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Perth Leasing Market Improving for GDI

February 20, 2019

 

GDI Property Group released its half year financial results for the period ended 31 December 2018 this week with signs of an improving leasing market in the west.

 

GDI has continued to deliver its key asset management strategies in 2018 with significant progress made in leasing vacant spaces in the portfolio. Most notably, at Mill Green, Perth, the majority of the space vacated during FY17 and FY18 at 197 St Georges Terrace has now been leased or is subject to heads of agreement, with only one upper level floor (Level 23) and one of six suites on the mid‐levels (9 and 10) unoccupied.

 

The key test for the group is the progress at Westralia Square. WA Police (WAPOL) who occupy approximately 14,000sqm of the 25,664sqm leased by the Minister for Works are in the market looking for 25,000sqm of space. The lease to the Minister for Works expires in 2020. GDI are preparing to engage with potential tenants and have commenced an upgrade of the lifts, end of trip facilities and have completed a foyer upgrade.

 

GDI is also continuing to work with Lendlease on a number of potential single user occupiers of a new development located at 1 Mill Street, Perth which is potentially available by 2022.

 

Key highlights  

  • Net Tangible Asset (NTA) per security of $1.21, up $0.03 per security from the NTA at 30 June 2018

  • Funds From Operations (FFO) of $23.5 million and FFO per security of 4.359 cents  

  • Distribution per security for the period of 3.875 cents, in line with guidance

 

Both Mill Green, Perth, and 50 Cavill Avenue, Surfers Paradise, were independently revalued as at 31 December 2018.   The valuation of Mill Green, Perth increased by $8.9 million to $330.0 million, while the valuation of 50 Cavill Avenue, Surfers Paradise, increased by $11.9 million to $100.0 million.

 

During the period, GDI execute the sale of 223  ‐ 237 Liverpool Road, Ashfield (GDI No. 42 Office Trust) for $46.0 million, having been purchased in December 2015 for $35 million, delivering an unlevered IRR in excess of 13%.

 

GDI’s balance sheet is in a strong position with a Loan to Value Ratio (LVR) of 8.7%,, well below the Board’s maximum LVR of 40% and the bank’s covenant of 50%.  This strong financial position has enabled GDI to extend the on‐market buyback of up to 5% of its securities, which was originally announced with the release of the half year results in February 2017, for a further 12 months.  Since February 2017, GDI has bought back and cancelled 2,186,936 securities, with 33,234 bought and cancelled during the period.   

 

GDI chooses not to provide earnings guidance given its constantly evolving property portfolio, capital structure and funds management business.  However, GDI confirms its forecast FY19 distribution of 7.75 cents per stapled security, noting that 3.875 cents per stapled security was declared for the half year ended 31 December 2018.

 

GDI Trading Chart vs ASX200 AREITs

Blue - GDI

Purple - ASX200 AREITs

 

 

 

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