This article first appeared on GuruFocus .
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Funds from Operations (FFO):Increased 5% to $110.3 million.
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Funds Under Management (FUM):Grew 11.4%, secured by $748 million from new institutional investors.
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Net Tangible Assets (NTA):Rose 3.6% to $0.575 per security, up from $0.56 at FY25.
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Investment Portfolio Valuations:Up 4.7% on FY25, marking the third consecutive six-month period of increases.
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Occupancy:Investment portfolio occupancy at 95.6%; Cromwell Industrial Partnership occupancy at 98.6%.
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Gearing:31.6%, towards the lower end of the target range; LVR of 36.8% against a covenant of 60%.
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Liquidity:$370.8 million.
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Interest Cover:4.3 times against a covenant of 2.
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Debt Hedging:85.5% of debt hedged with a weighted average maturity of 2.3 years.
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Corporate Costs:Lowered following the divestment of the European platform and onshore efficiency initiatives.
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Finance Costs:Down following the repayment of debt from the European platform sale proceeds.
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Leasing Activity:More than 28,000 square meters of new or renegotiated leases completed during the year.
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Weighted Average Lease Expiry (WALE):4.6 years for the investment portfolio; 4.7 years for the Cromwell Industrial Partnership.
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Industrial Platform:Portfolio of seven assets valued at approximately $478 million.
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FY27 Distribution Target:Increased to $0.031 per security.
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Release Date: August 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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FFO increased by 5% to $110.3 million, driven by 11.4% growth in funds under management.
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Investment portfolio valuations rose 4.7%, marking the third consecutive six-month period of increases.
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Occupancy remained high at 95.6% with no major vacancies until FY28, ensuring stable income.
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Successfully secured $748 million in new institutional capital, expanding partnerships and diversifying the investor base.
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Strong balance sheet with gearing at 31.6% (within 30-40% target) and substantial liquidity of $370.8 million.
Negative Points
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Investment portfolio EBIT was marginally lower due to a temporary vacancy at 400 George Street in Brisbane.
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AFFO was impacted by significant tenant incentives and lifecycle CapEx, particularly at 400 George Street and 700 Collins Street, with similar levels expected in FY27.
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FY27 is expected to be a 'trough year' for FFO due to lease expiry profile and ongoing capital expenditure.
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Performance fees are not expected to repeat at FY26 levels in FY27, potentially reducing earnings.
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Lease incentives for office portfolio were high at 35-40% in FY26, with expectations of more incentives for future Brisbane leasing.
Q & A Highlights
Q: Can you provide more color on the drivers of the step-up in the gap between FFO and AFFO from FY25 to FY26, and do you expect this to normalize in FY27? A: Michelle Dance (CFO) noted that FY27 is likely a "trough year" for FFO, with the lease expiry profile being the best guide for future trends. Jonathan Callaghan (CEO) explained that the FY26 AFFO deductions were driven by asset repositioning at 400 George Street and 700 Collins, including significant tenant incentives and lifecycle CapEx. He added that FY27 will still see a reasonably large CapEx load, with similar amounts to FY26, partly due to the electrification of 700 Collins Street and other works tied to new lease agreements.
Q: Regarding the partial recognition of deferred consideration from the Campbell Park sale, what does this relate to and how much did it contribute to the $6.4 million in co-investment EBIT? A: Jonathan Callaghan (CEO) stated that the deferred consideration relates to the sale of Campbell Park a few years back, where part of the payment was contingent on certain events. The company is now confident those events will occur, so it recognized approximately $4.3 million of that deferred consideration in FY26.
Q: Have the performance hurdles for the Terre Property Partners acquisition been met, and what can we expect in FY27 regarding further consideration? A: Jonathan Callaghan (CEO) confirmed there will be no further consideration in FY27. The deferred consideration is payable after three years and is effectively a share of profit. At the end of FY27, the profit from the venture will be measured, and a portion will be shared with Straits Real Estate.
Q: Can you talk about some of the key assumptions for your FY27 guidance? A: Jonathan Callaghan (CEO) stated that the company is confident in its target distribution of $0.031 per security. He expects a stronger performance from the investment portfolio next year, particularly as the vacancy at 400 George Street is filled. Otherwise, the outlook is broadly in line with current performance.
Q: Are you expecting any performance fees from your funds in FY27? A: Jonathan Callaghan (CEO) indicated that while there will always be some performance fees, they are not expected to be as high as in FY26. FY26 was a strong year for performance fees, particularly from the investment in securities funds and the Phoenix operating platform, but that level of performance is not expected to extend into FY27.
Q: What were the lease incentives for the office portfolio in FY26? A: Jonathan Callaghan (CEO) reported that lease incentives in FY26 ranged between 35% and 40%, with most leasing activity occurring in Sydney and Brisbane. He noted that future Brisbane leasing is expected to require higher incentives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
