Can GPT Sustain Growth Amid Rising Debt Costs and Major Development Risks?

• Funds from operations reach $322.6 million with 16.8 cents per security
• High portfolio occupancy across retail (99.7%), office (94.4%), and logistics (99.5%)
• New $1 billion GPT QuadReal Logistics Trust 2 partnership announced
• $200 million Rouse Hill Town Centre expansion underway, completion expected 2H 2026
• Net gearing steady at 30.7% with $1.0 billion liquidity and strong credit ratings

Strong Financial Foundations

The GPT Group has delivered a solid set of interim results for the six months ending 30 June 2025, underscoring its resilience and strategic focus in a competitive real estate market. Reporting funds from operations (FFO) of $322.6 million, or 16.8 cents per security, alongside an adjusted FFO of $257.4 million, GPT has maintained a steady financial footing. The statutory net profit after tax stood at $329.1 million, buoyed by a $48.3 million uplift in investment portfolio valuations.

Liquidity remains robust at $1.0 billion, with net gearing at 30.7%, comfortably within the company’s target range. This financial discipline is further supported by strong credit ratings from S&P and Moody’s, reflecting investor confidence in GPT’s capital management.

Operational Excellence Across Sectors

GPT’s portfolio occupancy rates continue to impress, with retail at 99.7%, office at 94.4%, and logistics at 99.5%. These high occupancy levels have driven like-for-like net property income growth across all sectors, 5.6% in retail, 6.5% in office, and 5.0% in logistics, highlighting the group’s ability to attract and retain tenants despite evolving market dynamics.

Leasing activity was particularly notable, with over 70 office deals covering nearly 56,000 square meters and logistics leases achieving average spreads of 37%. Retail specialty sales also showed resilience, with productivity reaching $13,417 per square meter and positive leasing spreads of 4.2%.

Strategic Growth and Development Initiatives

GPT is advancing key development projects that promise to enhance its asset base and future income streams. The $200 million expansion of Rouse Hill Town Centre in New South Wales is progressing well, with practical completion expected in the second half of 2026. Meanwhile, the 51 Flinders Lane office development in Melbourne is on track for completion in early 2026.

In a significant strategic move, GPT announced the launch of the $1 billion GPT QuadReal Logistics Trust 2 (GQLT2), an 80/20 partnership seeded with approximately $460 million of GPT’s balance sheet assets. This initiative underscores GPT’s commitment to expanding its footprint in the logistics sector, which continues to benefit from strong demand and favourable market fundamentals.

Looking Ahead

Management has reaffirmed its 2025 guidance, targeting funds from operations growth of at least 3% and a full-year distribution of 24.0 cents per security. With a development pipeline valued at around $3 billion and ongoing capital management initiatives, GPT appears well-positioned to sustain its growth trajectory and deliver long-term value to investors.

CEO Russell Proutt emphasized the group’s focus on operational excellence and strategic investment management, highlighting the depth of capability added in research, corporate development, and investor engagement. This disciplined approach will be critical as GPT navigates the evolving real estate landscape.

Bottom Line?

GPT’s interim results reinforce its strategic momentum, but upcoming equity raises and market conditions will test its growth ambitions.

Questions in the middle?

• How will the new GQLT2 partnership impact GPT’s balance sheet and future earnings?
• What risks could affect the timely completion and success of major developments like Rouse Hill and 51 Flinders Lane?
• How might rising interest rates influence GPT’s cost of debt and distribution guidance for the remainder of 2025?