GPT Able to Fund A$2 Billion of Acquisitions, CEO Says

GPT Group, Australia’s second-biggest diversified property trust, said it’s able to fund A$2 billion ($1.9 billion) of acquisitions and developments after withdrawing its bid for part of rival Australand Property Group.

GPT, which wants more offices and industrial properties, is willing to raise the proportion of debt to assets to as high as 30 percent from 18 percent currently, said Michael Cameron, chief executive officer and managing director of the Sydney-based REIT.

The property trust last month withdrew its bid, made in December, for Australand’s commercial and development property division, saying the two companies couldn’t agree on a price. It’s seeking to increase the proportion of offices to 35 percent of its assets from 32 percent as of March, and industrial properties to 15 percent from about 11 percent, Cameron said.

“We have significant capacity, well over A$2 billion of capacity,” Cameron said in an interview in Sydney on June 7. “We do get invited to look at every opportunity that fits our strategy, so we’re very active, but the discipline is being able to say no to deals that don’t actually work for us from a total return perspective.”

The company reduced its retail property weighting to 54 percent of all assets from 61 percent following the sale of its 50 percent share in Erina Fair shopping center in New South Wales state for A$397.1 million last month.

GPT is unlikely to follow other REITs that have issued shares to fund expansion, Cameron said.

Stockland, Mirvac

Stockland and Mirvac Group, Australia’s biggest and third-biggest diversified real estate trusts respectively, each raised A$400 million last month to buy new properties, fund developments and repay debt. Other REITs including Cromwell Property Group and Generation Healthcare REIT, which invests in medical properties and aged care centers, have also issued shares to buy properties.

“With gearing at 18 percent and a significant level of capacity, you could assume that, as we sit today, we don’t have any current plans” to raise additional capital to buy or develop assets, he said.

GPT has about A$80 million of vacant land that it plans to develop into logistics properties once it achieves the required levels of pre-commitments from potential tenants, Cameron said.

It’s close to a deal with Rand Refrigerated Logistics for a cold storage facility worth close to A$100 million in Sydney, the Australian Financial Review reported today. Brett Zarb, a GPT spokesman, declined to comment on the report.

Brisbane, Sydney and Perth were among the world’s 10 most expensive cities for industrial property rents in the three months ended March 31, figures from broker CBRE Group Inc. show.

The company also plans to create new funds including an one for industrial properties and another targeting individual investors to expand, Cameron said. It aims to reach its targeted weightings for its own office and industrial properties before setting up new funds, Cameron said.

GPT shares rose 1.1 percent to A$3.76 at the close of trading in Sydney, extending gains this year to 2.2 percent. The benchmark S&P/ASX 200 index added 0.4 percent today.

Before it's here, it's on the Bloomberg Terminal.