GPT results boosted by office projects as retail softens


However, due to lower property valuation compared to the previous year, net profit fell by 39.4 per cent to $880 million for the year to December 31, 2019.

We are making very good progress on our strategy to grow the logistics portfolio.

GPT CEO Bob Johnston

Macquarie Equities’ analyst Stuart McLean said GPT’s guidance was stronger than he expected and the firm’s office/logistics metrics appear solid.

“While the retail comparative sales improved, leasing metrics and like-for-like retail income growth seems more difficult,” Mr McLean said.

GPT has about 85 per cent of earnings generated from the office and industrial logistics businesses. It aims to lift the current 16 per cent exposure to the industrial sector to about 20 per cent with new acquisitions and development of the vacant land bank.

“We are making very good progress on our strategy to grow the logistics portfolio,” Mr Johnston said.

“The addition of three new development sites in our core markets of Sydney and Melbourne,
combined with projects currently underway, provides the group with the opportunity to deliver
more than 550,000 square metres of new prime logistics facilities with an estimated end value
on completion in excess of $1 billion.”

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GPT will work with the co-owners of the $2 billion Cockle Bay Wharf office and retail redevelopment in Sydney’s Darling Harbour. And its new sites in Parramatta and Melbourne’s 300 Lonsdale Street.

Mr Johnston said Sydney and Melbourne office markets were in “great shape” and while there is new supply coming on, a majority is pre-committed which will underpin rental growth.

Overall the retail sentiment has been soft and the group said there was no flow on effect from last year’s tax cuts, particularly in the mid-market apparel sector.

Mr Johnston said productivity in specialty sales for tenants was strong at an average $11,667 per square metre and was boosted by a change of mix in tenants to the more popular technology, food and interactive sport stores.

Saranga Ranasinghe, vice president and senior analyst, corporate finance group, Moody’s Investors Service, said the results highlighted the benefits of GPT’s diversified assets.

“In particular, weakness in the retail segment was offset by the strong performance in the office and logistics segments, driven by strong market fundamentals in both Melbourne and Sydney,” Ms Ranasinghe said.

“Despite the weaker retail environment, GPT’s operating performance and financial metrics remain in line with our expectations. GPT’s balance sheet also remains well-positioned for its rating, with its recent equity raising providing conservative funding for growth initiatives.”

GPT securities were up 1.5 per cent to $6.26.

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