 to 23.1c per security and FY25 distribution guidance of 18.2c, with an additional 2.1c special distribution forecast, subject to completion of the GALP transaction.
