Impact of the GPT Group on the Australian Property Market

This report examines the influence of the GPT Group on the Australian property market, focusing on its role as an Australian Real Estate Investment Trust (A-REIT) and its impact on investment, development, and financial risk management. The study utilizes secondary data, including financial reports and literature reviews, to assess the GPT Group's strategies, portfolio diversification across office, logistics, and retail sectors, and geographic diversity. The report highlights the GPT Group's strong returns through asset development, its influence on property valuation, and its efforts in financial and non-financial risk management. The analysis also considers the broader market context, including the challenges and opportunities within the Australian property market, providing insights into the group's performance and outlook. The report acknowledges the limitations of the study while emphasizing the GPT Group's significant impact on the sector.

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THE INFLUENCE OF THE GPT GROUP ON THE AUSTRALIAN PROPERTY MARKET
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Disclaimer
This is a working paper and represents the research in progress. The paper represents the
opinions of the author and it is a product of academic research. Any errors in the paper are the
faults of the author and are not meant to represent the position or opinion of anyone.
Executive Summary
The Australian Property Market has experienced quite some unprecedented challenges over the
past years. The study depended on secondary information to obtain relevant information.
However, the GPT group has played an important role in the property market in Australia. The
group has delivered a strong return on asset development as well as management through its
extensive experience in real estate. It has also influenced the property market in Australia by
enabling investors to benefit from the commercial activities they perform. It has been shown
from the results that the GPT portfolio is comprised of office, logistics and retail sectors. The
retail portfolio of GPT is well located with a 99.6 per cent. The portfolio achieved the same
income expansion of 3.8 per cent for 12 months. The logistic portfolio gives a total return of
approximately 10.8 per cent with an occupancy level of 95.3 per cent and 7.9 years average
lease. In risk management, the board has established a committee to manage both financial risk
management and non-financial risk management. The group have leveraged its wide real estate
experience in the Australian property market delivering strong returns through asset development
and investment. Despite these drawbacks in the property market, the Sydney economy is strong
as much as Sydney rental yields are low in the country.

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Acknowledgement
I would like to express my appreciation to my professor who has the attitude and substance of a
genius. He has continually and convincingly delivered a spirit of adventure in regard to this
research and an excitement with regard to teaching. Without his continuous help and guidance,
this paper could not be possible. I also thank my classmates who supported me morally in the
completion of this paper. I also take this chance to thank the University for giving me the
necessary facility and financial support.

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Table of content
The Influence of the GPT Group On the Australian Property Market...................................7
Introduction....................................................................................................................................7
Literature Review..........................................................................................................................8
The GPT (General Property Trust)..............................................................................................8
Methodology.................................................................................................................................12
Results and Discussion................................................................................................................12
Sector Diversity..........................................................................................................................12
Office sector...........................................................................................................................13
Logistics Sector......................................................................................................................13
Geographic Diversity.............................................................................................................14
Debt Diversity........................................................................................................................14
Risk Management...................................................................................................................15
Financial Risk Management...................................................................................................15
Non Financial Risk Management...........................................................................................15
Performance and Outlook.......................................................................................................16
GPT Wholesale Office Fund......................................................................................................16
Portfolio Overview.................................................................................................................16
Portfolio Diversification.........................................................................................................17
Geographic Diversity.............................................................................................................17
Risk Management......................................................................................................................17
Financial Risk Management...................................................................................................18
Interest Rate Risk...................................................................................................................18
Liquidity Risk.........................................................................................................................18
Performance and Outlook.......................................................................................................18
....................................................................................................................................................19
Gearing and Net Tangible Assets...........................................................................................19
Property implication...................................................................................................................19
Conclusion....................................................................................................................................20
List of References.........................................................................................................................21

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The Influence of the GPT Group on the Australian Property Market
Introduction

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Real estate investment is well known than any other time as a result of the ongoing boom
in the Australian property market. There exist indirect and direct approaches to invest into the
Australian property market. This portfolio has basically focused on two investment vehicles, one
being A-REITs (Australian Real Estate Investment Trusts) and the other an unlisted property
Fund. As per the ASX (Australian Securities Exchange), A-REITs are reserves given to financial
specialists to get to resources. The underlying advantage of A-REIT is that they offer access to
assets that singular investors will be unable to get. A-REITs help create wealth by giving
exposure to the estimation of asset values and the related capital development as well as rental
income. The property market has faced phenomenal difficulties over the previous years. For the
past months, the house cost has been falling and housing finance of new home deals have turned
out to be weaker than a year before (AFP 2016, p.32). As a result of property listings, the fall of
sales volume is believed to move higher making the normal property longer to sell. This is
making sellers to pull back on the grounds that the market has turned out to be more slender.
The GPT group has played a vital role in addressing some of the key factors affecting the
Australian property market. The group has a strong capital position that enables it to fund some
future commitments. Similarly, the group has helped investors in the property market to benefit
from the price of securities trading (ABS 2015, p. 12 and Schlesinger 2015, p. 24). As a result,
the group has enabled investors to sell their existing GPT securities, re-invest at a lower cost by
taking advantage of the group offer (Soos 2012, p. 47). The GPT group has also eliminated the
hedging positions that have been complicating its financial structure and limiting transparency to
the market through developing of the simple balance sheet and establishing a clear financial
position.

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In this paper, The GPT Group (General Property Trust) will be our concentration as the
A-REIT Fund contextual analysis and the investigation will be grounded on their ongoing and
past financial reports. Unlisted resources are investments that do not exist on the stock trade and
can incorporate assets such as infrastructure and private value. The advantage of unlisted
property reserves is that it gives expansion, relative stable return, and better risk-balanced return
and has a long-term concentration. The GPT Wholesale Office Fund (GWOF) will be the chosen
unlisted reserve for this report and the investigation will be fixed on the financial related
information.

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Literature Review
The GPT (General Property Trust)
The GPT influence has been immense in the Australian Property Market. The GPT
approach for development reflects an active ownership model that drives maximum performance
from every asset and enhances the general quality of the platform. It also has a pipeline of 2.4
billion dollars for future opportunities in assets (Bodman and Crosby 2003b, p.34). In the
property market, the GPT strength has driven the portfolio quality, scale, business diversity and
the heritage and culture embraced by various individuals. The group has made the property
valuation to stabilize across most parts of Australia especially in Sydney. As indicated by (AFP
2014, p.101and Teddlie and Yu 2007, p. 59), the major drivers of GPT growth in property
market growth in Australia are the development pipeline, strong investment capacity, clear
strategy in the ownership of the Australian Real Estate and structured rent increases (UNCTAD
2013, p.57 and Hawthorne 2010, p.107).

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The GPT is an Australian property group established by Dick Dusseldorp in 1971(Willig
2013, p.51 and Williams and Hall 2002, p. 41). The GPT was propelled and overseen by Lend
Lease and it is the principal property trust managed by the Lend Lease Group. The GPT was
created with the end goal to give retail investors a chance to put resources into an arrangement of
commercial property resources (Hendershott 2016a, p.43). In 1971 when The GPT was recorded
on the Australian Securities Exchange (ASX) it was enlisted as the first ever Australia property
trust. Being among the best 50 ASX recorded organization; The General Property Trust Group is
one of the biggest broadened property group in Australia. The Group has a critical investor base
in excess of 35,000 investors and manages a 20 billion dollars arrangement of logistics, offices,
business parks and major shopping centres in Australia(Costello, Fraser and Groenewold 2011,
p. 82).
In 2005, GPT's investors agreed to a demand manage the GPT on their own. Along these
lines going parted ways with Lend Lease to end up an autonomous organization, today is known
as General Property Trust and GPT Management Holdings. The GPT has 62 noteworthy
properties built in 4 categories; logistics, retail, development and office. (Stapledon 2012, p.21).
According to (Phillips, Shi and Yu 2015, p.11 and Hoesli, Lekander and Witkiewicz 2004), the
March quarter of GPT Group has reported a total growth of 2.1 per cent with an estimate of
34,100 square meters of the leasing space. The key area of performance for GPT group is the
Total Return. The focus on Total Return is in connection with long-term aspirations of the
security holders. A 15.2 per cent of Total Return was achieved by GPT in 2017.

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The GPT has a vision of being one of the most regarded property organization in
Australia according to their people, communities, investors and customer with the aim of
establishing value by conveying superior returns to the stakeholders and providing an
environment that empower their People to exceed expectations and their Customers and
Communities to flourish (Bodman and Crosby 2003b, p.97 and Savills 2014, p. 20). The
Australian property market increased from 1.4 per cent with an annual growth of approximately
10.9 per cent since 2015 indicating the fastest pace (Yin 2013, p. 23 and ABS 2015, p. 14). The
house prices in Sydney are at record level and media have alleged that house prices in Australia
have gone beyond the reach of the local buyers particularly in desirable conditions (Birrell 2013,
p. 35and Westpac Economics, p.61). There are notable market demands that are driving the
Australian market.
Property listings new and total

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Property listings of houses and units
The GPT has a strong fund management which has encountered critical improvement
over the previous years. The fund' supervisory team has proceeded and still keeps on dealing
with the current portfolios, improvements and divestments depending on meeting the pertinent
investment goals of the individual funds. (Phillips and Yu 2011, p.8 and Stock and Watson1993,
p. 20). As a result of the GPT Group, Sydney office markets have continued to convey
exceptional development in the asset valuations and net effective rents. The market of Sydney
office is relied upon to appreciate ideal leasing conditions as supply stays restricted.