This article is from the Australian Property Journal archive
GDI Property Group is backing the Perth office market’s outperformance compared to its east coast peers to continue, confident strong momentum will drive funds from operations growth.
The syndicator reported property FFO of $38.3 million in FY23, up from $33.9 million, while FFO on a per security basis dipped to 5.28c.
Increases at Westralia Square, a full-year contribution from its two car parks and a part-year contribution from its new co-living joint venture were partly offset by a decrease at the Mill Green complex.
Net tangible assets per security slid by $0.02 to $1.25. GDI’s weighted average capitalisation rate is 6.6%.
Since the start of FY23 it has signed new leases, lease renewals or heads of agreement for nearly 30,000 sqm of office space in Perth, representing about 30% of its Perth office portfolio, with the majority occurring in the last eight months of the financial year.
“GDI is relentlessly focused on executing leases for the balance of the portfolio. The strong momentum in the Perth market will underpin FFO growth,” it said.
“Strategically, GDI is positioned to capitalise on the relatively stronger Perth market to optimise a recycling of the portfolio towards east coast markets as they enter a dislocation phase.”
“With a significant amount of space to lease, particularly in 197 St Georges Terrace, Westralia Square and WS2, and 1 Adelaide Terrace, Perth (GDI No. 36 Perth CBD Office Trust) there is considerable opportunity to add to earnings and FFO.”
Perth’s CBD recorded positive office demand in the six months to July, according to the Property Council of Australia, while its vacancy inched upwards to 15.9%.
GDI said it is executing on its point of difference by delivering value-enhancing timber and reuse buildings and high returns through the newly formed co-living joint venture.
Practical completion of WS2, Perth’s first steel and timber office building, was achieved during the period. The 9,500sqm office building over 11 floors was built on top of the existing car park at Westralia Square. It was delivered at a cost of $63.5 million and has been valued at $90 million. Leases have been signed over four of the 11 floors, and heads of agreement over another three. Tenants include real estate firm Savills and environmental engineers Arup, who worked on the project.
Also during the period, GDI entered a joint venture to own, operate and syndicate co‐living mining accommodation with Tulla Group, the private investment vehicle of the Maloney family who was behind mining accommodation company The MAC Services Group. The JV owns and operates two Western Australian assets, a 269-room village at Norseman and the accompanying Lodge Motel and South Hedland Motel with 242 rooms, in South Hedland. GDI made a $33 million investment into the JV, and it is intended that once it has sufficient scale and diversity, the assets will be syndicated, and the initial capital recycled.
