Sydney - Wednesday - August 27: (RWE Aust Business News) -...

Sydney - Wednesday - August 27: (RWE Aust Business News) - GPT
Group (ASX:GPT) posted a net loss of $68 million for the half year to
June 30 2008 compared with a profit of $737m in the prior corresponding
half.
Realised operating income was $234m versus $297m previously.
Distributions of 11.4c per security for the half compare with
14.3c previously.
No development profits were booked during the half, with the One
One One Eagle Street development profit of $29 million to be recognised
in the second half of 2008.
Chief executive Nic Lyons said the result highlighted the overall
resilience of GPT's large, high quality, diversified domestic portfolio,
which continued to deliver income growth.
The core domestic portfolio forms the majority of GPT's real
estate investments and recorded 6.4pc like-for-like income growth versus
the previous corresponding half.
The interim result is in line with the revised full-year profit
guidance provided to the market in July of $464 million.
GPT confirms this revised guidance, subject to no further
deterioration of operating conditions.
"Although we remain cautious given uncertainty about the outlook
for global and local economic conditions, we continue to believe that our
irreplaceable portfolio of high quality Australian assets will
perform well given the solid sales growth exhibited by the retail
portfolio and high levels of occupancy across our industrial and office
assets," Mr Lyons said.
"However, we are clearly very disappointed with results this half
and with our revised guidance for the full year as previously outlined to
the market.
"The impact of the credit crisis on the real estate environment,
and markets everywhere, has been unprecedented in recent history, and
global operating conditions remain extremely challenging.
"Whilst our core domestic operations have continued to perform
strongly, our ability to derive development profits has been adversely
affected,as has the performance of our Hotel/Tourism, US Seniors and
European Funds Management businesses."
Mr Lyons said strategic initiatives outlined today will result in
a simplified business focusing on the ownership, management and
development of high quality Australian real estate, and a more
conservative financial structure reflective of the current environment
and appropriate for this business model moving forward.
"GPT remains a business that still expects to generate nearly
half a billion dollars in realised operating income this year, and
remains in a strong financial position with balance sheet gearing of
37pc, and no recourse to GPT for debt within GPT's funds."

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Initiatives
GPT has announced a number of strategic initiatives to simplify
the business model over time, reduce leverage and address the demands of
the investor base.
These include renewed strategic focus on core domestic
operations, namely the ownership, management and development of high
quality Australian real estate.
GPT has identified $1.3 billion of Australian assets as non-core,
with the Hotel/Tourism Portfolio, Homemaker Portfolio and Floreat Forum
currently being marketed for sale.
The company is also exploring exit options in relation to US
Seniors.
"We continue to believe in the long-term outlook for US Seniors
given underlying demographic trends and the quality of our portfolio and
joint venture partner," Mr Lyons said.
"However, given the revised strategic direction announced today
and the current capital constrained environment, we believe it is prudent
to allocate capital to our domestic market and our core ownership,
management and development business model. Market conditions in the
United States are clearly challenging at present, and we
acknowledge that it could take some time to exit our investment
completely. Nonetheless, we are committed to working with benchmark to
ensure a mutually acceptable outcome as we realise this investment over
time."
Other initiatives include reducing look-through leverage to less
than 40pc, primarily via non-core asset sales and adopting a more
conservative approach to capital management, including the retention of
an appropriate percentage of earnings on an ongoing basis.
In addition to the strategic initiatives outlined, GPT and
Babcock & Brown (ASX:BNB) remain fully committed to pursuing asset sales
by the joint venture fund as market conditions allow and where it
is prudent to do so.