GPT Group (GPT) was actually the first A-REIT publicly listed in 1971 and it owns a diversified portfolio of office, retail, and industrial properties plus It also has a fund management platform. The Funds Management segment provides asset and funds management of Australian wholesale fund vehicles, as well as investments by the company in GPT Wholesale Office Fund and GPT Wholesale Shopping Centre Fund. Last September we seriously considered buying GPT but instead opted for REA Group (REA) to increase our property linked exposure, after trimming our REA position for a healthy ~18% gain yesterday we are now contemplating if/where we would reconsider GPT, or an alternative sector company.
The company’s FY22 result delivered in February was in line with guidance and expectations assisted by a rebound in retail income (COVID impacts reduced) and a growing portfolio of logistics assets. However GPT continues to trade around its weakest link, which is its office division which delivers only ~35% of income), despite its retail, logistics, and funds management businesses all performing above expectations – in our opinion, this negative focus is presenting value.
- We believe GPT is cheap trading on a 26% discount to its Net Tangible Assets (NTA) although assets can always be marked down – the forecasted 5.8% yield is an added bonus.
MM is bullish GPT under $4.50
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