GPT makes most of its money from rental income generated by its retail, office, and logistics property portfolio, supplemented by high-margin funds-management fees and development profits from new projects. The company reports on the 16th of this month and while its trading ~17% above its 5-year valuation into a potential hiking cycle the stock again feels unattractive at current levels.
GPT carries significant debt (as all REITs do), so when rates rise, it pushes up funding costs, pressuring asset valuations, slowing development profits, and moderating tenant demand. Although GPT does hedge a good portion of its debt, not all, so rising rates still flow through over time.
- We like the risk/reward towards GPT back in the $5.20 area, with this month’s ~12c dividend likely to contribute to a pullback.
MM is neutral towards GPT around $5.50
Add To Hit List
