GDI Property Group reported a robust 29.1% increase in Funds From Operations for the half year ended December 2025, underpinned by strategic property sales and strong leasing performance.
- Funds From Operations rose 29.1% to $21.3 million
- Property sales achieved premiums of 50% and 170% over acquisition prices
- Leasing occupancy increased to 91.2%, with over 13,000sqm leased
- Co-living joint venture expanded with new Moranbah acquisitions
- Stable net tangible assets per security at $1.20 and sound gearing at 35%
Strong Financial Performance
GDI Property Group has delivered a notable uplift in its financial results for the half year ended 31 December 2025, with Funds From Operations (FFO) climbing 29.1% to $21.3 million. This growth was driven by increased contributions from its property portfolio and an expanding co-living joint venture, reflecting a well-executed strategy to enhance income streams and asset value.
Despite a modest fair value loss on investment properties of $1.2 million, statutory net profit remained steady at $16.4 million, underscoring resilient operational performance amid market fluctuations.
Premium Property Sales and Leasing Momentum
GDI secured contracts to sell six dealerships within its Autoleague portfolio for $74 million, reflecting a 50% premium to their acquisition cost. Additionally, the sale of two properties in Bassendean fetched $29.5 million, an impressive 170% premium. These transactions not only crystallise significant capital gains but also align with GDI’s capital recycling approach to optimise portfolio quality and returns.
Leasing activity was equally robust, with over 13,000 square metres leased during the period, including a key 3,300 square metre lease at 197 St Georges Terrace. This lifted occupancy to 91.2%, up from 86.5% six months prior, signalling strong tenant demand and effective asset management.
Expanding Co-living Ventures and Sustainable Recognition
The co-living joint venture portfolio expanded with the acquisition of The Lodge Village and Lodge Outback Motel in Moranbah, Queensland. These additions diversify GDI’s geographic and sector exposure, contributing to a higher FFO from this segment. Meanwhile, the WS2 development continued to garner industry accolades, winning the Property Council of Australia’s Award for Best Sustainable Development, highlighting GDI’s commitment to sustainability.
Balance Sheet Strength and Market Outlook
GDI’s balance sheet remains robust, with gearing at a prudent 35% and strong compliance with syndicated facility covenants. The group increased its syndicated debt facility by $25 million and extended terms on a significant portion of the debt, providing financial flexibility.
Looking ahead, GDI is optimistic about the Perth office market, where vacancy rates are expected to tighten and rental growth of up to 39% is forecast over the next five years. This outlook supports GDI’s focus on leasing growth, capital recycling, and portfolio expansion to drive future value.
Distribution and Investor Returns
For the half year, GDI declared a cash distribution of 2.50 cents per security, with guidance for a full-year distribution of 5.00 cents per security, subject to market conditions. The potential for distributions to be paid partly from capital warrants close attention from investors assessing income sustainability.
Bottom Line?
GDI’s strong half-year performance and strategic moves position it well for growth, but investors will watch closely how distribution policies and market conditions evolve.
Questions in the middle?
- Will GDI maintain its distribution guidance amid potential capital payments?
- How will the Perth office market’s forecast rental growth impact GDI’s portfolio returns?
- What further capital recycling or acquisitions might GDI pursue to sustain FFO growth?