A bullish third quarter update from property owner and investor GPT with upbeat commentary across all its sectors.
GPT reported the operating environment was “strengthening” as the post-pandemic economic recovery continues.
It reaffirmed the guidance issued a fortnight ago of estimated FFO (funds from operations) per security growth of 8% and estimated DPS (distribution per security) growth of 12% on 2020.
“Guidance assumes that the economic recovery is sustained and there are no significant disruptions from COVID-19 related restrictions for the remainder of the year,” GPT said in the statement.
And CEO Bob Johnston emphasised that point in the statement
“The Group has provided earnings and distribution guidance for the full year with the expectation that we will continue to see the economic recovery sustained and COVID-19 related disruptions minimised.”
GPT told the market in the update that it had seen strong rent collection outcomes across its portfolio, highlighted by 105% of net billings collected.
Retail collections totalled 110% as GPT continues to collect on outstanding debtors arising from the Covid-driven shutdowns.
Office portfolio occupancy fell to 91.9%, down from 94.9% in December, following practical completion of GPT’s 32 Smith, Paramatta development.
GPT reported 37,300 square metres of office leasing year to date, including heads of agreement. In logistics, occupancy slipped by 300 basis points to 96.8% in the quarter after recent lease expiries in Melbourne.
GPT said that its retail total specialty sales rose 12.4% with total centre sales up 8.0% compared to the weak March 2020 quarter. In specialty, general retail (+25.5%) and leisure (+20.3%) led the way while cinema sales and travel agencies remain depressed.
GPT also unveiled a new funds management partnership during the quarter. GPT and QuadReal Property Group entered into an $800 million partnership to expand its logistics exposure and funds management platform.
More than 20% of capital has now been committed by the joint venture. That includes acquisitions and development purchases in Melbourne and Brisbane with more on the way.
Mr Johnston said in the statement: “The Group’s diversified portfolio continues to benefit from the economic recovery currently underway. In logistics, tenant demand for high quality assets remains strong supporting the ongoing rollout of our development pipeline.
“Leasing activity in the office sector continues to improve as organisations position themselves for the recovering economy, and retail sales momentum has been supported by jobs growth and strong consumer confidence.
“With the exception of Melbourne Central, our retail assets have seen foot traffic return to approximately 95% of pre-COVID-19 levels. However, the return of workers and visitors to the Melbourne CBD remains well below historical levels and as a result the recovery of Melbourne Central continues to lag the balance of our portfolio.”
