GPT Group (ASX: GPT) shares are up and down in Thursday’s session. At the time of writing, shares in the real estate investment group are trading 0.43% lower at $4.58. The GPT share price has, however, been oscillating between green and red during morning trade. For context, the S&P/ASX 200 Index (ASX: XJO) is currently also sitting 0.36% lower.
The company comes into focus after its annual general meeting (AGM), in which both the chair and CEO presented on the company’s current situation.
Let’s take a closer look at these speeches.
In the first presentation, GPT Group chair Vickki McFadden talked about the company’s future and some of the challenges it faced.
McFadden blamed GPT’s 2020 troubles largely on the coronavirus pandemic. The company was especially hit by the 6-month lockdown in Melbourne, where a majority of its assets are located. As well, McFadden said rent relief measures that were implemented at the beginning of the pandemic materially affected its bottom line.
“The Group’s financial performance in 2020 was impacted by government measures implemented in response to the pandemic including the restricted trading conditions for our Retail assets and the mandatory rent relief to affected tenants,” she said.
“The impact on the Group’s 2020 rental income from COVID-19 was approximately $95 million, which includes approximately $72 million in the form of tenant rent waivers. We did qualify for and receive JobKeeper payments totalling $8.8 million.”
McFadden added funds from operations (revenue) from 2020 was still $554.7 million, or 28.48 cents per share. This was down 9.6% compared to 2019, however. The GPT Group share price rose when these results were announced in February. In 2020, GPT Group had a net loss of $213.1 million.
Property valuations also fell in 2020 by $712.5 million, according to the chair. She attributed this decline mostly to retail assets.
McFadden also confirmed she would run for re-election to the board.
After McFadden, GPT Group CEO Bob Johnston addressed shareholders at the AGM. Johnston reiterated the impacts of government restrictions on the business, especially in Victoria.
Johnston said the company was geared below its target range of 25% to 35% and maintains A and A2 credit ratings from S&P and Moody’s, respectively. It is also expanding into the logistics sector through around $400 million worth of development and acquisition during 2020. The total value of the group’s logistics assets is $3 billion. Johnston said he expects this figure to increase as demand outgrows supply. Occupancy rates in GPT’s logistics assets are currently 96.8%.
The CEO also claimed the office portfolio of the business is going strong, despite the challenges of 2020.
“Our Office portfolio continued to deliver strong results in 2020 demonstrating its resilience despite work from home arrangements enduring for much of the year,” Johnston said.
“Notwithstanding travel and mobility restrictions, our team concluded 99,600 square metres of signed leases across the portfolio, with an additional 26,500 square metres under Heads of Agreement.”
Office occupancy rates in GPT’s buildings are 91.9%, according to the CEO.
The group’s latest building project in Parramatta has just been completed and work is still continuing on its office building at Cockle Bay Wharf in Sydney.
Visitation rates to its shopping centres in December were 95% of what they were pre-COVID, Johnston claims. The one exception is its Melbourne Central centre. The Melbourne CBD is still lagging in foot traffic compared to other parts of the country. Occupancy rates for shopping centres in the business are 98%.
In other news, 4,000 leasing deals were completed in 2020 and a further 142 were wrapped up in the first quarter of this year.
Total funds under management for GPT are $12.9 billion.
It seems investors are not fully decided on what today’s update means for the company going forward, judging by today’s GPT share price movements.
GPT share price snapshot
Over the past 12 months, the GPT Group share price is up by around 14%. Over the last half-year, however, the company’s value has fallen by around 2%.
GPT has a market capitalisation of $8.9 billion.