Transcription of Finance News Network Interview with GPT Metro Office Fund Manager, Chris BlackmoreLelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me from GPT Group’s
(ASX:GPT) soon to be listed GPT Metro Office Fund is Fund Manager, Chris Blackmore. Chris welcome to FNN.
Chris Blackmore: Thanks it’s a pleasure to be here.
Lelde Smits: GPT Metro Office Fund is expected to list at the end of October. Could you outline what class of assets the Fund will own and also the size of the Fund?
Chris Blackmore: The Fund will be an ASX listed real estate investment trust, owning six quality A-grade metropolitan and business park office assets in Sydney, Melbourne and Brisbane, independently valued at around $376 million.
Lelde Smits: What is your rationale behind having exposure to metropolitan markets in those cities?
Chris Blackmore: The Fund’s properties are in well-established metropolitan locations, which with the strong asset fundamentals will be driving healthy returns. And it’s an asset class that’s complementary to GPT’s skills, which with its deep market knowledge and proven funds management capability, will enable us to add value for investors.
Lelde Smits: What are some of the other key characteristics of the GPT Metro Office Fund?
Chris Blackmore: The secret here is all about secure income from well-located quality assets. So the average age of these properties is just 3.5 years young. We have the benefit of a long weighted average lease expiry of 6.3 years, a capitalisation rate of 7.7 per cent and the benefit of 100 per cent occupancy. The Fund will have gearing at around 35 per cent and we’re offering an attractive 7.4 per cent annualised distribution yield, for the period to June 2015.
Lelde Smits: Who will be responsible for the day-to-day running of the Fund?
Chris Blackmore: The GPT Group as the Fund Manager will be responsible, and has a proven track record and capabilities in this sector. GPT boasts the prime CBD office fund for wholesale investors in its funds management platform, which has outperformed its peers on a one, three, five and seven year basis. In terms of the day-to-day management, I’ll be responsible for that and we have a strong corporate governance as well. So we have a majority independent Board chaired by John Atkin, with independent directors Justine Hickey and Paul Say.
Lelde Smits: You’re seeking to raise $255 million at $2.00 per share. How has the reception been among investors on your recent roadshow?
Chris Blackmore: The roadshow had a great response. There was significant demand for what is a new AREIT offering. The offer is fully underwritten, the institutional bookbuild has taken place and the retail broker firm and GPT securityholder offers, will be open in accordance with the PDS.
Lelde Smits: How important are the relationships with tenants at your metro properties?
Chris Blackmore: Tenant relationships are the key to the success of any property fund. So GPT has deep, long and good relationships with all of its key reputable tenants in this Fund. And they include household names such as Optus, Lion, Samsung and statutory authorities such as the Queensland Urban Utilities.
Lelde Smits: What would the metro balance sheet look like?
Chris Blackmore: We’ll have a conservative capital structure, gearing between 25 and 40 per cent and importantly, the Fund will not be taking on pure speculative development risk. Any developments will need a significant amount of secured income up front, before we go down that path.
Lelde Smits: Finally Chris, what would you say to those considering investing in the GPT Metro Office Fund?
Chris Blackmore: We welcome and look forward to welcoming those people who choose to invest in the Fund. We look forward to working with those GPT securityholders who choose to invest in the Fund. And we think it’s an excellent opportunity for everyone to take a slice of the ownership, of what we believe will be a highly successful property fund.
Lelde Smits: Chris Blackmore, thank you for the introduction to GPT Metro Office Fund.
Chris Blackmore: Thank you very much.
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