Property investment company GPT Group (ASX: GPT) released a quarterly update on its operations this morning. At the time of writing, the GPT share price has fallen 1.94% amidst a broader market sell-off.
Whilst there are encouraging signs in the report, the company also mentioned challenges ahead.
Major highlights of today’s announcement
- Rent collection for the September quarter was 90%, up from 67% in the June quarter. This means only 10% of GPT’s tenants are yet to pay their due rents.
- Completion of a new 50,200sqm warehouse in Penrith, New South Wales fully leased for 10 years.
- Approximately 97% of GPT’s retail stores (excluding Victorian assets) are currently open and trading.
- The company remains in a strong financial position with modest debt and $1.1 billion available liquid assets.
- Given the current uncertainty, funds from operations (FFO) and dividends still remain withdrawn.
A quick look at GPT Group’s property portfolio
GPT Group is a property investment company. It’s an active owner and manager of premium, A-grade Australian retail, office and industrial properties. GPT also manages three property funds.
Retail properties make up 50% of GPT Group’s portfolio, offices 30%, and industrial properties the remainder.
GPT Group owns some of the most prestigious commercial properties in Australia. These include landmarks such as Melbourne Central, Sydney’s Australia Square and Governor Phillip Tower, Brisbane’s One One One Eagle Street and Riverside Centre, and numerous properties around Collins Street in Melbourne’s CBD.
It also has a pipeline to redevelop Sydney’s exclusive Darling Park and Cockle Bay area, although the project is uncommitted at this point.
What’s in store for GPT Group?
Like many landlords across Australia, GPT Group has encountered issues in its retail portfolio in FY2020. Along with lockdown restrictions, sluggish wage growth and high unemployment have limited consumers’ ability to spend during the pandemic. This has, in turn, affected the ability of retailers to pay or renew their leases.
Around 25% of GPT’s tenant contracts are up for renewal in 2020, and the company will face pressure to lower its rent. However the fact that GPT has managed to collect 90% of its rent this quarter, as announced today, is a very encouraging sign.
In the office space, although growth in white-collar jobs is very weak, GPT Group still commands bargaining power as it owns 10% of both Sydney’s and Melbourne’s prime CBD offices.
The company has previously mentioned that e-commerce, not rival shopping-centres, presents the biggest threat to its retail portfolio, which makes up half its business. E-commerce is undermining the bargaining power of retail landlords, in particular those exposed to the discretionary department stores.
About the GPT share price
The GPT share price has recovered 35% since the lows seen in the March bear market. Despite this, however, the company’s shares are still trading nearly 37% lower than their 52-week high of $6.39. Since reaching a post-pandemic high of $4.57 in early June, the GPT share price has largely been trading between $3.70 and $4.20.
Forget what just happened. We think this stock could be Australia’s next MONSTER IPO…
One little-known Australian IPO has doubled in value since January, and renowned Australian Moonshot stock picker Anirban Mahanti sees a potential millionaire-maker in waiting…
Because ‘Doc’ Mahanti believes this fast-growing company has all the hallmarks of genuine Moonshot potential, forget ‘buy now pay later’, this stock could be the next hot stock on the ASX.
See how you can find out the name of this stock
Returns as of 6th October 2020
More reading
Motley Fool contributor dsunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post GPT (ASX:GPT) share price falls after Q3 update appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/31UbuMh
Leave a Reply