Property investor and manager, GPT Group has lifted its forecast returns a touch for the 2019 financial year (ending December 31) after reporting a solid set of results for the year to last December.
GPT reported a 14.5% increase in full-year profit to $1.45 billion (including valuation uplift) and says its shopping centres have remained resilient against online competition.
But it was its office assets that helped give the big boost to the valuation uplift: “The Group reported a valuation increase of $910.7 million for the 12 months to 31 December, with the Office assets recording the largest gains,” the company said yesterday.
The company expects that it will see a 4% rise this year in the key measure of Funds From Operations (FFO) and distribution per security (DPS).
FFO per security in 2018 rose 3.5% to 31.84 cents, while the DPS was up 3.5 to 25.46 cents a share.
Income from the company’s retail portfolio grew 2.2% in the 12 months to December 31, while the vacancy rate stood at 0.4% at year-end.
The company said on Monday that expansion plans for Sunshine Plaza shopping center in Queensland remain on track, with the completion of stage two in March expected to include a new David Jones department store, a Big W, H&M and 70 other retail brands.
GPT confirmed plans to sell its 50% stake in the MLC Centre in Sydney in order to fund projects in the city’s west and in Melbourne.
“The proceeds from the sale will initially be used to repay debt prior to being reinvested into the development pipeline, which includes the new 32 Smith office tower in Parramatta and a planned new office tower at Melbourne Central,” GPT CEO Bob Johnston said.
“The competitive landscape has evolved with the growth in online retailing, but physical retail continues to deliver approximately 90 percent of all retail sales,” he said.
CEO Bob Johnston said the Group “achieved excellent results, with full-year FFO growth in line with the upgraded guidance provided in October last year and significant revaluation gains from the Group’s high-quality investment portfolio.”
“GPT has recorded another year of strong valuation gains, supported by sustained investment demand for high-quality assets and favourable supply and demand fundamentals in our key markets,” said Mr. Johnston.
“Our Office portfolio delivered excellent results and continued to benefit from its exposure to the Sydney and Melbourne office markets, which we expect will continue to outperform in 2019,” he said.
GPT securities rose by just over 0.1% to $6.11.