GPT’s substantial increase in its funds under management target can easily be justified by the growing demand for real estate assets. GPT notes the default allocation to unlisted real estate has nearly doubled since 2004. With superannuation contributions increasing and an ageing population, the sector is primed for further growth and fund inflows.
For self-managed super fund investors, the exposure to listed trusts such as GPT has more than halved since 2008 to 3.6 per cent as investors fled the sector in the wake of the global financial crisis. In comparison, the unlisted side of things has remained relatively stable but is a difficult measure to monitor noting the illiquidity and mortgage trusts that also make up this sector.
Evidently GPT has the flexibility to move with investment themes and is in a position where it can grow funds under management as an extension of underlying operations without having to radically lift staff numbers. Across the two funds GPT already manages, both at the wholesale level, $7.2 billion worth of assets are under management.
Revenue is collected through funds management, property management and development of properties within the portfolios. Expanding its fund offerings, GPT is looking to launch a logistics fund, which will appeal to investors looking for an exposure to benefit from the changes unfolding across the traditional distribution channels , encouraged by the rise of online shopping.
Beyond growing funds under management, GPT is looking to adjust its underlying asset class exposures, by slightly moving away from retail space and moving towards a 15 per cent exposure to industrial offerings, including warehouses and distribution options.
Despite softening conditions across office and retail markets, GPT has been able to increase earnings per share growth guidance to 6 per cent (up from 5 per cent) for this calendar year. All up, GPT is looking to generate a 9 per cent total return for investors.
Targeting an increase in funds under management will help diversify the earnings base and offset the weakness that is expected to pervade retail and office markets for some time yet. It is evident GPT sees funds management to be an ideal source of robust earnings growth.