GDI sees Perth leasing lift support FY27 growth plan

Strong FY26 sets up Perth-focused strategy

GDI Property Group (ASX:GDI) is using a strong operating year to press its advantage in Perth’s office market, with Funds From Operations rising 25% to $44.5 million and net tangible assets reaching $1.21 per security. The group also reported full occupancy at Westralia Square 1 and Westralia Square 2, giving management a firmer base from which to pursue asset sales, debt reduction and selective growth.

The result builds on the FY26 earnings update in which GDI had already reported 25% FFO growth and a buyback alongside its Perth development strategy. At the annual meeting, newly appointed chairman James Warburton said the board’s priorities were to deliver its strategy, maintain a through-cycle distribution of 5.00 cents per security and narrow the gap between the security price and NTA.

Non-core sales remain central to capital management

GDI says it has more than $100 million of non-core balance-sheet assets left to sell. Approximately $50 million has already been released through the sale of the Autoleague Portfolio, following the final Autoleague asset sale previously reported by the group.

The proceeds are intended to support a material reduction in gearing, while the company balances securityholder returns with reinvestment. GDI has commenced its security buyback, but says the programme will continue to be assessed alongside asset sales and debt reduction. It reported $78 million of undrawn debt at the start of FY27.

Leasing momentum meets a supportive Perth market

GDI leased, renewed or signed heads of agreement covering 20,937 square metres of office space during FY26. Westralia Square 1, Westralia Square 2 and the office component of 197 St Georges Terrace are now fully leased, while negotiations continue over the remaining space at 5 Mill Street.

Management’s presentation pointed to 48,586 square metres of premium and A+ Perth CBD transactions in 2026 to date, up from 15,331 square metres in 2025, while new office supply is forecast to average 10,400 square metres a year over the next five years. Those figures come from external market research cited in the presentation and describe the broader Perth market, rather than GDI’s portfolio alone.

Co-living and Mill Green add growth options

The co-living joint venture contributed $9.5 million of FFO in FY26, up from $6.5 million, with South Hedland and Norseman trading close to full capacity. The venture has also acquired three assets in Moranbah for $18.3 million and added rooms at Norseman, while GDI says it is integrating the Newman and Moranbah acquisitions.

At Mill Green, GDI has submitted a master plan development application aimed at repositioning the asset and adding amenity for the rental market. The proposed 1 Mill Street mixed-use building would require external funding and a joint-venture partner, making the project an opportunity rather than a committed development pipeline.

FY27 distribution carries a capital warning

GDI is seeking to pay a 5.0 cents per security cash distribution in FY27, subject to no material change in circumstances or unforeseen events. The company explicitly says the distribution may be paid wholly or partly out of capital, an important qualification for investors assessing the sustainability of cash returns.

The next test is whether asset recycling can deliver the promised gearing reduction without slowing the leasing and property initiatives that produced the FY26 improvement. GDI’s plan depends on making that balance work while the Perth office recovery remains uneven across building grades.