This article is from the Australian Property Journal archive
AFTER a stint overseas, GPT Group is selling up its $2.7 billion interests and going back to basics. Chief executive Nic Lyon said the group now has a renewed focus on domestic operations.
The group also revealed that it has put $1.7 billion worth assets or 12% of its $13.9 billion portfolio on the market after it reported a net loss result for FY08.
The $1.7 billion of Australian and European assets is in addition to the flagged sales of the US seniors joint venture with Benchmark Assisted Living worth $800 million and $1.9 billion in the JV fund with Babcock & Brown.
In the six months June 30, GPT reported an AIFRS net loss of $68 million compared with a profit of $737 million a year earlier. The result was affected by writedowns of $344 million.
GPT’s realised operating income was $234.0 million from $296.7 million.
Lyons said the interim result is in line with the revised full-year profit guidance provided to the market in July of $464 million. GPT confirms this revised guidance, subject to no further deterioration of operating conditions.
“Although we remain cautious given uncertainty about the outlook for global and local economic conditions, we continue to believe that our irreplaceable portfolio of high quality Australian assets will perform well given the solid sales growth exhibited by the retail portfolio and high levels of occupancy across our industrial and office assets.
“However, we are clearly very disappointed with results this half and with our revised guidance for the full year as previously outlined to the market. The impact of the credit crisis on the real estate environment, and markets everywhere, has been unprecedented in recent history, and global operating conditions remain extremely challenging,” Lyons said.
GPT’s total assets fell $97 million to $13.9 billion due to non-cash asset value movements and the non-cash writedown of goodwill associated with the GPT Halverton business.
As a result, net tangible assets per security declined 4.7% to $3.68.
Lyons said GPT’s gearing levels remain within policy ranges, with headline heading of 37.3% and look through gearing of 46.7%.
Importantly, he added there is no recourse to GPT for debt within any of GPT’s funds, including the joint venture fund with Babcock & Brown.
Lyons outlined a number of initiatives which he said will simplify the group’s business model, including a renewed strategic focus on core domestic operations; exiting non-core investments such as the hotel/tourism and homemaker portfolios and assets warehoused for European funds management, and exploring exit options in relation to US Seniors.
From December 2009, GPT will begin to realise its investment JV with Babcock & Brown.
Meanwhile, the group has appointed Jones Lang LaSalle to sell its Voyages Hotels & Resorts and Four Points by Sheraton Darling Harbour Hotel in Sydney’s CBD.
Looking ahead, Lyons said GPT remains a business that still expects to generate nearly half a billion dollars in realised operating income this year.
“GPT is currently trading at a discount to NTA of approximately 50%, which we regard as unsustainable given the quality of GPT’s underlying asset base.
“The initiatives outlined today, while likely to take some time to execute, are consistent with the objective of GPT’s management team and board of pursuing a strategic direction that will deliver long-term value for securityholders,” he concluded.
The group has announced distribution per security of 11.4 cents – a decrease from 14.3 cents.
GPT shares closed 1.5 cents lower at $1.685
Australian Property Journal
