This article is from the Australian Property Journal archive
SOLID growth in the Sydney and Melbourne office markets has helped GPT record funds from operations of $537 million for the 12 months ended December 31, an increase of 7% over last year.
GPT also delivered a net profit after of $1.153 billion, up 32.8% on the previous corresponding period, including valuation uplift of $612 million, and 5.6% FFO per security growth to 29.88 cents. A distribution of 23.4 cents per security, up 4% from 22.5 cps.
CEO Bob Johnston said that all areas of the business had contributed to the profit result, with the quality of the investment portfolio evidenced by the strong like for like income growth of 4.5% and high occupancy level of 97.1%.
“Our key office markets of Sydney and Melbourne have experienced further improvements in property fundamentals and we expect both will deliver solid rental growth over the next few years, supported by positive tenant demand and a limited supply of new space over that time. Market conditions are expected to remain positive for valuations of high quality assets in prime locations through 2017,” Johnston said.
The retail portfolio delivered like-for-like income growth of 3.8%, driven by a combination of fixed rental increases, improved leasing spreads and a continued focus on expense management. Property net income was down slightly to $246.7 million as a result of the sale of Dandenong Plaza in Melbourne.
After two particularly strong years, specialty sales growth across the portfolio moderated to 2.6%. Specialty sales productivity across the portfolio remains strong, with the portfolio now trading at over $11,000 per sqm, up approximately 5.5% on the previous year.
The value of the retail portfolio increased by $230.8 million in 2016, with the weighted average capitalisation rate firming 19 basis points to 5.39% over the period. Key contributors to this result included Melbourne Central (+11.4%) and Highpoint (+10.3%).
The office portfolio delivered 6.3% like-for-like income growth and a valuation uplift of $336.5 million. Revenue increased from $210.5 million to $225 million. The portfolio’s weighted average capitalisation rate firmed 39 basis points to 5.55%. The division signed 170,000 sqm of leases and occupancy across the portfolio now stands at 97%. The logistics portfolio delivered like-for-like income growth of 1.4% for the year, and occupancy to 95.3%.
Funds management recorded revenue of $61 million up from $44.6 million from the previous year.
The group had net gearing of 23.7% at the end of the year.
Looking ahead, Johnston said GPT is in a healthy financial position at the commencement of 2017, and expects to deliver FFO per security growth of approximately 2%, and distribution per security growth of approximately 5% for the year.
“The outlook is underpinned by high portfolio occupancy, fixed rental increases and a strong capital position,” Johnston said.
Australian Property Journal
