GPT looks to logistics and office deals to boost earnings

Diversified property giant GPT has issued a higher earnings guidance to investors based on the booming industrial and logistics sector and a turnaround in its shopping centres, which had been hard hit by the COVID-19 pandemic.

A deal to manage UniSuper’s $2.8 billion direct real estate mandate and a large-scale $1.8 billion development program led GPT to report an 8 per cent jump in funds from operations – the more accurate measure of profitability for listed property groups – to $326.5 million for the six months to June 30.

GPT chief executive Bob Johnston said the better outlook, despite rising interest rates and inflation issues, had led him to forecast FFO earning per security of 32.4 cents, which is at the highest end of the group’s internal figures and ahead of most market analysts.

‘There has been a strong recovery in sales performance across GPT’s retail portfolio, buoyed by low unemployment and elevated levels of household savings.’

Bob Johnston, GPT chief

“The logistics sector is benefiting from ongoing structural tailwinds. Vacancy rates remain very low in the core markets nationwide, resulting in an expectation for further increases in market rents,” Johnston said.

“There has been a strong recovery in sales performance across GPT’s retail portfolio, buoyed by low unemployment and elevated levels of household savings.”

The ASX-listed GPT has a market value of $8.2 billion and is an owner and manager of $27.4 billion of diversified real estate assets, with a balance sheet portfolio valued at $16.4 billion.

Johnston said Melbourne Central, which had been hard hit by the pandemic, is benefiting from a return of students, tourists and the gradual rise in the number of CBD workers. A new Monopoly Dreams concept is opening in the centre.

But he did warn that rising interest rates will lead to some moderation in retail sales growth.