GPT Group

The stable outlook on GPT Group reflects our expectation that the group will continue to grow its high-quality asset base consistent with its diversified strategy, produce solid rental income, and adopt a moderate operating strategy. We believe that GPT's commitment to disciplined financial policies and financing strategy will maintain its credit metrics consistent with funds from operations (FFO) to debt greater than 12% and statutory net debt to assets not breaching 35%. The rating could come under pressure if GPT's investment portfolio underperformed our expectations, or management adopted a less-diversified operating strategy. Downward pressure could also occur if GPT purchased weaker quality assets, or increased development activity that weakened the business risk profile. A weakening in GPT's credit metrics, such

...GPT Group's diversified high-quality portfolio of commercial real estate underpins the fund's credit quality. We expect the group to acquire and develop high-quality assets that generate returns over the long term. We don't believe that the strategy emphasizes on portfolio allocation, but rather focuses on the composition of the asset pool that will provide long-term total return. We expect GPT to undertake a moderate amount of refurbishment of its buildings and incur construction costs to add new assets. In our view, this capital requirement is necessary to maintain asset quality and bolster GPT's market position. In addition, active earnings will continue to broadly contribute 10% of group earnings, predominantly from funds management and development income. GPT's leverage is likely to remain at the low end of its range over the next 12 months at least. The fund seeks to maintain gearing (based on net debt to total tangible asset) at 25%-35% (18.7% as of June 30, 2019). An equity raising...

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