GPT Group has delivered a net profit of $1.153 billion, up 32.8 per cent driven by higher income growth especially from its office property exposure and rising values.
The group, which is pushing ahead with plans for a mega office tower with about 70,000 sq m of premium grade commercial space in Sydney, enjoyed a 6.3 per cent increase in comparable office income growth with 3.8 per cent growth across its $5.32 billion shopping centre portfolio.
GPT's chief executive Bob Johnston said that all areas of the business had contributed to the profit result.
"Our key office markets of Sydney and Melbourne have experienced further improvements in property fundamentals and we expect both will deliver solid rental growth over the next few years, supported by positive tenant demand and a limited supply of new space over that time," Mr Johnston said.
GPT's overall valuation uplift of $612 million was driven by a combination of income growth and firmer valuation metrics.
The Group reports that its net gearing is 23.7 per cent at the end of the year, and its weighted average cost of debt is 4.25 per cent.
Funds From Operations per security was up 5.6 per cent while the company's forecast dividend per security growth of 4 per cent was also in line with the company's forecasts.
"Overall, the Group is in a healthy financial position at the commencement of 2017, and expects to deliver FFO per security growth of approximately 2 per cent, and Distribution per security growth of approximately 5 per cent for the year."
These forecasts are ahead of some analysts expectations.
By sector GPT's retail portfolio benefited from fixed rental increases, improved leasing spreads and a continued focus on expense management.
"This is a great result given the headwinds the sector has had including a number of retailers being placed into administration through the year," Mr Johnston said.
Retail sales showed positive growth over the 12 months to December 2016 with total centre sales up 3.2 per cent and specialties up 2.6 per cent.
The weighted average capitalisation rate firm for retail firmed 19 basis points to 5.39 per cent over the period.
Key contributors to that included Melbourne Central improving 11.4 per cent and its Highpoint shopping centre improving 10.3 per cent.
For full coverage of today's earnings, go to the AFR Results Wrap Feb. 14.
