GDI Property Group's Strong Leasing Momentum in Perth Market

GDI Property Group (ASX: $GDI) has reported strong leasing results in the Perth market, with a significant increase in leasing activity during the 6 months to December 2023. The company leased an additional approximately 28% of the Perth office portfolio, with notable leasing deals at Westralia Square contributing to a weighted average lease expiry (WALE) of 8.2 years and an occupancy rate of 98%. The successful leasing efforts have led to an increase in the independent valuation of the Westralia Square to $379.0 million, reflecting a 6.0% cap rate, up from $371.0 million at the end of June 2023. Additionally, the completion of WS2 has further enhanced the Westralia Square Complex, positioning it as a Premium Grade property.

Executive Commentary on Leasing Success and Financial Snapshot

The company's leasing success at Westralia Square and WS2 has significantly contributed to our strong financial performance. The increase in independent valuations and the positive leasing momentum underscore the value of our core assets. We are pleased with the leasing deals with Minister of Works (WAPOL), Hexagon, and Infosys, which have resulted in a substantial increase in the valuation of Westralia Square. The successful leasing efforts have also positively impacted our financial snapshot, with a maintained distribution, a slight decrease in Net Tangible Assets (NTA) from $1.25 to $1.20, and a growth in property income forecasted for FY25 to reflect the leasing endeavors. The Co-Living Joint Venture has also been a significant contributor, adding $3.7 million net profit before tax for the half-year period.

Summary of GDI Property Group's Leasing and Financial Performance

GDI Property Group's strong leasing results in the Perth market have led to a notable increase in the independent valuation of its core assets, particularly at Westralia Square. The company's successful leasing efforts have positively impacted its financial snapshot, with a maintained distribution and a forecasted growth in property income for FY25. The Co-Living Joint Venture has also provided substantial returns, adding $3.7 million net profit before tax for the half-year period. Looking ahead, GDI Property Group remains focused on its leasing efforts in the Perth market to maximize the value of its current assets in both the Property and Funds Management Business. The company has also provided guidance for FY24, confirming its intent to pay a cash distribution of no less than 5.00 cents per security for the year, subject to no material change in circumstances or unforeseen events. GDI Property Group's strong performance and strategic leasing initiatives position the company for continued success in the future.