GPT Wholesale Shopping Centre Fund, which GPT Group (ASX.GPT) manages and owns roughly a third of, recently acquired half-stakes in Sunshine Plaza in Queensland and Macarthur Square in Sydney for a total of $1.2 billion.

Why it matters: This should add solid growth to GPT’s funds management business. As of Dec. 31, 2025, the funds platform had third-party assets under management of $24 billion, up $4 billion from 12 months ago.

  • GPT is diversifying its income streams, reducing its reliance on rent collection while pivoting to funds management. We think it’s a sensible move as funds management is capital-light. Today, the business contributes about 10% of group earnings, up from 6% in 2019.
  • Investors’ appetite for retail assets is strong, given the sector’s resilient performance in recent years, relative to office. GWSCF raised over AUD 600 million in new capital in April, following a $280 million raise in 2025, which replaces redeeming investors and funds the acquisitions.

The bottom line: Year to date, the security price is down 6%, largely driven by higher bond yields. No-moat GPT is now trading at an 11% discount to our unchanged fair value estimate of $5.80 per security, and 7% below its net tangible assets per share of $5.53 as of Dec. 31, 2025.

  • Investors’ main concern is GPT’s significant exposure to the Melbourne office market, which remains weak relative to other major capital cities. That said, GPT is diversified: retail accounts for 40% of the overall portfolio by book value, followed by office at 37%, with the rest in logistics.
  • We also think the market underappreciates the value of its $28 billion funds management platform, which is not included in its NTA. The security offers an unfranked forward yield of 4.8% at the current price.

Key stats: GPT’s retail portfolio performed solidly in the March quarter. The shopping malls had virtually no vacancies, with tenant sales up 4% year on year.

GPT Group ramps up its shopping center funds under management

GPT’s strategy is to operate a diversified portfolio of high-quality property assets in Australia’s largest cities and to reshape exposure by taking advantage of structural tailwinds such as rising e-commerce and population growth. This is executed by divesting low-yielding assets, actively developing logistics sites, and replenishing landbanks. Today, the retail and office segments, including contributions from their respective funds management, each account for around 40% of the group’s funds from operations. Logistics contributes less than a quarter. In 2010, the retail/office/logistics split was about 60%/30%/10%. The gross lettable area of logistics sites has roughly doubled over the past decade, mostly on the eastern seaboard of Australia.

GPT’s retail and office portfolios include some of the most iconic assets in Australia. For example, its retail portfolio includes Melbourne Central, one of Australia’s most productive retail assets. Its office portfolio includes stakes in Sydney’s Australia Square and Grosvenor Place, Brisbane’s One One One Eagle Street, and multiple properties in and around Collins Street in Melbourne’s central business district.

The group’s committed development pipeline has tapered since 2023, limiting financial outlay and risk. Today, GPT has a more modest development pipeline, with a handful of projects it started each year. GPT typically focuses on refreshing and rejuvenating existing assets in the retail and office portfolios, while developing greenfield properties in logistics.

In recent years, GPT has been diversifying its income streams, reducing its reliance on rent collection while increasing its exposure to funds management. As of Dec. 31, 2025, the funds platform had AUD 28 billion in assets under management, up from $13 billion in 2020. We think funds management is a growth driver, and it is also less capital-intensive. We expect AUM to expand at just under 5% annually over the next decade, modestly below what we assume for property funds management giants like Charter Hall Group and Goodman.

Bulls say

  • GPT’s retail and office assets are predominantly in Sydney and Melbourne, the two largest capital cities in Australia, with strong population growth. Industrial assets would benefit from long-term tailwinds such as population growth and rising e-commerce.
  • GPT has diversified income sources from retail, office, logistics, and funds management, with no single segment being the dominant earnings contributor.
  • Unlike rivals, GPT’s solid balance sheet means it has the flexibility to proceed with development projects should the company choose to do so.

Bears say

  • Many of GPT’s shopping centers are exposed to department stores, one of the most challenging areas in the economy for tenants.
  • Office occupancy has been hurt by structural threats from hybrid working. The demand is also sensitive to business conditions and market sentiment.
  • There is a limit to how much more industrial rents can grow, as tenants may not be able to keep paying higher rents.

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