This article is from the Australian Property Journal archive
Growthpoint Properties Australia overcame challenges in the first half year to deliver a solid profit result, highlighting the group’s resilient portfolio.
Growthpoint maintained a strong fund from operations (FFO) of $88.8 million, which is slightly down from the $191.1 million in the previous corresponding period, despite the sale of non-core assets which realised $335 million.
The group recorded a statutory net loss of $98.7 million, driven largely by property devaluations. The company also declared a distribution of 11.2 cps, including a one-off 2.1 cps distribution, maintaining its target payout ratio of 75–85% of FFO.
Growthpoint’s CEO and managing director Ross Lees said the funds management business continues to growth, delivering $288 million of new assets under management whilst realising $335 million in sales and reduced gearing to 38.8%.
“All of this has been achieved whilst continuing to deliver strong performance through our directly owned assets, underscored by 94% occupancy and a 6.0 year weighted average lease expiry,” he pointed out.
The funds management business expanded with the establishment of the $198 million Growthpoint Australia Logistics Partnership (GALP) with TPG Angelo Gordon, focusing on logistics assets. Additionally, the Growthpoint Canberra Office Trust (GCOT) acquired a $90 million A-Grade office building in Canberra’s CBD, leased primarily to government tenants.
The office portfolio saw 13,671 sqm of leasing across 17 deals, with a focus on repositioning 30,000 sqm of assets in Sydney Olympic Park, South Melbourne, and South Brisbane. While the office portfolio value declined by 4.7% to $2.6 billion, rental growth in most markets help mitigate yield expansion.
In the industrial sector, Growthpoint completed 100,058 sqm of leasing, including a significant expansion of the Perth Regional Distribution Centre with Woolworths, securing a 10-year lease extension. The industrial portfolio valuation rose by 1.5% to $1.4 billion, driven by rental growth despite a slight increase in capitalisation rates.
Lees believes market conditions are improving.
“With Australia’s population expected to grow by over 4 million by 2034, we anticipate strong demand across our portfolios.
“The recent 25-basis-point rate cut by the Reserve Bank of Australia (RBA) is expected to boost confidence and capital flows in the real estate sector, creating opportunities for investment and capital recycling,” he added.
Growthpoint reaffirmed its FY25 FFO guidance of 22.3–23.1 cps and distribution guidance of 20.3 cps, including the one-off 2.1 cps distribution.
