In the last 1 to 2 years, GDI executed significant lease...

In the last 1 to 2 years, GDI executed significant lease agreements across WS1 and WS2; even for good buildings, you can expect substantial costs in this context (e.g., incentives and leasing fees); and GDI reported $11.6m (FY23) and $13.8m (FY24) of such costs (slide 10; FY24 presentation). Now that WS1 and WS2 are almost fully leased, these costs can be expected to decrease substantially in the near future (maybe 1 more year).

Also, GDI has endured significant capex in the last two years ($37.3m and $25.5m), as detailed on slide 26 (FY24 presentation); importantly, they specify that it’s only a 2-to-3-year plan. Based on slide 26, the above average capex expenditure will be largely completed by the end of FY25 and can be expected to normalise to something like $5m per year (that’s my guess; usually 0.30% to 0.60% of gross property value for a REIT; that’s what GOZ budgets).

Based on the above, it's entirely reasonable to expect GDI’s AFFO per security to comfortably exceed its distribution per security in the near future (it costs GDI $26.9m to pay out a .05c distribution). Maybe not quite FY25, but almost certainly FY26. This expectation is predicated on relatively steady occupancy at the Mill Green complex.