GPT Group (ASX: GPT
) is owns and manages a varied portfolio of Australian retail, office and industrial property assets. The Group's property portfolio includes the MLC Centre, Australia Square, Rouse Hill Town Centre, and Melbourne Central.
The company has through the latest release on ASX stated the announcement to divest its 50 percent stake held in the MLC Centre. Over the past five years, the building has been through a significant upgrade to the food court, together with an extensive re-leasing program undertaken within the office tower which has enhanced the income profile of the asset.
The company’s Chief Executive Officer Bob Johnston while announcing the proposed disposal of the asset has said that the Sydney CBD office market has witnessed a notable amount of rental growth over the past 5 years. Moreover, the company has been able to successfully reposition itself and this has led to the generation of exceptional returns for the company.
He also said that the company has some ambitious plans intact which will aid the company to reinvest the proceeds received from the disposal of these assets into its development pipeline. This development pipeline includes the development of the new office tower at Parramatta, and a proposed new office building at Melbourne. The Group will also continue to look out for the emerging Logistics development space after the the completion of many successful developments comprehensively done over the past 2 years.
The sale of the MLC Centre would see GPT’s Sydney office exposure initially reduce to 60 percent (from 65 percent), with its weighting to Melbourne increasing to 34 percent (from the current 30 percent).
For the 1H 2018, the company had reported a statutory profit of $728.5 million. Funds from Operations (FFO) which is considered as the sector’s key performance metric, came in at $289.4 million for the half year. This has led to a FFO growth of 3.2 percent per security.
A revaluation of the group’s investment assets was done during the half year. Due to this revaluation the company’s assets increased by $457 million via a rise in the valuation of Office, Retail and Logistics portfolios over the book values of the assets which were recorded as on 31 December 2017. NTA per security increased by the 27 cents to reach at $5.31.
In the half yearly report the company has provided the guidance, as per which the company can envisage a growth in the FFO per security of ~3%. The company has also guided for a growth in the distributions of around 3% for the FY 2018. The company’s expectation is that the office sector will continue to remain strong also the retail sales growth will continue as well as positive trend is expected for the demand in the logistics facility space in the regions of Sydney and Melbourne.
In the meantime, the stock price of the company has risen by 7.17 percent in the past six months as on 15 January 2019. Company’s shares last traded at $5.530, trading flat & it has a market capitalization of circa $9.98 Bn as on 16 January 2019.
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