Broad Recovery Sees GPT Set to Lift Payout

All being well, property group GPT says it is on track for an inflation-busting rise in distribution and funds from operations for the year to December.

The company has stuck to full year guidance after telling unit holders at the annual meeting on Wednesday it had seen a strong recovery in some of its key businesses – especially retail – in the past couple of months.

The meeting was told the developer and investor expects to deliver Funds from Operations (FFO) in the range of 31.7 to 32.4 cents per security and a distribution of 25.0 cents per security for the full year 2022 ending December.

This is in-line with guidance provided to the market in February and takes into account rising interest rates.

If it meets this guidance FFO for each security will be up from 28.82 cents for 2021 and at the top of the range, will represent a solid 12% plus rise and more than 10% at the bottom.

The forecast distribution will be up 12% from the 23.2 cents a security for last year – which will easily top the expected 6% rise in headline inflation for 2022.

The annual meeting heard of a solid improvement in the performance of its retail assets, except in Melbourne’s CBD where the return to offices is lagging.

“Despite the challenging year occupancy is above 99% which is a great outcome and demonstrates the resilience and quality of our assets. In March, customer visitations for the portfolio were up 8.8% on March last year, CEO Bob Johnston told the meeting.

“We have seen a strong recovery in sales over the last two months following the shadow lockdown from Omicron in January.

“March sales across our portfolio were generally well above 2019 levels with the main exception being Melbourne Central.

“Melbourne Central which prior to COVID was the most productive shopping centre in the country, is lagging in its recovery due to the slow return of workers to the CBD. The ramp-up of students attending classes, the re-opening of borders and the return of CBD workers will accelerate the recovery of this asset.

“Total Specialty sales were up 9.9% in February and 8.7% in March on the prior year,” Johnston said.

GPT’s office portfolio has a value of $6.1 billion and delivered solid results for the Group in 2021 and at the end of March, occupancy was 92.0%.

“While the office leasing market remains competitive and was relatively subdued during the first quarter of this year, we anticipate that leasing activity will continue to improve as conditions normalise and businesses seek high quality space to encourage staff back to the workplace.

GPT has spent heavily since the pandemic started and online retailing expanded rapidly, in building and investing in logistics like warehouses and distribution centres.

“The logistics sector and our portfolio continue to enjoy strong tailwinds and we expect this momentum to continue for some time,” Johnston told the meeting.

“Our land bank has expanded, with the Kemps Creek estate now 37 hectares, following the acquisition of an adjoining site.

The QuadReal partnership also secured its first Sydney project, acquiring 10 hectares in Kemps Creek, along with three development sites in Brisbane.

“We continue to make good progress with our development projects despite some recent delays due to the abnormal weather conditions during the March quarter.

The securities ended up nearly 2% at $4.78.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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