This article is from the Australian Property Journal archive
LOCKDOWNS in NSW and Victoria have caused headaches for GPT’s retail assets, and a long recovery is expected its Melbourne Central mall as the CBD remains empty, while it continues to reweight its portfolio towards the industrial sector.
The group confirmed in late October the $402 million sale of Wollongong Central to Haben JY Group, and with its quarterly update on Friday reaffirmed it had agreed terms with Sentinel Property Group for the sale of Casuarina Square in Darwin, expected to come in at $420 million.
That came shortly after its $682 million purchase of the Ascot Capital logistics portfolio, bringing its total industrial portfolio to $4.1 billion.
On average, 27% of stores open in NSW and Victoria during the quarter. GPT’s CEO Bob Johnston, said trading restrictions “had a considerable impact on cash collections”, with 63% of rent collected in the period.
Leasing spreads achieved averaged -9.5%, and portfolio occupancy slipped from 98.9% to 98.5%.
“The recent easing of COVID-19 restrictions and re-opening of non-essential retail in NSW and Victoria is welcomed, and early indications suggest we will see customer visitations at our shopping centres return to levels experienced prior to the lockdowns. However, the recovery of GPT’s Melbourne Central shopping centre is likely to be more protracted given its reliance on the return of office workers, students and visitors to the Melbourne CBD.”
Total centre sales across the portfolio were down 45.7% compared to the same quarter in 2019, and total specialties sales were down 54.2%.
Melbourne CBD office occupancy fell to just 6% during the period, according to the Property Council. Vacancy rates in the office sector remain elevated, but Johnston said they are stabilising. Leasing deals were finalised at recently completed developments at 32 Smith Street and the GPT Wholesale Office Fund’s Queen & Collins. It also secured the Victorian government as a tenant for 12,300 sqm at 181 William Street.
Johnston said the most active enquiry is from “small to medium size tenants looking to take advantage of the opportunity to move into vibrant workspaces that provide flexible growth options”.
GPT’s growing logistics portfolio included newly completed projects totalling $90 million. They were a 16,300 sqm facility at Wembley Business Park in Brisbane and a 29,800 sqm facility at the Gateway Logistics Hub in Melbourne’s Truganina.
“We continue to see strong tailwinds for the sector, with solid tenant demand and low vacancy in each of our core markets,” Johnston said.
“The group continues to execute on its strategy to increase capital allocation to the logistics sector through acquisitions and development completions. Following an active quarter, logistics now represents approximately 26% of GPT’s property investment portfolio and we have a healthy development pipeline providing further opportunities for growth in the sector.
“Asset valuations for the logistics sector continue to be supported by very strong investment and tenant demand.”
The logistics development pipeline has an end value of about $1.6 billion.
