Company Interview / Is Growthpoint’s office edge paying off?

Key points:

Strong FY26 FFO and distributions, underpinned by 96% portfolio occupancyOffice occupancy materially above market, supported by active management and sustainability focusIndustrial portfolio maintains 98% occupancy with >30% leasing spread growthFY27 guidance reflects solid like-for-like asset growth offset by rising debt costs

Ross Lees, CEO of Growthpoint Properties Australia (ASX:GOZ) outlines a resilient FY26 performance, highlighting funds from operations of 23.5 cents per security and distributions of 18.4 cents per security, in line with prior guidance. Lees states that underlying FFO sits around $177 million, slightly ahead of FY25, supported by portfolio occupancy rising from 94% to 96%. He attributes this to active asset management and strong office leasing, even as the broader office market faces elevated vacancy and a challenging macro backdrop with higher interest rates.

Lees notes that Growthpoint’s office occupancy is about ten percentage points above the underlying market, driven by capital investment, building quality and sustainability initiatives, including improved NABERS ratings and a high GRESB score. On AI, he cites tenant surveys suggesting 63% expect to need the same or more space due to AI-related productivity changes, while sectors viewed as most vulnerable to downsizing represent only 11% of portfolio occupancy.

Industrial assets remain a key income driver, with occupancy steady at 98% and leasing spreads up over 30% in FY26. For FY27, Lees guides to FFO of 22.6–23.5 cents per security, with higher debt costs seen as the main headwind as historic hedging rolls off.