Why Occupancy Matters for S&P/ASX Small Ordinaries Property Stocks Cromwell (ASX:CMW) and Growthpoint (ASX:GOZ)

Over the year to 30 June 2026, occupancy moved in opposite directions at two listed property groups with heavy office exposure. Cromwell Property Group's portfolio occupancy slipped to 95.6 per cent from 97.6 per cent, while Growthpoint Properties Australia lifted its direct portfolio to 96 per cent from 94 per cent.

The headline figures now sit close together, but they arrived there by different routes and are measured on different bases. That makes occupancy, the share of space or rent that is actually leased, a practical way to compare how exposed each group is to vacancies and how dependent it is on a handful of tenants.

How each group earns its income

Cromwell Property Group (ASX:CMW) is a stapled security, meaning a company share and trust unit trade together. It owns a concentrated Australian office portfolio and runs a growing funds management business, having exited the European platform that contributed $21.1 million of Earnings before interest and tax in FY25. According to its FY26 results announcement, released on 27 August 2026, funds under management rose 11.4 per cent to $4.7 billion, helped by $748 million of new institutional mandates.

Growthpoint Properties Australia (ASX:GOZ), also stapled, owns office and industrial property directly and manages funds for third parties. Its FY26 Annual Report lists $5.2 billion of Assets under management across 64 properties, of which $4.0 billion sits on its own Balance Sheet across 48 office and industrial assets.

Both report on a 30 June year, so their FY26 numbers cover the same period, and neither was affected by the September 2026 index rebalance.

Cromwell's dip has a specific cause

Cromwell's results presentation measures occupancy by net lettable area (NLA), the floor space available to rent. It highlights "a temporary 9-month vacancy of 7,000 sqm at 400 George Street, Brisbane", which it identified as the reason like-for-like net operating income, the rent left after property costs, fell 1.3 per cent.

The same building holds a longer-term positive. Cromwell said completion of a lobby upgrade there supported the Queensland Government exercising a three-year Lease option. The group completed 28,607 square metres of new or renegotiated leasing in FY26 at a reported rental reversion of 8.7 per cent, meaning new rents were above the expiring ones, and its weighted average lease expiry (WALE), the average remaining lease term weighted by income, shortened to 4.6 years from 5.0.

Tenant concentration is high. The presentation shows its five largest tenants provide 69.0 per cent of gross income, led by Qantas Airways at 20.6 per cent and the Australian Government at 19.0 per cent, with the Queensland and NSW governments also in the top five.

Growthpoint's recovery came through leasing

Growthpoint measures occupancy by income. Office occupancy rose to 95 per cent from 92 per cent and industrial held at 98 per cent, according to the annual report. Office leasing totalled 81,022 square metres across 48 leases and industrial leasing 117,934 square metres across 11 leases, which the company described as record office leasing. The office deals covered about 22 per cent of office income.

The cost of filling space is visible in the pricing. Results slides summarised by Investing.com show office leasing spreads of minus 1.2 per cent, meaning new rents were slightly below previous ones, against positive spreads of 34.6 per cent in industrial. Industrial leases carried average net incentives of 17 per cent, a discount such as rent-free time that reduces effective rent. Office values fell 1.9 per cent and industrial values 0.9 per cent, and the weighted average Capitalisation rate, the Yield used to value property, was 7.14 per cent for office.

Growthpoint's largest tenants are more spread out: Woolworths at 12 per cent of income, followed by the NSW Government and the Australian Government at 8 per cent each. Its WALE is 6.1 years, or 6.3 years for office.

Earnings, payouts and balance sheets compared

Funds from operations (FFO) is the sector's standard measure of recurring earnings. Cromwell's FFO rose 5.0 per cent to $110.3 million and Growthpoint's rose 0.9 per cent to $177.6 million. Statutory results, which include valuation changes, were profits of $135.8 million and $90.1 million respectively, with Growthpoint recovering from a $124.6 million loss in FY25.

By our calculation, Cromwell paid out about 71 per cent of FFO (3.0 ÷ 4.2), while Growthpoint reported a 78.2 per cent payout. Measured against net tangible assets (NTA), Cromwell's distribution equals 5.2 per cent of NTA (3.0 ÷ 57.5) and Growthpoint's 6.0 per cent (18.4 ÷ 305). Growthpoint carries more Debt relative to assets, although its gearing sits within its 35 to 45 per cent target range.

The occupancy comparison has a built-in limit. An NLA basis counts every square metre equally, while an income basis weights space by rent, so a vacant floor in a lower-rent building affects the two measures differently. The figures are close, but not strictly like-for-like.

What would move occupancy from here

For Cromwell, the key test is re-leasing the Brisbane space and managing a WALE below five years, with income concentrated in Qantas and government tenants. Its gearing rose to 31.6 per cent from 28.2 per cent, its weighted average cost of debt was 5.0 per cent with 85.5 per cent of debt hedged, and its cap rate widened to 7.20 per cent from 7.07 per cent. The Barton1 office development in Canberra, pre-leased to the Federal Government, is due for completion by the end of FY27.

For Growthpoint, the question is whether office occupancy gains hold without further rent concessions, and whether valuations stabilise. Its weighted average cost of debt was 5.1 per cent, and FY27 FFO guidance of 22.6 to 23.5 cents per security allows for a decline.

Confirmed dates are on Cromwell's side of the ledger. Its September quarter distribution of 0.775 cents has a 30 September Record Date and is payable on 16 November, consistent with FY27 guidance of 3.1 cents. Its Annual General Meeting is scheduled for 17 November 2026 in Brisbane. Growthpoint has guided to an unchanged 18.4 cent distribution for FY27.