On Monday, the real estate company GPT Group (ASX: GPT) announced a quarterly market update for the period ended 31 March 2019.
During the quarter, the Group undertook a new US$400 million (A$559 million) US Private Placement debt issuance for an average term of 12.9 years at a margin of 170 basis points over 3-month BBSW. This underscores the strong demand by investors which upsized the initial US$150 million offerings to US$400 million.
Commenting on the successful debt capital markets issuance by the Group, GPT’s Chief Financial Officer, Anastasia Clarke, said the Group was delighted with the support received from US investors, who recognised the quality of GPT’s diversified portfolio.
“This is a strong endorsement of the Group’s credit strength and confirmation of its continuing ability to access global debt markets at competitive pricing,” said Ms Clarke.
On the sales front, GPT reported 1.6% growth in retail specialty sales with Food Retail and Tech & Appliances sector achieving attractive growth of 8.8% and 8.2% respectively while Jewellery and Lifestyle segments trending downwards. Total Retail Specialty comparable MAT growth was 1.9% compared to 3.6% as at 31 December 2018.
GPT’s Chief Executive Officer, Bob Johnston “While there is evidence that retail conditions remain subdued, the Group’s retail portfolio continues to maintain high occupancy. The Group is achieving strong leasing outcomes in the Office portfolio and it is continuing to execute on its growth plans in Logistics, with a number of acquisitions completed and new developments underway.”
The Group has signed office leases of 47,000 square metres (sqm) during the quarter and managed to maintain the office portfolio occupancy at 97.1%. The change in office portfolio also includes the sale of the Group’s 50% interest in MLC Centre during the quarter at a consideration of $800 million, representing a 3% premium to 31 December 2018 book value.
Whereas, logistics portfolio witnessed the signing of 33,000 sqm of leases in the March quarter and occupancy of 94.4%. The group has acquired a 15-hectare development site Truganina, Melbourne, adjacent to an 8-hectare site acquired in 2018. This combined site is expected to deliver approximately 140,000 sqm of logistics space with an estimated end value of ~$200 million.
The report read that works have commenced on a new 26,000 sqm facility with practical completion expected in December 2019. It highlights the ongoing construction works for the first stage of the Truganina estate in Melbourne as well as planning works for further projects in Sydney and Brisbane.
GPT Wholesale Office Fund (GWOF) achieved a total return of 11.7% for the 12 months to 31 March 2019 and continued to outperform its office fund peers. GPT Wholesale Shopping Centre Fund (GWSCF) delivered a total return of 3.4% for the 12 months to 31 March 2019, reflecting a market-leading total return of 8.6% per annum over the past three years.
The Group further reaffirmed its 2019 guidance to meet the 4% growth for both Funds From Operations per security and Distributions per security for the full year.
GPT stock price declined by 2.833% to last trade at $5.830 on 29 April 2019. The price to earnings multiple stood at 7.460x with a market capitalisation of $10.83 billion.
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