GDI Reports $44.5 Million FFO and Maintains 5 Cent Distribution

Robust FFO Growth Amid Revenue Decline

GDI Property Group (ASX:GDI) posted a 25% surge in Funds From Operations (FFO) to $44.5 million for the year ended 30 June 2026, translating to 8.24 cents per security, a 24.5% lift on the prior year. This growth was largely driven by the Property Division’s 14.8% FFO increase, with key assets like Westralia Square and WS2 stabilising occupancy and rental income. However, total revenue dipped 6.4% to $77.0 million, reflecting a $3.8 million fall in funds management fees due to a reduced asset base and fewer transactional fees.

Net profit attributable to securityholders edged down slightly by 2.8% to $34.6 million, impacted by lower revenue and fair value adjustments. Despite this, net tangible assets (NTA) per security nudged higher to $1.21, supported by modest revaluations of core properties.

Leasing Momentum and Portfolio Stability

Leasing activity remained a strong suit, with over 20,937 square metres of lettable space secured through new leases, renewals, and heads of agreement. This includes post-balance date deals that brought Westralia Square’s WS1 and WS2 to full occupancy, lifting overall portfolio occupancy to 90%, up from 88.2% in FY25.

GDI’s strategic speculative fitout program at Mill Green continues to pay dividends, with occupancy at 197 St Georges Terrace rising to 92% and 5 Mill Street to 93%. The company plans to submit a Master Plan Development Application for Mill Green, aiming to transform the precinct into a mixed-use destination in stages, balancing capital deployment with market conditions and tenant demand.

Co-Living Joint Venture Accelerates Growth

The Co-living Joint Venture (JV) contributed $9.5 million to FFO, up over 44% from FY25, bolstered by the acquisition of three Moranbah properties with 239 rooms for $18.3 million and a 140-room expansion in Norseman. These assets benefit from take-or-pay contracts with mining companies, providing stable income streams.

Capital Management and On-Market Buyback

Gearing remains conservative at 33%, with drawn debt on the Syndicated Facility reduced by $21 million to $343.3 million, and $78.2 million of undrawn capacity retained. The facility was upsized by $25 million and maturities extended to February 2028 and 2029, respectively.

Post balance date, GDI announced an on-market buyback of up to 5% of its stapled securities, funded from cash reserves, undrawn debt, and potentially proceeds from non-core asset sales exceeding $100 million. The buyback is discretionary, with the Board retaining flexibility on timing and scale, balancing it against capital deployment in projects like Mill Green Stage 1A and distribution maintenance.

Distribution and Outlook

GDI maintained its distribution at 5.0 cents per security for FY26, with guidance to sustain this payout in FY27, subject to market conditions and potential capital distributions. The company’s focus remains on leasing current vacancies, advancing development opportunities, and exploring acquisition prospects within the Funds Management Division and Co-living JV.

Executive remuneration continues to align with performance, featuring a mix of short-term and long-term incentives tied to financial and strategic metrics, with the Managing Director’s performance rights issue pending securityholder approval at the upcoming AGM.