This article is from the Australian Property Journal archive
GROWTHPOINT is on track to deliver full year growth in funds from operations as it rides the momentum of Australia’s robust office market.
The group reaffirmed its FY20 guidance at least 25.4 cents per security and distributions of 23.8 cents, representing growth of 3.5%.
Net property income jumped 9.1% on the prior corresponding period to $121.4 million and like-for-like NPI grew 2.7%. Property valuation gains took the portfolio value to $4.2 billion, up 5.0%.
Timothy Collyer, managing director said the fundamentals of the business remain robust with a high occupancy rate, long weighted average lease expiry, high proportion of fixed annual rent reviews and exposure limited to the better-performing office and industrial property sectors.
The portfolio weighted average capitalisation rate firmed 20 basis points to 5.7%. About 111,000 sqm was leased through the half, representing 15% of total portfolio income, and WALE increased to 6.4 years from 5.0 years.
During the half, Growthpoint signed its longest lease agreement to date, a 25-year deal with its single tenant, the NSW Police Force at the Curtis Cheng Centre in Parramatta. Other key tenants, Optus and ANZ, also extended their leases.
Portfolio occupancy rate was maintained at 98% and retention rate increased to 95% from 85%.
Growthpoint recently achieved practical completion on an A grade office building in Melbourne’s Richmond ahead of schedule, and plans for redevelopment of a 25 hectare industrial property in Melbourne’s north have been submitted.
Collyer said these projects are expected to deliver above market returns over the next couple of years.
“We remain focused on aligning FFO per security and DPS growth over the medium term. Earnings growth will be supported by our development pipeline, with projects to be progressively completed over the next few years, and using debt capacity for accretive property acquisitions. We are also exploring options to diversify our income streams.”
