GDI Property Group (GDI) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to GDI Property Group half year results. [Operator Instructions] I must advise you that this conference is being recorded. I would now like to hand the conference over to your speaker today, Steven Gillard. Thank you. Please go ahead.

Welcome everybody to our half year results. We've had a solid -- a lot of progress this year in relation to our developments. We've got the DA approved and hopefully have the building approval approved in -- very shortly in relation to the WS2 development. The Mill Green, we've got the DA lodged, and we're happy to have in the near future, a very imminent future our DA approved on that. We've settled the Hay Street property. We've had some solid leasing, although really, we had to stage -- set GDI for a perfect recovery. But obviously, with COVID et cetera, major businesses and smaller businesses have found it difficult making decisions. And we're sort of -- we're in a bit of a transition period -- we're in a transition period because we really needed some solid leasing. But we have done a number of deals, particularly Level 11 and 12 in Westralia Square, a couple of new leases in Mill Green, Cavill Avenue. We've extended the major lease plus a number of leasing deals there. And at the moment, the inquiry rate ended -- what we've got incurred is very, very good. It's really quite buoyant over there. And we've got a number of potential deals on the boil, some larger, some smaller. People are starting to make decisions. So it's really good. I mean we've got a situation where there's really no supply. And you've got a very old -- a lot of the older stock. Whilst the vacancy rate is high, a lot of the older stock is very -- is virtually impossible to lease. And the A and B grade stock is under that 10% sort of level. And so we're getting some good inquiry. We're getting a number of tenants moving back into the city. We've got a situation over there where a number of the projects were delayed and a number of things. The government is in surplus. Economic forecast is forecasting solid growth for WA. We've had very good volumes in the commodities, which has been good. And so we're really -- we're in a very good position. And we're quite excited of the future, particularly in Perth. The Gold Coast property has been -- some very good leasing there. Townsville, we've got a -- we haven't had any progress. Obviously, the government, et cetera, couldn't get access to the borders. That's freeing up now, and we've got some strong inquiries there as well. We -- if you look at the page -- if you can go to the page of the presentation in relation some economic forecast. We -- if you look at those SEEK job ads in WA, you'll see they're up nearly up 26.5%, which is good. I mean, we've got a situation where it's very hard to find builders, find staff to start a number of these projects. And now with the borders opened, a lot of people will move there. You're having to fly in and fly out. Your residential market's gone very strong. Your residential vacancy is now down below 1%. And they really need people to come over there and work to facilitate the growth in a number of the commodity projects. And also the oil and gas price now, a number of those projects are being reading items. If you look at the consumer sentiment, it's at 10-year highs in the WA. The infrastructure projects are significant. And we've got forecast very strong GDP growth and net absorption in the office market in Perth. So really, we are in a very good position. We're really sort of -- our vacancy has decreased a little bit, but we're really in a situation where we can really make big inroads in that vacancy and capitalize on the strong WA growth. We -- so really, that's all we've got to say in that sense. We're in a great position. We've got a couple of big projects. There's potential, very exciting profits for GDI. We've got in the funds management side, we're finding it difficult to buy, particularly East Coast where we can't see any value at all. The car yards we purchased at 8%. Net, we believe we'll have significant -- whilst significant the valuations will reflect that this time in the NTA, and we see those and a number of our other valuations having significant growth in the future. So now, look, I think I'll just pass, unless if there's anything to -- any questions. So we can have question time, please.

[Operator Instructions] All right. And we've got our first question, comes from the line of Carlos Caraco (sic) [ Cocara ] from Rennaissance Asset.

Steve, just wondering if you can provide a little bit more color around sort of leasing inquiry in Perth, and what you're seeing in terms of requirements and how much that's changed in the last 6 months or so?

Yes. I think you'll find -- yes, in the last 6 months, it has certainly improved. But in the last month or so, it's really ignited. There's some strong leasing inquiry. There are companies who are growing. We've had some companies have had to take additional space because of the COVID sort of situation with workstations. Others are -- look, people have been treading water to make a decision, obviously, it's been very uncertain times. It's very difficult to enter into a lease and sign a document when -- in those uncertain times. And I think people have seen some significant green shoots and they're getting a lot more confident. So at the moment, we've got the best inquiry we've had for probably 3 or 4, 5 years, currently in regard to the -- to all of our number of properties. So it's -- there's big, small, there's a number of very large, we're dealing with a number of multinationals and Australian companies in relation to 1 Mill Street. We're getting some solid inquiry in relation to WS2 and Westralia Square, 1 Adelaide Terrace. At 5 Mill street, we've got a lot of smaller inquiries. Hopefully, we can finalize some deals in there. We've done a full floor to Laing O'Rourke. And a lot of those companies are looking to take additional space as well. So -- but we're really very -- it's the best we've been for at least 6 or 8 months in regard to confidence of doing leasing deals. And there's potentially a lot of growth in the size of these tenants as these projects and a number of things start to snowball in Perth. There's -- so we -- it's been very, very good.

Can I -- it's Dave Williams, Carlos. Just on 5 Mill and that smaller sort of sub 500-meter tenant, they were really absent from the market in the middle of last year. Obviously, with COVID and not really knowing what their businesses were going to look like, we've now got, particularly at 5 Mill, we've got tenants competing for suites that we have. So we've got a couple of suites with more than 1 tenant running at them. And we're doing it that we have not dropped rates and we have not increased incentives. So that's a really pleasing sign. And that wasn't there 6 months ago, certainly.

Right. And in Townsville, what are your prospects there in terms of leasing up the vacancy in that property?