COVID has had a dramatic impact on GPT in the year to December.
The property giant wrote down the value of its various assets – especially office buildings and retail by a net $712 million and provided rent relief to COVID-hit tenants at a cost of nearly $100 million which cut into the group’s earnings in a what it described as a “challenging year”.
And the impact of all these negatives was seen in the distribution for the year – 22.5 cents per security, more than 14% lower than the 26.48 cents per security for 2019.
The cause was the big cut to the interim – to 9.3 cents from 13.11 cents the year before. The final of 13.20 cents was slightly lower than the 13.37 cents for the final half of 2019.
The property manager, which controls $14.1 billion in office, retail and industrial assets, reported a 9.6% fall in funds from operations – the key real estate investment industry metric that removes lumpy changes to property values – to $554.7 million for the full year to December.
FFO per security was 28.48 cents, down 12.9% on 2019.
Rent waivers for tenants, mainly in the group’s retail properties, and provisions for uncollected rent over the year totalled $95.3 million and all due to the impact of COVID and the lockdowns the pandemic triggered and continue to ignite (Victoria this week).
Despite the news of the rise in rent relief and the lower FFO the price of GPT’s securities rose 1.8% to $4.18 yesterday as investors focused on encouraging news from the group’s growing logistics business (which seeks to take advantage of the rise in online shopping and selling).
Investors also ignored the statutory net loss after tax in 2020 of $213.1 million, compared to a statutory net profit after tax of $880 million in 2019. That loss was driven by the $712 million in “negative property valuation movements” a fall of 4.8% in the value of its huge portfolio.
However, operating net income was $280.2 million, up 1.8 % compared to 2019.
GPT reported an investment portfolio totalling $24.4 billion in assets under management (AUM) for the annual period.
The company’s property portfolio is presently 98.4% occupied. Despite the impacts of virus GPT Group collected 94% of net billings during the period.
GPT noted that its logistics portfolio has grown from $1.9 billion to $3 billion over the past two years. The company says it has increased capital allocation to logistics, which is now 21% of group assets.
GPT reported liquidity of $1.8 billion which it claims fully funds current commitments through to 2024.
Looking ahead, GPT intends to continue growing its logistics portfolio via acquisition and development.
GPT said it also has additional plans to further expand its funds management platform further.
Given the continued uncertainty in the business environment caused by the pandemic, no 2021 earnings or distribution guidance was provided. However, GPT expects to deliver 2021 earnings and distribution guidance with its March 2021 quarterly update.
A share buy-back program was announced yesterday for up to 5% of securities on issue as GPT maintains its capacity to invest in strategic growth opportunities. That helped send the price higher
CEO Bob Johnston underlined GPT’s particular vulnerability in the pandemic to what was happening in Victoria.
“Melbourne was hit hardest with an extended period of strict lockdown,” he told a briefing yesterday.
“GPT has 38% of its real estate portfolio located in Melbourne, including 44% of our retail assets. The extended lockdown meant that our retail assets and particularly Melbourne Central and Highpoint were significantly disrupted.
“While the five day lockdown in Victoria announced on Friday was disappointing news, we are confident that a recovery is underway for the city and this will be sustained,” he added.
