GPT Group is in the market for potential acquisitions, armed with a $2.5 billion war chest and a desire to grow through developments and asset investments.
At the group's half-year result on Monday, the directors said while they did not have a specific target, having walked away from Australand earlier this year, the balance sheet had the firepower to participate in any potential takeover activity.
CLSA analyst John Kim said GPT could be looking at assets to seed a new suburban office fund.
"While GPT passed on an Australand bid, there is little question in our mind that acquisitions are in store," Mr Kim said.
"We believe GPT has one of the lowest weighted average cost of capital at 6.7 per cent and balance sheet gearing levels in the Australian real estate investment trust industry of 19.9 per cent.
"Additionally, it has size, and funding partners, bringing its total debt-funded investment capacity to $2.5 billion. We place a low probability on a Commonwealth Property Office Fund acquisition, but do believe it is looking for product for a new suburban office fund."
At the half year investor briefing GPT's chief executive Michael Cameron said the group had a "fortress" balance sheet with "plenty of capacity".
"That's [the balance sheet] not going to be an issue for us to be ready to pounce on any opportunities," Mr Cameron said.
"But we're not focused on getting bigger and we're not focused on borrowing money at 5 per cent and buying assets at 7 per cent for the sake of earnings accretion."
Mr Cameron said the directors would look at individual opportunities and individual states in Australia, and apply that discipline, "very very tightly".