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GPT GROUP — Interim / Quarterly Report 2017
Oct 30, 2017
65009_rns_2017-10-30_e4ac9be0-2b7a-448d-9bd4-a7706a0bd452.pdf
Interim / Quarterly Report
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THE GPT GROUP ANNOUNCES
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31 October 2017
September Quarter Operational Update
The GPT Group (“GPT” or “Group”) today announced its operational update for the September 2017 quarter.
Key Highlights
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Retail specialty sales $11,103 per square metre at 30 September
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US Private Placement debt issue of US$325 million (A$403 million) extends GPT’s debt maturity profile to 6.9 years
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Total office leasing of 27,000 sqm signed or at Heads of Agreement (HoA) during the quarter
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Development Application lodged for 32 Smith Street, Parramatta
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25,400 sqm logistics facility completed at Lot 2012, Eastern Creek
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GWSCF completes acquisition of an additional 25 per cent interest in Highpoint Shopping Centre
CEO and Managing Director Bob Johnston said GPT remained in a very strong financial position at the end of the September quarter and was on track to meet its guidance for the full year 2017.
“The Group’s balance sheet was strengthened during the quarter following the successful US Private Placement which was oversubscribed and enabled GPT to significantly extend its debt maturity profile,” Mr Johnston said.
“GPT’s Office portfolio maintained its high occupancy during the period, benefitting from the quality of its assets and high exposure to the strong conditions in the Sydney and Melbourne markets.”
“Retail sales growth softened during the quarter with total centre MAT growth falling from 3.1 per cent in June to 1.8 per cent as at the end of September reflecting a softening in consumer confidence. Despite this, GPT’s high quality Retail portfolio continues to deliver strong like for like income growth.”
“The Group remains well positioned to deliver the full year 2017 guidance of 3 per cent FFO per security growth announced with the interim results in August.”
Retail
GPT’s comparable specialty moving annual turnover[1] (MAT) was up 0.6 per cent, with total centre MAT up 1.8 per cent. Specialty retail sales were $11,103 per square metre at 30 September, up 2.3 per cent compared to the previous comparable period.
During the period, the GPT Wholesale Shopping Centre Fund (GWSCF) settled its acquisition of an additional 25 per cent stake in the Highpoint Shopping Centre and Maribyrnong Homemaker Centre for $680 million (excluding acquisition costs of $37.4 million). The purchase took GWSCF’s ownership of the centre to 83.33 per cent with GPT retaining a 16.67 per cent interest. GWSCF revalued seven assets during the quarter, resulting in an increase in the value of the portfolio by $89.3 million. GWSCF’s weighted average capitalisation rate firmed by 30 basis points to 5.01 per cent.
Following the end of the quarter, the GWSCF-owned Wollongong Central opened the $68 million refurbishment of its Gateway Building which included the new generation David Jones department store and food concept.
- Excludes development impacted centres (Sunshine Plaza, Wollongong Central, Macarthur Square) and assets sold in the period (Woden)
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The refurbishment also resulted in the introduction of the Illawarra region’s first Mecca Maxima, and approximately 40 specialty stores, including T2, Peter Alexander, Review and Cue, together with international discount retailer TK Maxx.
Construction of the $420 million expansion of Sunshine Plaza, in which GPT has a 50 per cent interest, remains on track for completion in late 2018. Following the end of the quarter, the development reached a major milestone with the opening of the centre’s new north east carpark.
The leasing program for the Sunshine Plaza is almost 30 per cent complete with strong interest in the remaining shops in the new retail mall.
Office
During the September quarter, a total of 27,000 square metres of new leases and renewals (including HoA) were agreed across the portfolio. This brings total leasing volume (including HoA) for the calendar year to 30 September to 168,500 square metres.
Office occupancy was 96.9 per cent as at 30 September (excluding HoA).
The key leasing deals completed include:
| Asset | Tenant | Status | Area | Term |
|---|---|---|---|---|
| 750 Collins Street | Monash College | Signed* | 41,181 sqm | 15years |
| Riverside | Deloitte | Signed | 6,069 sqm | 10years |
| 530 Collins Street | AEMO | Signed | 5,033 sqm | 5years |
| DarlingPark 2 | Adobe | Signed | 3,079 sqm | 5years |
| ONE ONE ONE Eagle Street | RayWhite | Signed | 2,362 sqm | 8years |
*Execution occurred post quarter-end
During the period, nine GPT Wholesale Office Fund (GWOF) assets were externally revalued. This led to valuation gains of $35 million or 0.5 per cent across the GWOF portfolio. The valuation gains were led by 750 Collins Street, Melbourne and the Darling Park assets in Sydney, primarily a result of recent leasing transactions.
The Group recently submitted a Development Application for its planned 26,000 square metre prime office tower at 32 Smith Street Parramatta. GPT is working towards securing a tenant precommitment and is targeting to commence construction in the first half of 2018.
Construction on GPT’s 15,700 square metre A-Grade office building at 4 Murray Rose Avenue, Sydney Olympic Park remains on track for completion in late 2018. 4 Murray Rose, which has secured NSW Rural Fire Service as its major tenant, has received a solid level of enquiry from prospective tenants for the remaining space available in the building.
Logistics
During the quarter, GPT completed a total of 18,640 square metres of leasing (including HoA) across its Logistics portfolio, bringing total leasing for the calendar year to 30 September to 166,600 square metres (including HoA).
The occupancy of the Logistics portfolio was 95.9 per cent at the end of the period.
During the period, Super Retail Group agreed to an extension of its lease over 41,700 square metres at Citiwest Industrial Estate in Melbourne to 2021.
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Development approval was also received for two new Logistics projects; a planned 32,000 square metre logistics facility at Lot 21 Old Wallgrove Road, Eastern Creek and a 11,000 square metre facility at Huntingwood Drive, Huntingwood.
Following the end of the period, construction of the 25,400 square metre logistics facility at Lot 2012 Eastern Creek was completed. The Group is targeting to secure a lease over the space by year end.
Funds Management
GWSCF delivered a total return of 14.4 per cent and GWOF a total return of 12.9 per cent over the 12 months to 30 September.
During the quarter, GWSCF issued a domestic medium term note, raising $200 million of 7 year bonds. The bond issue received strong investor support, with final pricing at 145 basis points over the benchmark swap rate, and a fixed rate of 3.99 per cent.
Capital Management
GPT remains in a strong capital position, with gearing of 25.3 per cent as at 30 September.
During the quarter, the Group raised US$325 million (A$403 million) in a US Private Placement (USPP) debt issue. The USPP issue comprised US$160 million of 12 year notes and US$165 million of 15 year notes, with final pricing at 189 basis points over BBSW once swapped back into Australian dollars. The placement introduced 10 new investors to the Group, further diversifying GPT’s debt sources, and extended GPT’s average debt maturity profile to 6.9 years.
2017 Guidance
GPT is on track to achieve FFO per security growth of 3 per cent for the full year 2017, and distribution per security growth of approximately 5 per cent.
-ENDS-
For more information, please contact:
Investors:
Media:
Brett Ward
Head of Investor Relations & Corporate Affairs +61 2 8239 3536 +61 437 994 451
Scott Rochfort Group Media Manager +61 2 8239 3938 +61 438 733 864
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APPENDIX 1 – RETAIL SALES
Comparable Annual Retail Sales Growth by Category
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Combined MM / Spec breakdown
11.7%
10.8%
7.3% 6.9%
6.0%
4.1%
3.1%
2.5%
1.8% 1.5% 1.6%
0.6%
-0.2%
-3.3%
-4.3%
-7.8%
Total centre Dept Store DDS Supermarket Mini Majors Specialties Combined MM / Spec Retail Services Jewellery Homewares General Retail Leisure Food Catering Food Retail Apparel Mobile Phones
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Specialty Monthly Sales Growth[1]
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6 month growth: 2.3% 6 month growth: -0.9%
quarterly growth: -2.0%
6.0%
4.7%
2.7%
2.2% 2.1%
1.3%
0.9% 0.7%
-0.7% -0.7% -0.7%
-2.1%
-3.3%
Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17
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- Excludes development impacted centres (Sunshine Plaza, Wollongong Central, Macarthur Square) and assets sold in the period (Woden) to calculate comparable quarterly and six month growth data to 30 September 2017
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Retail Portfolio Sales Performance by Centre
| Ownership | Moving Annual | Moving Annual | Turnover (MAT) | Turnover (MAT) | Specialty Occupancy Cost |
|
|---|---|---|---|---|---|---|
| Centre MAT ($m) |
Comparable Centre MAT Growth |
Comparable Specialty MAT Growth |
Specialty MAT ($psm) |
|||
| GPT Portfolio | ||||||
| Casuarina Square 50% $380.6 |
(2.0%) | (6.0%) $11,090 16.8% |
||||
| Charlestown Square 100% $556.5 |
4.4% | 4.2% $12,455 14.0% |
||||
| Highpoint ShoppingCentre 16.67% $986.6 |
(1.0%) | (2.0%) $10,798 19.6% |
||||
| Melbourne Central Retail 100% $506.6 |
4.0% | 2.5% $12,329 19.0% |
||||
| Rouse Hill Town Centre 100% $435.9 |
2.1% | 3.2% $8,626 14.8% |
||||
| Westfield Penrith2 50% $643.2 |
1.9% | (2.7%) $12,050 17.5% |
||||
| GWSCF Portfolio | ||||||
| Casuarina Square 50% $380.6 |
(2.0%) | (6.0%) $11,090 16.8% |
||||
| Chirnside Park 100% $273.2 |
(0.1%) | (0.4%) $11,950 15.6% |
||||
| Highpoint ShoppingCentre 83.33% $986.6 |
(1.0%) | (2.0%) $10,798 19.6% |
||||
| Northland ShoppingCentre3 50% $534.6 |
1.9% | (0.4%) $8,697 19.1% |
||||
| Norton Plaza 100% $122.1 |
(4.2%) | (3.6%) $11,851 14.2% |
||||
| Parkmore ShoppingCentre 100% $254.9 |
(0.3%) | (3.5%) $8,689 15.7% |
||||
| GPT Weighted Total $2,732.3 |
1.8% | 0.6% $11,103 17.0% |
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| Centres Under Development | ||||||
| GPT Portfolio | ||||||
| Sunshine Plaza1 50% $524.6 |
(2.2%) | (1.3%) $11,712 18.8% |
||||
| GWSCF Portfolio | ||||||
| Macarthur Square1 50% $562.5 |
1.8% | 2.4% $10,148 16.5% |
||||
| WollongongCentral 100% $267.9 |
(2.2%) | 2.0% $8,620 15.4% |
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Analysis provided by Lend Lease.
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Analysis provided by Scentre Group.
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Analysis provided by Vicinity.
GPT reports in accordance with the Shopping Centre Council of Australia guidelines.
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APPENDIX 2 – PORTFOLIO REVALUATIONS
| As at 30 September 2017 |
As at 30 September 2017 |
As at 30 June 2017 |
As at 30 June 2017 |
||
|---|---|---|---|---|---|
| Ownership | Fair Value ($m) |
Cap Rate | Fair Value ($m) |
Cap Rate | |
| GWSCF Portfolio | |||||
| Highpoint ShoppingCentre1 83.33% $2,225.2 |
4.25% | $1,434.4 | 4.50% | ||
| Macarthur Square 50% $595.9 |
5.25% | $570.4 | 5.50% | ||
| Northland ShoppingCentre 50% $487.8 |
5.50% | $486.6 | 5.625% | ||
| WollongongCentral 100% $455.7 |
5.75% | $432.8 | 5.75% | ||
| Casuarina Square 50% $321.2 |
5.50% | $316.4 | 5.75% | ||
| Chirnside Park 100% $280.0 |
6.00% | $279.7 | 6.00% | ||
| Parkmore ShoppingCentre 100% $259.0 |
6.25% | $255.6 | 6.25% | ||
| Norton Plaza 100% $141.1 |
5.75% | $140.9 | 5.75% | ||
| GWOF Portfolio | |||||
| DarlingPark 1, Sydney 50% $872.5 DarlingPark 2,Sydney Cockle BayWharf,Sydney |
5.00% | $857.8 | 5.13% | ||
| 5.00% | 5.13% | ||||
| 5.75% | 5.75% | ||||
| DarlingPark 3,Sydney 100% $500.0 |
5.00% | $485.4 | 5.13% | ||
| 8 Exhibition Street,Melbourne 50% $223.0 |
5.00% | $221.7 | 5.00% | ||
| 150 Collins Street,Melbourne 100% $225.5 |
5.13% | $218.7 | 5.25% | ||
| 655 Collins Street,Melbourne 100% $145.6 |
5.00% | $142.1 | 5.13% | ||
| 750 Collins Street,Melbourne 100% $263.0 |
5.00% | $251.3 | 5.50% | ||
| 2 Southbank Boulevard,Melbourne 50% $242.5 |
5.50% | $240.5 | 5.50% | ||
| Riverside Centre,Brisbane 100% $633.5 |
5.75% | $634.9 | 5.88% |
- Fair value includes Homemaker Centre Maribyrnong.
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