GDI Positioned for Perth Rebound

26 August 2019

GDI Property Group release their FY19 results with hope of an improving Perth commercial market.


The Group achieved an after tax profit increase of 12.3% and an increase in adjusted FFO of 3.6%. The group's annual presentation included a number of charts pointing to a brighter outlook for Perth, including the fact that WA is the state with the highest resources sector investments pipeline ($234bn), has the highest mix of state final demand and population growth, with positive net office absorption, low supply and positive effective rent growth, all supporting solid investment fundamentals.


Key highlights

  • Net Tangible Asset (NTA) per security of $1.26, up $0.08 per security from the NTA at 30 June 2018
  • Funds From Operations (FFO) of $48.3 million and FFO per security of 8.96 cents
  • Distribution per security for the period of 7.75 cents, in line with guidance


Operational successes

Property division GDI's focus for FY19 was the delivery of asset management strategies for the existing assets in the portfolio, most notably, at Mill Green, Perth, with the re-leasing of the majority of space vacated during FY17 and FY18.


GDI are also continuing to work with Lendlease Developments Pty Limited on a number of potential single occupiers of a new development located at 1 Mill Street, Perth. As previously announced, the Minister for Works signed two binding heads of agreement to occupy 14,522sqm of office accommodation at Westralia Square.


The existing leases over 25,664sqm with the Minister of Works will be varied, largely to facilitate WAPOL’s relocation within Westralia Square from the upper levels to the lower levels, and the departure of the Department of Justice.


Our wholly owned portfolio is now independently valued at $715.0 million, with all assets revalued during the year. Mill Green (+$8.9 million to $330.0 million) and 50 Cavill Avenue, Surfers Paradise, ($11.9 million to $100.0 million) were revalued at 31 December 2018, with Westralia Square (+$30.0 million to $285.0 million) revalued at 30 June 2019 Strong balance sheet GDI’s balance sheet is in a strong position with a Loan to Value Ratio (LVR) on the Principal Facility of 8.3%, below the Board’s maximum LVR of 40% and the bank’s covenant of 50%.


During the year, GDI increased the size of the Principal Facility to $140.0 million and extended its tenure to 31 January 2021, with drawn debt remaining unchanged at $59.4 million.


GDI has used its balance sheet to extend its on‐market buyback of up to 5% of our securities.


Guidance for FY20

Given the likelihood of asset disposals and acquisitions, both for GDI Property Trust and the Funds Business, GDI have chosen not to provide earnings guidance.


However in a more cautious approach, the business advised that subject to no material change in circumstances, a forecast distribution of 7.75 cents per security is forecast for FY20.