Growthpoint Properties Australia H1 Earnings Call Highlights

Growthpoint Properties Australia (ASX:GOZ) executives used the company’s half-year FY2026 results presentation to highlight strong leasing momentum, a stable portfolio backdrop and progress in its funds management growth strategy, while also acknowledging the impact of upcoming lease expiries on second-half earnings.

Half-year earnings and updated guidance

Chief Executive Officer and Managing Director Ross Lees said Growthpoint delivered funds from operations (FFO) of AUD 91.9 million for the half, equal to 12.2 cents per security, representing a 3.4% increase on the prior corresponding period. Lees attributed the result to strong like-for-like property FFO growth of 5.9%, including 7% growth in office and 3% in industrial.

The company paid a distribution of 9.2 cents per security, which management said was in line with guidance and reflected a 36% payout ratio.

Reflecting first-half performance and “visibility for the balance of the year,” Lees said Growthpoint updated FY2026 FFO guidance to 23.0–23.6 cents per security, from the previous range of 22.8–23.6 cents per security. Management also cautioned that first-half FFO is expected to exceed the second half, citing lease expiries and fund-related timing.

Portfolio occupancy and leasing activity

Head of Property Nick Koustas said the directly held office and industrial portfolio continued to underpin “stable, income-driven returns,” supported by proactive leasing and targeted capital expenditure. The portfolio’s tenant base was described as resilient and high-quality, weighted 46% to listed businesses and 31% to government entities.

Management reported overall portfolio occupancy of 95%. Koustas noted office occupancy increased to 94% from 92%, while industrial occupancy remained high at 98%.

In the office portfolio, Koustas said more than 30,000 square meters of leasing was completed during the half across 30 transactions, equating to 7.7% of direct office income and carrying an average lease term of 5.6 years. More than half of the office leases were completed with existing customers, and almost 90% of those deals involved tenants taking the same amount of space or more. Koustas added that leasing and signed heads of agreement since 31 December totalled a further 30,000 square meters, and that FY2026 expiries had reduced to 3% as at 31 January 2026.

Targeted investment was also flagged as a contributor to leasing progress, with management citing One Hundred Melbourne Street as now fully leased and Five Murray Rose Avenue as 66% leased.

In industrial, Koustas said the group leased more than 62,000 square meters in the first half across six leases, equivalent to more than 12% of direct industrial income, with an average term of 4.9 years. With more than 26,000 square meters signed or under heads since 31 December, management said vacancy and forward expiries were now 4% or less through to FY2029. Koustas also said the portfolio continued to deliver positive leasing spreads.

Executives pointed to tenant activity across the portfolio, including welcoming Panda Mart at Raglan Street, Preston on a five-year lease, renewing Linfox at Lenore Drive, Erskine Park, and Jaguar Land Rover at Melbourne Airport, as well as facilitating Hive Group taking warehouse space in Perth and EPEC Group expanding office accommodation in South Brisbane.

Valuations, rents and incentives

Koustas said valuations “stabilized or increased” for more than 68% of the portfolio during the half. Capitalization rates were described as “largely steady,” while market face rents increased 1.6% for office and 2.1% for industrial.

After capital expenditure and incentives, the directly held office portfolio value declined 0.9%, while the industrial portfolio increased 0.2%, management said.

On leasing terms, management disclosed that first-half incentives were broadly consistent with FY2025. Average office incentives were 32%, compared with 31% for full-year FY2025, while industrial incentives were approximately 20% in the first half. Executives said they expect these levels to remain fairly consistent into the second half.

Balance sheet, refinancing and hedging

Lees said Growthpoint “strategically leveraged” its balance sheet during the half, with gearing ending the period at 41.2%, which management said helped support AUD 125 million of new assets under management (AUM) and positioned the business for future growth.

Net finance costs declined compared with last year, which management attributed to debt repaid from asset sales undertaken in FY2025. Growthpoint’s weighted average cost of debt remained at 5%, with debt 78% hedged at 31 December. Lees said the company anticipates hedging near 75% toward the end of FY2026 and above 50% through FY2027.

During Q&A, management said it had negotiated AUD 100 million in new bank facilities effective in January, providing liquidity for 1H FY2027 maturities. Lees said the new facility had a shorter tenor of roughly three years and came with “some margin compression” relative to prior facilities, adding that margin compression across the last 12 months “feels like between 10 and 20 basis points,” while noting the offsetting impact of a higher swap curve.

Lees also said Growthpoint maintained “significant buffers” to banking covenants, citing an interest cover ratio (ICR) of 3.0x versus a covenant of 1.6x, and an OR of 44% versus a covenant of 60%. The company said it would continue to explore capital recycling opportunities and had recently exchanged contracts on a AUD 17 million divestment.

Funds management growth and market outlook

Lees reiterated that growth through funds management is a key pillar of the strategy, with AUD 1.4 billion in assets managed across 11 unlisted funds in office, industrial and retail. In the first half, Growthpoint created AUD 125 million in new AUM, adding to AUD 328 million created in FY2025. This included:

• AUD 24 million acquisition in Bundamba through an expansion of the Growthpoint Australia Logistics Partnership
• Establishment of the AUD 101 million Growthpoint Macquarie Park Trust to acquire an A-grade office asset in Sydney’s largest metro market

Alongside growth, management emphasized returning capital to investors as funds reach the end of their terms. Lees said Growthpoint facilitated liquidity with AUD 140 million of AUM divested in the half and a further AUD 173 million settled in January 2026.

Looking ahead, Lees said the company was optimistic about what it described as a structural imbalance between supply and cost, particularly in office, where “economic rents required to justify new development” remain well above in-place rents, creating a barrier to new supply. He also referenced existing office stock being withdrawn for alternative uses, including living and data center conversions, which he said could tighten vacancies over the medium term and support rental growth.

In the near term, management acknowledged vacancy remains elevated in the market, and said its focus is on maintaining a high-quality product offering supported by sustainability credentials and local sector specialists. Lees added that capitalization rates are largely stable and that rents are now driving growth, with expectations for continued improvement in office markets, while industrial demand remains resilient even as it normalizes from peak levels.

On the second-half earnings bridge, management attributed the first-half/second-half skew primarily to the benefit of leasing completed in FY2025 flowing into the first half, and two key expiries: approximately 6,000 square meters at 100 Skyring Terrace at the end of January and an 11,000-square-meter expiry at 75 Dorcas Street in March. Lees also cited potential variability from leasing outcomes on remaining vacancy (management referenced roughly 1.7% vacancy in industrial and around 5% in office) and possible acquisition fees in funds management.

Management also discussed FY2027 expiries, noting the lease expiry chart showed about 14% expiring in FY2027. Lees pointed to known second-half FY2027 vacancy in Queensland of about 8,000–9,000 square meters at 100 Skyring Terrace, as well as around 5,000 square meters at 100 Melbourne Street, with other expiries described as being in active negotiations.

About Growthpoint Properties Australia (ASX:GOZ)

Growthpoint provides space for you and your business to thrive. Since 2009, we've been investing in high-quality industrial and office properties across Australia. Today, we have $6.9 billion3 total assets under management. We directly own and manage 58 high quality, modern office and industrial properties, valued at approximately $5.0 billion3. We actively manage our portfolio and invest in our existing properties, ensuring they meet our tenants' needs now and into the future. We are also focused on growing our property portfolio.