GPT Group (ASX:GPT)

Bob Johnston
CEO & MD
Market Cap (AUD): 11.65B
Sector: Real Estate
Last Trade (AUD): 5.96 -0.02 (-0.33%)
Tab Bar

1. About

GPT is an owner and manager of a $12.3 B diversified portfolio of high-quality Australian retail, office, and logistics property assets and together with GPT’s fund's management platform, the Group has $21.5 B of property assets under management (AUM). GPT owns some of Australia’s most significant real estate assets, including the MLC Centre and Australia Square in Sydney, Melbourne Central and Highpoint Shopping Centre in Melbourne and One One One Eagle Street in Brisbane. Listed on the Australian Securities Exchange (ASX) since 1971, GPT is one of Australia’s largest diversified listed property groups with a market capitalisation of approximately $9.2 billion.

2. Business model

 

The Company generates the majority of its income from the following operations:[1]

 

Divisions

Revenue ($M)

% of total Revenue

% of Profit (before Tax) ($M)

Profit Drivers[2]

Retail

$313.1

47.40%

56.32%

The positive revaluation is predominantly the result of favourable valuations at Melbourne Central, Highpoint Shopping Centre, and Westfield Penrith, in addition to the contribution from GWSCF. The positive revaluation across the portfolio has been driven by a combination of net income growth and firming in valuation metrics

Office

$247.8

37.51%

44.03%

The positive revaluation has been driven by favourable valuations at MLC Centre, Citigroup Centre, Australia Square and Farrer Place

Logistics

$93.3

14.12%

16.63%

The logistics portfolio achieved a net revaluation uplift of $62.1 m in 2017. This uplift is attributed to continued investor interest in quality logistics assets which led to a firming of investment metrics combined with positive leasing outcomes. The weighted average lease expiry has been maintained for a long duration of 7.6 years

Funds Management

$37.0

5.60%

6.55%

N/A

Corporate

($30.6)

(4.63%)

(23.53%)

N/A

3. Strategy

 

The key strategy includes:[3]

 

  • GPT’s strategy is focussed on leveraging its extensive real estate experience to deliver strong returns through disciplined investment, asset management, and development

 

  • The development capability has a focus on creating value for security holders through the enhancement of the core investment portfolio and in the creation of new investment assets

4. Markets

 

The Company operates in the following industries:[4]

 

Industry (Australia)

Industry Revenue (2017)

Annual growth (13-18)

Retail Property Operators

$25 billion

8.3%

Office Property Operators

$37 billion

10.3%

Financial Asset Investing

$13 billion

4.0%

5. Competition

 

Major competitors include:[5]

 

  • Mirvac Group (ASX:MGR)
  • DEXUS Property Group (ASX:DXS)
  • Growthpoint Properties Australia Ltd (ASX:GOZ)
  • Goodman Group (ASX:GMG)

6. History

 

1971[6]  

The company was founded, listed on the Australian Securities Exchange

 

1998  

Acquired Tattersalls Building

 

1999  

Brought interests in Macarthur Square & Dandenong Plaza, acquired 50% interest in Maroochydore Superstore Plaza

 

2000  

Expanded Industrial Portfolio with the acquisition of Hotel Nikko

 

2004  

Acquired P&O Australian Resorts

 

2005  

Babcock and Brown signed joint venture agreement with GPT

 

2006  

Launched first wholesale fund, the GPT Wholesale Office Fund (GWOF)

 

2007  

BNB acquired U.S. Regional Mall Portfolio, launched German Retail Fund

 

2008  

SGP Stockland acquired stake in GPT

 

2012  

GPT announced the sale of 50% of interests in two retail assets to the GPT Wholesale Shopping Centre Fund

 

2013  

GPT acquired a seed asset for its metropolitan office fund

 

2014  

GPT and GWOF combined to buy CBW in Melbourne for $608.1M

 

2015  

GPT sold Dandenong Plaza for $197 million

 

2016  

GPT sold its interest in GMF and enters into a facilitation and property rights deed with growthpoint properties Australia

7. Team

 

Board of Directors[7]

 

Vickki McFadden – Chairman           

Bob Johnston – Chief Executive Officer

Brendan Crotty – Director

Dr. Eileen Doyle – Director

Lim Swe Guan – Director

Michelle Somerville – Director

Gene Tilbrook – Director

Angus McNaughton – Non-Executive Director

Tracey Horton AO – Director

 

Management Team

 

Bob Johnston – Chief Executive Officer

Anastasia Clarke – Chief Financial Officer

Mark Fookes – Chief Operating Officer

James Coyne – General Counsel

Matthew Faddy – Head of Office & Logistics

Nicholas Harris – Head of Funds Management

Anthony McNulty – Head of Development

Vanessa Orth – Head of Retail

Phil Taylor – Head of People & Performance


read more

8. Financials

 

2018 Half Year Results Presentation

 

Financial Year 2017 (ended 31 December)[8]

 

Divisions

Revenue  ($M)

% Change

Profit (before Tax) ($M)

% Change

Retail

$313.1

8.60%

$318.4

8.26%

Office

$247.8

10.67%

$248.9

10.62%

Logistics

$93.3

0.65%

$94.0

(1.47%)

Funds Management

$37.0

(39.34%)

$37.0

(39.34%)

Corporate

($30.6)

(2.68%)

($133.0)

(2.47%)

Total

$660.6

3.85%

$565.3

3.59%

9. Risk

 

Major risks include:[9]

 

Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. GPT’s primary interest rate risk arises from borrowings.

 

Liquidity risk:

Liquidity risk is the risk that GPT, as a result of its operations:

  • Will not have sufficient funds to settle a transaction on the due date,
  • Will be forced to sell financial assets at a value which is less than what they are worth, or
  • May be unable to settle or recover a financial asset at all

 

Refinancing risk:

Refinancing risk is the risk that credit is unavailable or available at unfavourable interest rates and credit market conditions resulting in an unacceptable increase in GPT’s interest cost. Refinancing risk arises when GPT is required to obtain debt to fund existing and new debt positions.

 

Foreign exchange risk

Foreign exchange risk refers to the risk that the value of a financial commitment, asset or liability will fluctuate due to changes in foreign exchange rates. GPT’s foreign exchange risk arises primarily from:

  • Firm commitments of highly probable forecast transactions for receipts and payments settled in foreign currencies or with prices dependent on foreign currencies; and
  • Investments in foreign assets

 

Credit risk:

Credit risk is the risk that a contracting entity will not complete its obligations under a contractual agreement, resulting in a financial loss to GPT. GPT has exposure to credit risk on all financial assets included in the statement of financial position.

References

  1. ^ Annual Financial Report 2017  P. 29 - 30
    https://www.listcorp.com/asx/gpt/gpt/news/2017-annual-financial-report-1853262.html
  2. ^ Annual Financial Report 2017  P. 4 - 5
    https://www.listcorp.com/asx/gpt/gpt/news/2017-annual-financial-report-1853262.html
  3. ^ Annual Financial Report 2017  P. 2
    https://www.listcorp.com/asx/gpt/gpt/news/2017-annual-financial-report-1853262.html
  4. ^ http://www.ibisworld.com.au/industry/default.aspx?indid=1894
    http://www.ibisworld.com.au/industry/default.aspx?indid=1893
    http://www.ibisworld.com.au/industry/default.aspx?indid=519
  5. ^ http://quotes.wsj.com/AU/XASX/GPT
  6. ^ http://www.gpt.com.au/About-GPT/Overview
    http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=text&issuerId=578&announcementId=356945
    http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=GPT&timeframe=Y&year=1999
    http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=GPT&timeframe=Y&year=2000
    http://www.asx.com.au/asxpdf/20040707/pdf/3m2nkfs887y03.pdf
    http://www.asx.com.au/asxpdf/20050503/pdf/3qqxpt4yvvbl9.pdf
    http://www.asx.com.au/asxpdf/20060724/pdf/3xngzjf26ss21.pdf
    http://www.asx.com.au/asxpdf/20070516/pdf/312h1qq4r5jbpn.pdf
    http://www.asx.com.au/asxpdf/20071221/pdf/316n8hm1r282cj.pdf
    http://www.asx.com.au/asxpdf/20081112/pdf/31djwhzv45l03p.pdf
    http://www.asx.com.au/asxpdf/20120626/pdf/42719kfrrvnfbc.pdf
    http://www.asx.com.au/asxpdf/20131113/pdf/42ktmsjjdxsvqy.pdf
    http://www.asx.com.au/asxpdf/20140903/pdf/42rz57v7p3661x.pdf
    http://www.asx.com.au/asxpdf/20151221/pdf/433z52bgkwp96t.pdf
  7. ^ http://www.gpt.com.au/About-GPT/Board-of-Directors
    http://www.gpt.com.au/About-GPT/Leadership-Team
  8. ^ Annual Financial Report 2017  P. 29 - 30
    https://www.listcorp.com/asx/gpt/gpt/news/2017-annual-financial-report-1853262.html
  9. ^ Annual Financial Report 2017  P. 48 - 51
    https://www.listcorp.com/asx/gpt/gpt/news/2017-annual-financial-report-1853262.html