Property investment company, GPT Group, announced its operational update for the September quarter on Friday. Shares received a modest boost, despite the company reporting that extensive retail trading restrictions were experienced that had a considerable impact on the business.
On average only 27% of stores were open in NSW and Victoria during the quarter, with predominantly only essential retail allowed to trade. The recent easing of COVID-19 restrictions is already showing customer visitations at shopping centres return to levels experienced prior to the lockdowns. However, GPT noted that the recovery of its Melbourne Central shopping centre is likely to be more protracted given its reliance on the return of office workers, students and visitors to the Melbourne CBD.
Vacancy rates in the Office sector remain elevated but are stabilising although they continue to make progress with leasing despite the extended lockdowns. Occupancy for GPT’s stabilised assets increased and they also finalised a number of leasing transactions in recently completed developments in the Melbourne CBD.
Cash collections in the September 2021 quarter were 63% of gross billings, while Office portfolio occupancy increased to 94.3%.
In line with a strategic focus, GPT increased its investment in the Logistics sector to $4.1 billion through recent acquisitions and the completion of two development projects. The company continue to see strong tailwinds for the sector, with solid tenant demand and low vacancy in its core markets.
Given COVID-19 restrictions have only recently eased and uncertainty remains in terms of retail trading conditions and rental collections, GPT said it would continue to refrain from providing funds from operations and distribution guidance for 2021.
GPT’s Chief Executive Officer, Bob Johnston, commented: “The group continues to execute on its strategy to increase capital allocation to the Logistics sector through acquisitions and development completions. After a challenging period for the Retail sector, we expect that there will be a recovery in customer visitations and sales across our retail assets. With the increased levels of vaccination rates and the expectation of fewer COVID-19 restrictions being required in the future, we are optimistic that we will see a return to more favourable economic conditions.”