GPT FY14 profit drivers and developments Interviews February 26, 2015 11:10 AM Email Alerts for: ASX:GPT Transcription of interview with The GPT Group (ASX:GPT) CEO and Managing Director, Michael CameronJohn Treadgold: The GPT Group has just released its full year results: What was your profit and earnings per share and how do the results compare to the year before?Michael Cameron: Our reported profit for 2014 was $645 million, that’s 13 per cent up on the year before. Our EPS (Earnings per Share) was 4.1 per cent increase and what we’re probably happiest about is our total return was 9.6 per cent, against a target of 9 per cent. So we’re really happy with that.John Treadgold: GPT’s funds management business grew 18 per cent over the first half: How did it perform over the full year?Michael Cameron: The Funds Management business had a great year. We saw $1.4 billion of new capital raised. Overall the Fund’s increased by 35 per cent, so that’s about $2.5 billion. We also launched the Metro Fund and that was the largest AREIT IPO (Initial Public Offering) on the market in 2015. We raised about $255 million. So it was very pleasing to see, off the back of strong performance within each of the Funds.John Treadgold: Can you outline the growth in the logistics development business?Michael Cameron: The logistics business has really blossomed in the last year; we produced $181 million of product around Australia. This year 2015, we’re set to deliver $285 million and we’re left with about $100 million worth of land, and when that’s converted to final product that will deliver about $440 million.John Treadgold: How is the GPT office portfolio positioned heading into 2015?Michael Cameron: The office portfolio was in an interesting place. We chose some years ago to focus our attention on Sydney and Melbourne and 88 per cent of the portfolio is in those areas. In fact, we have no exposure to areas outside of the Eastern seaboard. That’s been a great decision because we’ve seen an increased level of net absorption. We’ve seen real rental growth in Melbourne and Sydney, above three per cent. Vacancies have been fairly steady and incentives have been steady.John Treadgold: How would you characterise the performance of the Retail portfolio?Michael Cameron: The retail portfolio is well positioned in addition to the office. What we’ve seen is almost every key metric; there’s been an improvement in the performance throughout 2014. That’s sort of happened fairly quietly in the background. A few examples, we’ve got 3,700 stores across the portfolio; we’ve only got 36 vacancies. It’s just staggering. We’re also seeing about 4.2 per cent growth in sales and if I look at the latest data that’s come through for January, that’s now 7.3 per cent growth year-on-year. So we’re happy with where we’re positioned and the retail portfolio, which makes up about 50 per cent of all of the assets across GPT, will really benefit from that strength.John Treadgold: GPT completed transactionsnear $2 billion in 2014: What were the highlights?Michael Cameron: We completed a number of transactions, $2 billion in total. We were very happy with what happened with the CPA (Commonwealth Property Office Fund) acquisition. We came away from that bid with $1.1 billion worth of assets and investors were delighted. But for me personally, we invested in an asset in Victoria, in Melbourne called CBW, the corner of Bourke and William Streets. Half of that asset, which was worth $608 million, went on to our balance sheet. The other half went into a Fund and we were able to not only get the terrific returns off that asset, but we’re also rewarded with the Fund’s management fees on top of that half. So the overall return for us is sensational.Ends
