Growthpoint’s Portfolio Faces Valuation Headwinds Despite Funds Management Growth

FY25 Financial Highlights

Growthpoint Properties Australia (ASX – GOZ) has delivered a solid FY25 performance, reporting funds from operations (FFO) of 23.3 cents per security, surpassing both initial and updated guidance. Despite a statutory net loss after tax of $124.6 million, the company increased distributions to securityholders to 20.3 cents per security, including a one-off distribution of 2.1 cents to assist with capital gains tax payments related to asset sales.

The company’s gearing ratio improved slightly to 39.7%, down from 40.2% in FY24, supported by $335 million in proceeds from asset recycling executed in line with book values. This active capital management has positioned Growthpoint with $244 million in undrawn debt facilities and a weighted average debt maturity of 3.9 years, extending the earliest debt expiry to December 2026.

Portfolio and Leasing Performance

Growthpoint’s diversified portfolio maintained a high occupancy rate of 94%, with office assets at 92% and industrial assets at 98%. The weighted average lease expiry (WALE) remained steady at 5.6 years. The office portfolio experienced a 7.4% valuation decline, primarily in the first half of FY25, while the industrial portfolio saw a 4.0% like-for-like valuation increase, buoyed by rent growth and lease extensions, notably a 10-year extension at Woolworths’ Perth Regional Distribution Centre.

Leasing activity was robust, with over 123,000 square meters leased across office and industrial assets, including significant leasing spreads of 25% in the industrial portfolio. Growthpoint also progressed strategic repositioning projects, such as the lobby facelift at 75 Dorcas Street, South Melbourne, and spec fitouts at 5 Murray Rose Avenue, Sydney Olympic Park, enhancing tenant appeal.

Funds Management Growth

The funds management business gained momentum, generating $328 million in new assets under management (AUM) and increasing funds management revenue by 20%. Growthpoint launched two new funds – the Growthpoint Australia Logistics Partnership (GALP), a $198 million industrial fund in partnership with TPG Angelo Gordon, and the Growthpoint Canberra Office Trust (GCOT), a $90 million government-leased office asset syndicate. These initiatives underscore Growthpoint’s strategy to drive growth through funds partnerships alongside income from directly held assets.

Sustainability and Governance Milestones

In a significant milestone, Growthpoint achieved its Net Zero Target on 1 July 2025, covering scope 1 and 2 emissions from directly managed office assets and corporate activities. The company maintained strong environmental credentials with average NABERS Energy and Water ratings of 5.2 and 4.9 stars, respectively, and improved indoor environment ratings to 5.0 stars. Sustainability-linked loans now comprise 67.7% of the loan book, reflecting the integration of ESG factors into capital management.

Governance enhancements included the appointment of Tonianne Dwyer as an Independent Non-Executive Director, returning the Board to majority independence and surpassing gender diversity targets with 44.4% female representation on the Board.

Executive Remuneration and Outlook

Executive remuneration outcomes aligned with strategic priorities, with short-term incentives awarded at approximately 66% of maximum opportunity. The FY26 remuneration framework will emphasize portfolio performance and sustainable growth, introducing new financial and non-financial metrics to better align incentives with shareholder value creation.

Looking ahead, Growthpoint aims to maintain active portfolio management, target leasing of vacancies and expiries, and continue expanding its funds management platform. With capitalisation rates stabilizing and market conditions improving, the company is well-positioned to build on its momentum in FY26, guided by FFO per security guidance of 22.8 to 23.6 cents and distribution guidance of 18.4 cents.