Soft applause from investors for the first earnings and distribution guidance for a year from GPT as it emerges from the shadow of too much uncertainty thanks to Covid and the lockdowns.
The company on Monday forecast 8% growth in funds from operations (FFO) for the 2021 year – the most accurate measure of earnings for listed property trusts – thanks to the obvious improvement in retailing with the absence of long lockdowns and stabilising of property values, especially in CBD areas.
GPT said its forecast distributions growth will be up 12% in 2021 which sounds almost boom-like, but will still leave it short of the 2019 level, not to mention 2018.
The distribution in 2020 fell 15% to 22.5 cents a security (from 26.48 cents in 2019 and 22.56 cents a security in 2018).
Funds from operations for 2020 fell 12.9% to 28.48 cents a security from 2019’s 32.68 cents a security.
An 8% rise this year would take that to around 30.75 cents a security and well short of 2019.
Those comparisons were ignored in the short statement from GPT on Monday which had CEO, Bob Johnston upbeat, although he said that that while the Melbourne Central shopping centre was still facing some disruptions from COVID-19 related issues, the pace of the economic recovery has given the business confidence to issue the new growth figures.
“It is pleasing to see Australia’s economy continuing to benefit from the post COVID-19 recovery and the disruption to our operations is abating”, Mr Johnston said.
“While risks remain, including the speed of recovery of our Melbourne Central Shopping Centre and further COVID-19 related disruptions, trading conditions over the first quarter have provided us with sufficient confidence to announce earnings and distribution guidance for the 2021 full year.”
GPT has focused on boosting its industrial portfolio (mostly logistics – warehouses, distribution centres and the like), which has been a main beneficiary of the boom times in online shopping. It has a target of about 30% exposure to the sector with the rest in office, retail and its funds management operations.”
It has sold a couple of big assets or interests in CBD assets and deployed the cash raised into the logistics business.
“The Group’s high-quality portfolio has proved resilient throughout the pandemic. Consumer confidence continues to be strong, driving foot traffic at our shopping centres, office utilisation is steadily increasing and demand for logistics assets remains strong reflecting the increased economic activity,” Mr Johnston said.
GPT will release its quarterly results on April 29 and will hold its AGM on May 13.
It said at the time of the February release of its 2020 full year results that it would withhold guidance until around the time of the release of the first quarter results for 2021. The statement on Monday met that pledge.
By the close the soft applause had turned to a guarded thumbs down and the securities fell 3.2% to $4.66.