Growthpoint Properties guides to higher FFO on strong performance

Growthpoint Properties (ASX: GOZ) was up 2.50% at the open after upgrading its FY22 funds from operations (FFO) guidance to "at least" 27.7 cents per share (CPS), up from the 27cps announced last December.

Management attributes a minimum of 7.8% growth over FY21 to ongoing leasing successes across the portfolio.

Today’s guidance also envisages no significant market movements or unforeseen circumstances occurring during the remainder of FY22.

Due to the continued strong performance of the group over the year, the REIT also announced a distribution of 10.4 cps for the six months through June.

Higher valuations

To the uninitiated, for more than 12 years, the REIT has been investing in high-quality industrial and office properties across Australia and owns/manages 58 properties – 31 industrial and 27 office - valued at approximately $5.1 bn.

Timothy Collyer, managing director attributes the growth in preliminary draft external valuations – which indicate a $64.51m increase (2.2%) - to the resilience of the REIT’s growing property portfolio, and particularly, ongoing strength of the industrial market and leasing success across both office and industrial portfolios.

Increased valuations are expected to contribute around 8 cents per security (cps) increase to the REIT’s net tangible assets (NTA), to $4.63 per security pro forma, from $4.55 at 31 December 2021.

A resilient foundation

Despite Growthpoint’s exposure to a higher interest expense on its floating debt - with circa 60% of its debt forecast to be fixed as at 30 June 2022 – Collyer reminds investors the REIT has ample head room to debt covenants and no hedges expiring in FY23.

"The Group’s exposure to favoured industrial and metropolitan office property markets and secure income from predominantly large corporate and government tenants provide a resilient foundation for our business," Collyer noted.

Recent developments

Since the start of the year the REIT has:

• Settled its acquisition of 2-6 Bowes Street, Phillip, ACT

• Purchased 141 Camberwell Road, Hawthorn East, VIC

• Seen Woolworths exercise their five-year lease option for their Qld distribution centre at Larapinta and received the rental determination

Growthpoint share price: A 12 month snapshot.