Why GPT Group is growing on all fronts

Property Investment company GPT Group (ASX: GPT) has released its March quarter operational update with growth noted on all fronts, but occupancy rates slipped slightly from 2016.

GPT shares were up 0.2% to $4.67 at the time of writing.

GPT owns and manages a $12.3 billion diversified portfolio of high-quality Australian retail, office, and logistics assets together with GPT’s funds management platform and $21.5 billion of property assets under management.

Its real estate portfolio includes Australia Square in Sydney, Melbourne Central, and One One One Eagle Street Brisbane.

Its retail portfolio includes 13 shopping centres with 22 assets in its office portfolio and 28 assets in the logistics space with overall occupancy for the FY17 dropping from 97.1% in FY16 to 96.8%.

GPT Group focuses on maintaining a strong balance sheet throughout 2017 with moderate gearing and significant investment capacity giving it the flexibility to move in on investment opportunities as they arise.

For the March quarter, GPT Group reported total centre comparable MAT growth of 2.1%, with 34,100 sqm of leasing space signed in the quarter and the acquisition of Sunshine Business Park in Melbourne for $74 million with an initial yield of 6.1%.

Over the last quarter GPT has seen wet weather impact upon the $420 million expansion of Sunshine Plaza with the project now expected to open on a staged basis in late 2018 with completion by the second quarter of 2019.

GPT will continue to diversify funding sources with the issue of A$90 million Hong Kong Dollar medium term notes for the term of 13 years.

GPT recently announced it would begin construction of a 31,000 square metre office facility in Western Sydney in the heart of logistics and warehouse precinct The Gateway, which is expected to attract significant interest and is in line with the company’s strategy to “undertake speculative developments”.

Elsewhere in the REIT space, Scentre Group (ASX: SCG) has taken a hard-nosed stance on retailers with a warning non-performers would “fall away” and shopping centre space will be prioritised for the best brands.

Movement on the Scentre Group registry also recently showed non-executive director Aliza Knox picked up 25,500 shares last week, after Macquarie rated the stock as outperform with a $4.43 price target.

Shares in Australian-listed property trust Charter Hall Retail REIT (ASX: CQR) have been tracking down steadily in the last 12 months from $4.48 at this time last year to $3.86 at the time of writing.

Charter Hall has proven to be good value for shareholders over the years, with a grossed-up dividend yield of 7.3% and EPS at 37c per share.

Buying into a REIT is a long-term investment and investors can expect share value to accumulate slowly as assets appreciate. Dips can be expected as the retail environment ebbs and flows with discretionary spending levels.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. 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.

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