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It was always going to be a tough task for GPT Group (ASX: GPT) to repeat the $910.7 million property revaluation boost achieved in 2018, with Sydney office properties alone adding an extra $500 million to asset values.
So while the company announced today that it managed to notch a $342.2 million net valuation gain last year, a year-on-year profit comparison appears less rosy.
Net profit after tax (NPAT) declined 39.4 per cent to $880 million, but chief executive officer Bob Johnston believes 2019 was a successful year underscored by funds from operations (FFO) in line with guidance, the execution of developments and a strengthening of the balance sheet to fund future growth opportunities.
"The Group's diversified portfolio of high quality assets continues to deliver growth for investors," says Johnston.
"Like for like income growth across the portfolio of 3.5 per cent was underpinned by high occupancy, fixed rental growth and strong leasing outcomes achieved in the Office and Logistics portfolio.
"The Group successfully completed an $867 million capital raising in June to fund the acquisition of a 25 per cent interest in Darling Park 1 & 2 and Cockle Bay Wharf, Sydney, and to support the next phase of growth for the Group."
The capital raising followed the $800 million sale of GPT's 50 per cent stake in the MLC Centre to Dexus (ASX: DXS).
The bulk of the valuation uplift came from office properties contributing around 80 per cent to net gains, with the largest uplift coming from Melbourne Central Tower as a result of releasing achieved during the year.
Elsewhere in the office space, GPT's development at 32 Smith Street in Parramatta remains on track for completion at the end of 2020 and is targeting a 6-star Green Star environmental rating.
Meanwhile a valuation increase of $117.1 million was recorded for the logistics portfolio, for which GPT acquired five fully leased investment assets in Sydney in 2019 for $212 million, two of which adjoin the group's existing holdings in the prime Erskine Park precinct.
Two new logistics property developments with a combined value of $105 million were completed in 2019, and a further four projects are currently underway and due for completion in 2020.
"We are making very good progress on our strategy to grow the Logistics portfolio," says Johnson.
"The addition of three new development sites in our core markets of Sydney and Melbourne, combined with projects currently underway, provides the Group with the opportunity to deliver more than 550,000 square metres of new prime logistics facilities with an estimated end value on completion in excess of $1 billion."
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