GPT Group: Interim result 2017
Recommendation
Listed property trusts have been under pressure in recent months, with investors worrying about the impact of online sales on shopping centres, the entry of Amazon into Australia and demand for office space. GPT Group has been no exception, with its security price falling 11% since its peak in April – ahead of today's result – despite its diversified portfolio of high quality retail, office and industrial assets.
Six months to 30 June | 2017 | 2016 | /– (%) |
---|---|---|---|
Distrib. Profit ($m) | 235.0 | 208.1 | 13 |
Interim distrib. per share (cents) | 12.3 | 11.5 | 7 |
Gearing* (%) | 24.1 | 23.7 | 2 |
NTA per share ($) | 4.88 | 4.59 | 6 |
*Gearing defined as net debt/(total tangible assets – cash) |
Today's better-than-expected interim result, though, saw the stock recover 4% of that loss, as the market digested a 13% rise in distributable earnings and a 7% increase in distributions to 12.3 cents.
The biggest surprise was the performance of the group's shopping centres, which saw rental income rise 4%. GPT owns some of the best shopping centres in Australia and has a 99.6% occupancy rate. Management appears to be repositioning the portfolio to have a larger number of tenants that are less likely to be impacted by Amazon, such as food and personal services, as well as introducing new brands such as the first Australian Toyota concept store at a shopping centre in Sydney.
GPT's portfolio of office buildings benefited from increased demand for premium CBD assets in Sydney and Melbourne. GPT reported 9% rental growth from its office assets, with a healthy 97% occupancy rate.
GPT's gearing remains low at 24% and net tangible assets per unit increased to $4.88. Management provided guidance for a 5% lift in distributions for the full year, which would take them to 24.6 cents per security and put the stock on a forward yield of 5.0%. HOLD.