Company Reports

GPT’s strategy is to operate a diversified portfolio of high-quality property assets in Australia’s largest cities and to reshape exposure by taking advantage of structural tailwinds such as rising e-commerce and population growth. This is executed by divesting low-yielding assets, actively developing logistics sites, and replenishing landbanks. Today, the retail and office segments, including contributions from their respective funds management, each account for around 40% of the group’s funds from operations. Logistics contributes less than a quarter. In 2010, the retail/office/logistics split was about 60%/30%/10%. The gross lettable area of logistics sites has roughly doubled over the past decade, mostly on the eastern seaboard of Australia.

GPT's interim 2026 funds from operations, or FFO, rose 5% to AUD 17.7 cents per security. Distributions increased 2% to AUD 12.3 cps. Management reaffirmed 2026 FFO guidance of AUD 35.4 cents and distributions of AUD 24.5 cents, a 69% payout.

GPT Wholesale Shopping Centre Fund, which GPT Group manages and owns roughly a third of, recently acquired half-stakes in Sunshine Plaza in Queensland and Macarthur Square in Sydney for a total of AUD 1.2 billion.

GPT’s strategy is to operate a diversified portfolio of high-quality property assets in Australia’s largest cities and to reshape exposure by taking advantage of structural tailwinds such as rising e-commerce and population growth. This is executed by divesting low-yielding assets, actively developing logistics sites, and replenishing landbanks. Today, the retail and office segments, including contributions from their respective funds management, each account for around 40% of the group’s funds from operations. Logistics contributes less than a quarter. In 2010, the retail/office/logistics split was about 60%/30%/10%. The gross lettable area of logistics sites has roughly doubled over the past decade, mostly on the eastern seaboard of Australia.

GPT delivered calendar 2025 funds from operations of AUD 34 cents per security, up 6% from last year, with distributions per security of AUD 24 cents. For 2026, management guided to a 4% increase in FFO to AUD 35.4 cents per security, and a distribution payout ratio of 69%.

GPT’s strategy is to operate a diversified portfolio of high-quality property assets in Australia’s largest cities and to reshape exposure by taking advantage of structural tailwinds such as rising e-commerce and population growth. This is executed by divesting low-yielding assets, actively developing logistics sites, and replenishing landbanks. Today, the retail and office segments, including contributions from their respective funds management, each account for around 40% of the group’s funds from operations. Logistics contributes less than a quarter. In 2010, the retail/office/logistics split was about 60%/30%/10%. The gross lettable area of logistics sites has roughly doubled over the past decade, mostly on the eastern seaboard of Australia.

For the second time this year, GPT Group lifted funds from operations guidance. Management expects FFO of AUD 34.0 cents per security, up from no less than AUD 33.2 cents, previously. This represents a 6% increase from last year.

GPT Group's funds from operations, or FFO, for the half year ended June 2025 grew 4% to AUD 16.8 cents per security versus a year ago. Distributions were flat at AUD 12.0 cents. Guidance for FFO growth in 2025 is now at least 3%, from 1%-3% previously.

GPT’s strategy is to operate a diversified portfolio of high-quality property assets in Australia’s largest cities and to reshape exposure by taking advantage of structural tailwinds such as rising e-commerce and population growth. This is executed by divesting low-yielding assets, actively developing logistics sites, and replenishing landbanks. Today, the retail and office segments, including contributions from their respective funds management, each account for around 40% of the group’s funds from operations. Logistics contributes less than a quarter. In 2010, the retail/office/logistics split was about 60%/30%/10%. The gross lettable area of logistics sites has roughly doubled over the past decade, mostly on the eastern seaboard of Australia.

The real estate sector is not immune to the potential economic impact of US tariffs. There is growing uncertainty as the likelihood of slower Australian gross domestic product growth mounts.

GPT’s strategy is to operate a diversified portfolio of high-quality property assets in Australia’s largest cities and to reshape exposure by taking advantage of structural tailwinds such as rising e-commerce and population growth. This is executed by divesting low-yielding assets, actively developing logistics sites, and replenishing landbanks. Today, the retail and office segments, including contributions from their respective funds management, each account for around 40% of the group’s funds from operations. Logistics contributes less than a quarter. In 2010, the retail/office/logistics split was about 60%/30%/10%. The gross lettable area of logistics sites has roughly doubled over the past decade, mostly on the eastern seaboard of Australia.

GPT Group’s 2024 results are slightly stronger than we expected. Funds from operations of AUD 32.2 cents beat management guidance of AUD 32.0 cents. Distributions of AUD 24 cents represents a payout ratio of 75%. For calendar 2025, we forecast FFO of AUD 32.8 cents, in the middle of the guidance range of AUD 32.5 cents-AUD 33.1 cents and distributions of AUD 24 cents. This is a 3% upgrade to our previous 2025 earnings forecast. However, the increase is insufficient to dictate a change to our AUD 5.70 fair value estimate for no-moat GPT.

More jobs have been added to office-using sectors. According to the Australian Bureau of Statistics, Australian white-collar job numbers rose 4% in the 12 months to Aug. 31. This is the strongest growth since May 2022. Compared with November 2019, there are 13% more office workers in Australia. The gains were largely contributed by hiring and real estate services, public administration and safety, and education and training sectors.

Following the transition of coverage to a new analyst, we raise our fair value estimate for GPT Group by 3% to AUD 5.70 per security. A key driver of this upgrade is our more positive view on the funds management business. We lift our medium-term growth forecast for funds management net income to 2.5%, from 0% previously, reflecting our expectations of solid inflows from mandates and the impact of likely revaluations, which will increase the asset base. The group’s funds under management grew to AUD 22 billion in June 2024, from AUD 13 billion in 2019. Notably, GPT secured the Commonwealth Superannuation Corporation mandate of AUD 2.6 billion last year and the asset transition is expected to settle in the second half of 2024. We expect GPT to achieve longer-term inflows given its long-established brand, strong track record, and management expertise.

GPT’s strategy is to operate a diversified portfolio of high-quality property assets in Australia’s largest cities and to reshape exposure by taking advantage of structural tailwinds such as rising e-commerce and population growth. This is executed by divesting low-yielding assets, actively developing logistics sites, and replenishing landbanks. Today, the retail and office segments, including contributions from their respective funds management, each account for around 40% of the group’s funds from operations. Logistics contributes less than a quarter. In 2010, the retail/office/logistics split was about 60%/30%/10%. The gross lettable area of logistics sites has roughly doubled over the past decade, mostly on the eastern seaboard of Australia.

In line with our expectations, GPT Group reported funds from operations of AUD 0.16 per security and distributions of AUD 0.12 for the first half of 2024. Management reaffirmed full-year guidance, and we continue to forecast 2024 FFO per security of about AUD 0.32 and distributions of AUD 0.24, which is in line with guidance. This equates to a forward distribution yield of approximately 5%, which is attractive compared with the 10-year commonwealth bond yield of 3.9%.

GPT Group was listed in 1971, and internalized its management in 2005, severing ties with former manager and founder Lendlease. Its long history helped GPT Group build a property portfolio that includes many well-known assets. For example, its retail portfolio includes Melbourne Central, one of Australia’s most productive retail assets. Its office portfolio includes stakes in Sydney’s Australia Square, Brisbane’s One One One Eagle St, and numerous properties in and around Collins St in Melbourne’s CBD. GPT Group’s retail and office portfolios each contribute about one-third of funds from operations. Another fifth comes from industrial property and a growing balance from funds and property management.

We retain our AUD 5.55 fair value estimate for no-moat GPT as we transition coverage to a new analyst. Shares trade around 21% below fair value. It remains one of Australia’s most diversified REITs, with around 35% of 2023 funds from operations coming from its retail or shopping center portfolio, a similar amount from office, 23% from industrial, and 8% from funds management.

GPT Group was listed in 1971, and internalized its management in 2005, severing ties with former manager and founder Lendlease. Its long history helped GPT Group build a property portfolio that includes many well-known assets. For example, its retail portfolio includes Melbourne Central, one of Australia’s most productive retail assets. Its office portfolio includes stakes in Sydney’s Australia Square, Brisbane’s One One One Eagle St, and numerous properties in and around Collins St in Melbourne’s CBD. GPT Group’s retail and office portfolios each contribute about one-third of funds from operations. Another fifth comes from industrial property and a growing balance from funds and property management.

No-moat GPT Group posted a reasonable first-quarter update, with near full occupancy across its retail and industrial portfolio, but office leasing conditions declined 0.3% to 92%. However, GPT Group made progress during the quarter, with more than double the amount of office space leased than in the first quarter of 2023. We expect sluggish office conditions to eventually improve, driven by population growth, new transport infrastructure close to GPT’s assets, and less rival supply. In line with our full-year estimates, management reaffirmed its fund from operations of AUD 0.32 per security and distribution of AUD 0.24 guidance. GPT appears undervalued, trading at a material discount to our AUD 5.55 per share fair value estimate.