GPT Group swings to half-year loss

The news: Property investor GPT Group has swung to a half-year loss on the back of a slump in valuations.

The numbers: It reported a net loss of $1.1 million for the six months to 30 June, compared to a $529.7 million profit a year earlier. This was mainly due to a $341.3 million decline in investment property valuation, while funds from operations also declined to $316.7 million with lower funds from operations per security of 16.53 cents. GPT declared a distribution of 12.5 cents per security for the first half and said it remains on track to deliver on full-year guidance of 25 cents a security.

The context: The weaker result comes amid a rapid increase in interest rates that has lifted GPT’s cost of debt and had a material impact on its funds from operations. Chief executive Bob Johnston said the rise in bond yields resulted in further softening of valuation metrics for real estate assets and a 3% decline in the valuation of the group's property portfolio.

What they said: "Transaction activity has been limited over the last 12 months and it is expected that investment appetite, particularly for larger assets, will remain relatively muted for the balance of 2023. There is the potential for further softening of valuation metrics and asset values as transaction evidence emerges," Johnston said.