Highlights

• FFO of $177.6 million (23.5 cps) delivered near the top of guidance, up from 23.3 cps in FY25.

• Occupancy rose to 96%, with record office leasing of 81,022 sqm extending WALE to 6.1 years.

• Distribution of 18.4 cps, representing a 78.2% FFO Payout Ratio within the 75-85% target range.

• FY27 FFO guidance of 22.6-23.5 cps and distribution guidance of 18.4 cps issued, with Capital recycling to lower gearing by approximately 4%.

Growthpoint Properties Australia (ASX:GOZ) is an internally managed Real Estate Investment Trust (REIT) investing in high-quality Australian office and industrial properties. Its directly held portfolio comprises 27 office Assets ($2.6 billion) and 21 industrial assets ($1.5 billion), alongside a $1.2 billion funds management Business serving institutional investors. Listed on the ASX since 2009 and part of the S&P/ASX 300, Growthpoint holds a Baa2 Credit rating from Moody's.

Recent Development

Announced on 17 August 2026, Growthpoint's FY26 results showed FFO of $177.6 million (23.5 cps), near the top of guidance and above FY25. Statutory net profit was $90.1 million, reversing a FY25 statutory loss of $124.6 million, primarily from lower net devaluations.

Portfolio occupancy increased to 96% (from 94% in June 2025), driven by record office leasing of 81,022 sqm — 22% of office income — raising office occupancy to 95% and WALE to 6.3 years. Industrial leasing of 117,934 sqm maintained 98% occupancy with a 5.6-year WALE. New AUM of $124.9 million was created via the Growthpoint Australia Logistics Partnership (GALP) and the new Growthpoint Macquarie Park Trust (GMPT). Gearing increased to 41.6% within the 35-45% target range. A conditional $267.7 million divestment (Woolworths Distribution Centre in Perth) was exchanged post balance date, with proceeds expected to reduce gearing by approximately 4%.

Sector Context

Office market fundamentals are improving in select CBDs, but elevated vacancy rates and rising Interest Rate environments continue to weigh on office REIT valuations. Growthpoint's achievement of 95% office occupancy against a market experiencing above-market vacancy is a testament to its active management and high-quality asset base. The industrial sector remains tight, with Growthpoint's 98% industrial occupancy reflecting continued Demand from logistics and Manufacturing tenants. The company's achieved its Net Zero Target in July 2025, a differentiating sustainability credential for ESG-conscious institutional investors.

Risks and Uncertainties

Gearing at 41.6% is toward the upper end of the 35-45% target range, and while the $267.7 million Perth divestment is expected to bring it down, completion in early 2027 leaves near-term Balance Sheet flexibility limited. The elevated interest rate environment reduces FFO, as reflected in the FY27 guidance range of 22.6-23.5 cps being flat to down versus FY26. Office portfolio valuations declined $47.4 million in FY26, and further cap rate decompression remains a risk. The review of the distribution reinvestment plan and payout ratio could change the income profile for investors.

Catalysts to Watch

Completion of the $267.7 million Perth divestment in early 2027 and the resulting ~4% reduction in gearing is the most immediate catalyst. FY27 expiry reduction — already addressed, with expiries reduced to 11% of office income — will be monitored for further progress. Any new capital partnership deals or AUM growth in the unlisted funds business would expand the Earnings base. Tenant demand trends across the office portfolio, particularly AI's impact on workplace space requirements (currently assessed as limited by tenant feedback), will be closely watched.

Final Thoughts

Growthpoint Properties (ASX:GOZ) delivered a solid FY26, anchored by record leasing activity and near-top-of-guidance FFO despite a challenging macroeconomic backdrop. With gearing on a path to reduction and stable distribution guidance, the REIT enters FY27 on reasonably firm footing, though elevated interest rates and the ongoing office market recalibration remain headwinds investors must weigh.