This article is from the Australian Property Journal archive
GPT recorded another full-year loss on the back of hefty asset devaluations in 2024, but the diversified property group posted a funds from operations (FFO) increase and is expecting further modest growth in the coming year as it records strong office leasing numbers.
FFO came in at $616.3 million, or 32.2c per security, a slight uptick on the prior corresponding period (pcp)’s $600.9 million, or 31.37c.
GPT expects to deliver 2025 FFO of between 32.5 and 33.1 cents per security, showing 1% to 3% growth, and a steady distribution of 24.0c per security.
The loss of $200.7 million came on the back of $770.7 million in property valuation declines, as downwards valuations continued to wash through the commercial real estate sector – particularly in the office market, which has been grappling with working from home phenomenon and higher interest rates.
That follows 2023’s $240 million loss which was driven by $819 million in property valuation declines.
“2024 has been a year of successful operational improvement and delivery. In particular, it’s pleasing to see the significant lift in occupancy across the office portfolio,” GPT’s CEO, Russell Proutt said.
“Coupled with the strong retail and logistics operational performance, this sets up the group for future earnings growth,”
GPT recorded its strongest office portfolio leasing volume in five years, and around double the leasing volume achieved in 2022. It secured 202,200 sqm of leases across 147 deals, equating to around 20% of total portfolio net lettable area.
Office portfolio occupancy ended the year at 94.7%, with a weighted average lease expiry (WALE) of 5.0 years and comparable net property income growth of 1.9%.
In its retail portfolio, occupancy was at 99.8%, with comparable net property income growth of 4.9%. Strong leasing activity resulted in 570 lease deals during the period, with an average annual rental increase of 4.9% and an average lease term of 5.1 years. The leasing spread averaged 4.2%.
Total centre sales were up 4.3% and total specialty sales were up 4.9%.
GPT closed out 2024 with the acquisition of a 50% stake in two shopping centres from Perron for $482 million, while GPT has just come to an arrangement with the GPT Wholesale Shopping Centre Fund (GWSCF) that will see the ASX-listed group take on a greater ownership stake in Melbourne megamall Highpoint, and the pair take co-ownership of Rouse Hill Town Centre (RHTC) in Sydney’s north-west. RHTC is set for a $200 million redevelopment beginning in the current half.
“During the year we embarked on a strategy to prioritise the growth of our investment management business to enhance return on capital. We have had strong initial success as evidenced by the establishment of the Perron Group partnership and the GWSCF modernisation,” Proutt said.
“While it is early days, we continue to see significant opportunities for future growth and believe the changes made to the platform will drive earnings growth in the years ahead.”
Logistics portfolio occupancy was 99.5%, with a WALE of 5.1 years and comparable income growth of 5.6%. Leasing of 103,800 sqm was completed for the full year with leasing spreads averaging 35%. GPT is eyeing off opportunities to access further income upside through upcoming leasing, with 33% of portfolio income expiring over 2025 to 2027.
GPT has a $3 billion logistics development pipeline.
