Release Date: February 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GPT Group (GPTGF, Financial) achieved its earnings and distributions guidance of $0.32 and $0.24 per security for the year.
- The company maintained a high occupancy rate of nearly 99% across its portfolio, indicating strong tenant demand.
- GPT Group's retail portfolio experienced a 2.7% annual valuation growth, driven by stable capitalization rates and strong operating fundamentals.
- The logistics platform delivered 5.6% like-for-like income growth, with high occupancy at 99.5% and a weighted average lease expiry of 5.1 years.
- GPT Group has a strong balance sheet with net gearing of 28.7%, providing material headroom to its 50% covenant.
Negative Points
- The office portfolio saw a significant decline in value of 16.8% for the year due to weak income fundamentals and a softening of capitalization rates.
- Overall portfolio experienced a 5.6% decline in value in 2024, primarily driven by first half valuation movements.
- AFFO decreased by 4% compared to the prior period due to higher maintenance and leasing CapEx.
- The company faced a 6% increase in finance costs, partially offsetting the 4% increase in total investment portfolio and management FFO.
- GPT Group's office portfolio has a current vacancy rate of 5%, with ongoing efforts needed to address larger long-dated forward expiries.
Q & A Highlights
Q: Can you provide details on the $24 million trading profits for 2024 and expectations for 2025?
A: Merran Edwards, CFO, explained that the 2024 trading profits were mainly from Sydney Olympic Park transactions. For 2025, trading profits are expected to be about half of 2024's level.
Q: What are the assumptions for the weighted average cost of debt in 2025?
A: Merran Edwards, CFO, stated that the weighted average cost of debt is assumed to be in the mid-5% range for 2025.
Q: What is the current office occupancy rate without heads of agreement?
A: Matthew Brown, Head of Office, noted that the office occupancy rate without heads of agreement is approximately 92%.
Q: Can you provide insights into the capital raising plans for 2025?
A: Russell Proutt, CEO, mentioned that capital raising will focus on various sectors, including opportunistic strategies in office, core and core+ in retail, and development opportunities in logistics. There is optimism about raising incremental capital this year.
Q: How are corporate costs expected to evolve in 2025?
A: Merran Edwards, CFO, indicated that corporate costs are expected to remain consistent with 2024 levels, with some reallocation to align with strategic priorities.
Q: What is the outlook for office leasing incentives?
A: Matthew Brown, Head of Office, expects leasing incentives to decrease over the next 12 to 24 months as market conditions improve and positive net absorption is observed.
Q: What is the expected CapEx for the Melbourne Central redevelopment?
A: Chris Barnett, Head of Retail and Mixed Use, stated that the redevelopment is expected to commence in Q3 2026, with a total project cost of approximately $120 million.
Q: How is the GWOF fund modernization progressing?
A: Russell Proutt, CEO, mentioned ongoing discussions with investors to find the best outcome for the fund, with a focus on the 2026 liquidity event.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
