GPT Group: Interim Result 2018
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GPT Group owns a portfolio of high quality retail, office and industrial properties and it manages them conservatively, so there are rarely any surprises come results time.
| Six months to 30 June | 2018 | 2017 | /– (%) |
|---|---|---|---|
| Distrib. Profit ($m) | 232.9 | 235 | (1) |
| Distribution (cps) | 12.61 | 12.3 | 3 |
| Gearing (%)* | 24.7 | 24.4 | 1 |
| NTA per share ($) | 5.31 | 5.04 | 5 |
| *Gearing defined as net debt/(total tangible assets -cash) |
This interim result was no different. Whilst there was good underlying growth in the portfolio, distributable profits were flat due to elevated capital expenditure and lease incentives over the past six months. This is to be expected in a period when a property trust signs a number of new leases, particularly with office buildings.
GPT's shopping centres performed particularly well over the period, with occupancy at 99.7%. Rental income increased 2.3%, with growth from specialty retailers in appliances, dining and health and beauty services offsetting weaker sales in the department stores. As we noted twelve months ago, GPT has been repositioning its centres towards tenants that are less likely to be affected by online retail and it's reassuring to see this being reflected in the numbers.
The office portfolio performed in line with expectations, benefiting from the robust Sydney and Melbourne office markets. Occupancy increased to 97% and rental income rose by 5.5% mainly due to higher income from Sydney's MLC Centre and Farrer Place.
GPT's gearing remains low at 25% and net tangible assets per unit increased to $5.31. Management guided towards a 3% rise in distributions for the year to December 2018; but at the current rate of progress investors may receive a little more. HOLD.
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