General Property Trust ABN: 58 071 755 609 Interim Financial Report 30 June 2017The GPT Group (GPT) comprises General Property Trust (Trust) and its controlled entities and GPT Management Holdings Limited (Company) and its controlled entities.
General Property Trust is a registered scheme, registered and domiciled in Australia. GPT RE Limited is the Responsible Entity of General Property Trust. GPT Management Holdings Limited is a company limited by shares, incorporated and domiciled in Australia. GPT RE Limited is a wholly owned controlled entity of GPT Management Holdings Limited.
Through our internet site, we have ensured that our corporate reporting is timely, complete and available globally at minimum cost to the Trust. All press releases, financial reports and other information are available on our website: www.gpt.com.au.
CONTENTSDirectors' Report 3
Auditor's Independence Declaration 9
Financial Statements 10
Consolidated Statement of Comprehensive Income 10
Consolidated Statement of Financial Position 11
Consolidated Statement of Changes in Equity 12
Consolidated Statement of Cash Flows 13
Notes to the Financial Statements 14
Result for the half year 14
Segment information 14
Operating assets and liabilities 18
Investment properties 18
Equity accounted investments 20
Capital structure 21
Equity 21
Earnings per stapled security 22
Distributions paid and payable 23
Borrowings 23
Other disclosure items 24
Cash flows from operating activities 24
Commitments 24
Fair value disclosures - financial instruments 25
Accounting policies 26
Events subsequent to reporting date 27
Directors' Declaration 28
Independent Auditor's Report 29
DIRECTORS' REPORTFor the half year ended 30 June 2017
The Directors of GPT RE Limited, the Responsible Entity of General Property Trust, present their report together with the financial statements of the General Property Trust (the Trust) and its controlled entities (the consolidated entity) for the half year ended 30 June 2017. The consolidated entity together with GPT Management Holdings Limited and its controlled entities form the stapled entity, The GPT Group (GPT).
General Property Trust is a registered scheme, GPT Management Holdings Limited is a company limited by shares, and GPT RE Limited is a company limited by shares, each of which is incorporated and domiciled in Australia. The registered office and principal place of business is the MLC Centre, Level 51, 19 Martin Place, Sydney NSW 2000.
1. OPERATING AND FINANCIAL REVIEW
Review of operations
Funds from Operations (FFO) represents GPT's underlying and recurring earnings from its operations. This is determined by adjusting statutory net profit after tax under Australian Accounting Standards for certain items which are non-cash, unrealised or capital in nature. FFO has been determined in accordance with the guidelines established by the Property Council of Australia.
The reconciliation of FFO to net profit after tax is set out below: | |||
For the half year ended | 30 Jun 17 $M | 30 Jun 16 $M | Change % |
Retail |
| 152.0 5.0 | 141.7 6.9 | 7.3% (27.5%) |
157.0 | 148.6 | 5.7% |
Office
| 127.3 0.6 | 106.5 0.6 | 19.5% 0.0% |
127.9 | 107.1 | 19.4% |
| 45.1 1.1 | 46.7 3.0 | (3.4%) (63.3%) |
46.2 | 49.7 | (7.0%) |
Logistics
Funds management | 17.5 | 29.2 | (40.1%) |
Corporate management expenses | (14.2) | (13.8) | (2.9%) |
Net finance costs | (47.2) | (50.1) | 5.8% |
Income tax expense | (7.4) | (5.9) | (25.4%) |
Non-core | - | 5.0 | (100.0%) |
Funds from Operations (FFO) | 279.8 | 269.8 | 3.7% |
Other non-FFO items: Valuation increase | 480.0 | 379.9 | 26.3% |
Financial Instruments mark to market and net foreign exchange loss | (3.7) | (65.7) | 94.4% |
Other items(1) | (3.8) | 2.4 | (258.3%) |
Net profit after tax | 752.3 | 586.4 | 28.3% |
FFO per ordinary stapled security (cents) | 15.54 | 15.02 | 3.5% |
Funds from Operations (FFO) | 279.8 | 269.8 | 3.7% |
Maintenance capex | (21.4) | (25.5) | 16.1% |
Lease incentives and costs | (23.4) | (36.2) | 35.4% |
Adjusted Funds from Operations (AFFO) | 235.0 | 208.1 | 12.9% |
Distribution paid and payable | 221.6 | 206.8 | 7.2% |
Distribution per ordinary stapled security (cents) | 12.3 | 11.5 | 7.0% |
(1) Other items include impairment and amortisation of intangibles, profit on disposal of assets and related tax impact. |
Operating result
GPT delivered FFO of $279.8 million for the half year ended 30 June 2017, an increase of 3.7% on the prior comparable period. This translated into FFO per security of 15.54 cents, up 3.5%. The result was driven by increased contributions from the investment portfolio of high quality Australian retail, office and logistics properties.
GPT's statutory net profit after tax is $752.3 million, an increase of 28.3% on the prior comparable period, driven by $480.0 million in property valuation increases and a lower negative mark to market and net foreign exchange movement of financial instruments.
DIRECTORS' REPORT
For the half year ended 30 June 2017
GPT has maintained strong metrics across its core portfolios:
Overall Portfolios | Retail Portfolio | Office Portfolio | Logistics Portfolio | |
Value of Portfolio | $5.61 billion portfolio including GPT's equity interest in the GPT Wholesale Shopping Centre Fund (31 Dec 2016: $5.32 billion) | $4.77 billion portfolio including GPT's equity interest in the GPT Wholesale Office Fund (31 Dec 2016: $4.34 billion) | $1.48 billion portfolio (31 Dec 2016: $1.40 billion) | |
Occupancy | 96.9% (31 Dec 2016: 97.1%) | 99.6% (31 Dec 2016: 99.6%) | 97.4% (31 Dec 2016: 97.0%) | 95.0% (31 Dec 2016: 95.3%) |
Weighted average lease expiry (WALE) | 5.2 years (31 Dec 2016: 5.1 years) | 4.1 years * (31 Dec 2016: 4.0 years) | 5.3 years (31 Dec 2016: 5.5 years) | 8.0 years (31 Dec 2016: 7.9 years) |
Structured rental reviews | 74% of specialty tenants subject to average increases of 4.7% (30 Jun 2016: 72% subject to average increases of 4.5%) | 90% of tenants subject to average increases of 3.9% (30 Jun 2016: 87% subject to average increases of 3.8%) | 93% of tenants subject to average increases of 3.3% (30 Jun 2016: 92% subject to average increases of 3.3%) | |
Comparable income growth | 4.7% (30 Jun 2016: 3.8%) | 3.8% (30 Jun 2016: 3.0%) | 5.8% (30 Jun 2016: 6.0%) | 3.8% (30 Jun 2016: 0.1%) |
Weighted average capitalisation rate | 5.39% (31 Dec 2016: 5.58%) | 5.28% (31 Dec 2016: 5.39%) | 5.25% (31 Dec 2016: 5.55%) | 6.39% (31 Dec 2016: 6.54%) |
*The methodology of WALE at June 2017 has been revised to exclude holdovers.
Retail
Operations net income
The retail portfolio achieved a net revaluation uplift of $120.6 million in the 6 month period to June 2017, including GPT's equity interest in the GPT Wholesale Shopping Centre Fund (GWSCF). The positive revaluation is predominantly the result of favourable valuations at Charlestown Square, Highpoint Shopping Centre, Westfield Penrith and 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.
Like for like income growth of 3.8% was driven by a high proportion of structured rental increases and continued strength in leasing metrics including an ongoing focus on active remixing. Retail sales have moderated over the 12 month period to June 2017 consistent with what was anticipated and on trend with ABS retail sales, with weighted total centre sales up 3.4% and specialty annual sales up 2.1%. The portfolio remains well leased with occupancy at 99.6%.
Development net income
The retail development team has focused on master planning and delivery of development opportunities within its $1.9 billion development pipeline. In the first half of 2017, this includes the delivery of the $68.0 million repositioning of Wollongong Central. The remix will introduce David Jones and is on track to be completed later this year. The $210.0 million Sunshine Plaza retail expansion is on track for an opening in late 2018.
During the first half of 2017, the business unit contributed $5.0 million to FFO, predominantly from residential land sales at Rouse Hill (30 Jun 2016: $6.9 million).
Office
Operations net income
The office portfolio achieved a net revaluation uplift of $321.2 million in the period to June 2017, including GPT's equity interest in the GPT Wholesale Office Fund (GWOF), as a result of continued high occupancy levels, market rental growth and firming investment metrics. The positive revaluation has been driven by favourable valuations at MLC Centre, Citigroup Centre, Australia Square and Farrer Place.
Like for like income growth of 5.8% was achieved as a result of leasing success leading to strong rental growth and continued high levels of occupancy at 97.4% (including signed leases). The assets which were the main contributors to income growth were Australia Square, Citigroup Centre, MLC Centre and One One One Eagle Street.
Development net income
The team has focused on progressing a number of repositioning projects at Melbourne Central Tower, CBW and 750 Collins Street in Melbourne and MLC Centre in Sydney. Progress is also being made on the planning approval for a new tower at Darling Park.
Following the successful pre-commitment lease of 9,240sqm to the Rural Fire Service, construction has commenced on a 15,680sqm campus building on the 4 Murray Rose site at Sydney Olympic Park. Completion is expected in late 2018.
The acquisition of an office development site of 2,439sqm in the heart of Parramatta's commercial district settled in March 2017. This site will provide the opportunity for an office building of over 28,000sqm, with the development application underway.
Logistics
(i) Operations net income
The logistics portfolio achieved a net revaluation uplift of $38.2 million in the period to June 2017. This uplift is attributed to continued investor interest in quality logistics assets which led to a firming of investment metrics combined with high occupancy of 95.0%. The weighted average lease expiry has been maintained at a long duration of 8 years.
The GPT Group published this content on 15 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 16 August 2017 07:36:04 UTC.
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