GPT Group: Interim result 2015
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Michael Cameron took charge of a tottering GPT Group during the depths of the GFC. Six years on, he leaves to take up the reins at Suncorp having returned GPT to the high-quality listed property trust it once was.
| Six months to June 30 | 2015 | 2014 | (%) |
|---|---|---|---|
| Rental income ($m) | 293 | 281 | 4 |
| Borrowing expense ($m) | 58 | 52 | 12 |
| Distrib. profit ($m) | 249 | 224 | 11 |
| DPS (c) | 11.0* | 10.5 | 5 |
| Gearing (%) (**) | 30 | 27 | 11 |
| NTA per share ($) | 4.03 | 3.82 | 6 |
| * Unfranked, ex date passed | |||
| ** Gearing defined as net debt / (total tang. assets – cash) | |||
GPT's retail, office and logistics properties all increased their operating income in the first half of 2015. Unsurprisingly given continued low interest rates and the intense demand for commercial property, all three divisions' capitalisation rates declined, with GPT now sporting a low average capitalisation rate of 6.18%.
Along with developments and the listing of GPT Metro Office Fund in October 2014, increases in property prices helped push up GPT's funds under management to $9.8bn. Income from its equity investments in these funds also increased, by 31% to $51m, and now exceeds operating income from its logistics properties.
Assuming new chief executive Bob Johnston runs GPT in the same fashion as his predecessor, strong management and its collection of trophy properties including MLC Centre and Australia Square mean GPT would make a fine addition to conservative portfolios and those looking for a reasonable yield.
However, as we noted in DEXUS: Result 2015 on 3 Sep 15 (Avoid – $7.35), it's likely we're nearer the top of the property cycle than the bottom. GPT is down 6% since we last reviewed the stock in March but, with a forecast unfranked yield of 5.1%, it remains too expensive for us. AVOID.
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