GPT Group (ASX:GPT) Shares Cheap Or Clouded By Office Risk

GPT Group entered this result with a stock that has slipped in recent weeks, down about 8% over seven days and slightly weaker over the past month, despite trading on what looks like a discounted P/E multiple. The earnings headline is simple. The engine that matters for a real estate investment trust, funds from operations, came in at A$338.8m for the half and management kept full year funds from operations and distribution guidance intact.

The market reaction now hinges on whether investors focus on that steady funds from operations story or remain focused on past one off gains and concerns about earnings quality.

Is GPT Group a genuine bargain on 8.7x P/E and a discounted DCF, or are earnings quality and one off gains masking the real picture? Compare the numbers directly in our valuation analysis for GPT Group

H1 2026 Earnings Summary

• Revenue (H1 2026 vs H1 2025): A$507.4m vs A$552.9m (down about 8.2% year on year)
• Net Income (Excl. Extra Items, H1 2026 vs H1 2025): A$400.1m vs A$329.1m (up about 21.6% year on year)
• Basic EPS (Earnings Per Share, H1 2026 vs H1 2025): A$0.2091 vs A$0.1718 (up about 21.8% year on year)
• Funds From Operations (FFO, H1 2026 vs H1 2025): A$338.8m vs A$322.6m (up about 5.0% year on year)

Prefer clean charts to a dense wall of earnings tables and figures? See GPT Group's full visual breakdown, including how its valuation and P/E compare with the underlying cash flow story, in our company report for GPT Group.

GPT Group bulls point to income resilience

The bullish story says GPT Group offers steady income from high occupancy, firm leasing and reliable funds from operations. The H1 2026 print gives that view some support. FFO rose 5% to A$338.8m, or 8.3% if you strip out trading profits, while AFFO, which is adjusted funds from operations, also edged higher. Like for like net property income grew across all three sectors, with retail at 99.8% occupancy, logistics at 99% and office still above 92% despite the drag from Grosvenor Place. Retail recorded its 14th straight quarter of positive leasing spreads and logistics leasing spreads were about 38%. Management kept full year FFO and distribution guidance unchanged and reaffirmed gearing around 31.5% with A2 and A ratings plus about A$1b of liquidity. That combination of income growth, occupancy and a steady payout profile goes some way to validating the income resilience thesis.

Bear case tests earnings quality and office risk

The bear view argues GPT Group’s earnings rely too heavily on one off gains and that office exposure and interest costs could wear down returns. On this result, some of those worries look less sharp but not fully cleared. Statutory net profit of A$400.1m is driven by revaluations, which feeds the concern about non cash items. However, FFO growth of 5% and 8.3% excluding trading profits points to underlying cash earnings doing more of the work. Office remains a swing factor. Occupancy of 92.1% is supported by strong leasing and positive spreads of 4.7%, yet Grosvenor Place still has about 30% vacancy that needs time and capital to fill. Net finance costs were broadly flat and the weighted average cost of debt eased to 5.0%, so higher rates are not yet eroding the P&L, but refinancing and execution on office leasing remain pressure points.

With office leasing, interest cover and one off gains all in play, it is worth reviewing the independent risk analysis for GPT Group which shows 4 important warning signs

Own Your Next Move With GPT Group

If the mix of income resilience and earnings quality questions around GPT Group has you watching for a better entry point, register for free with Simply Wall St and add it to a Watchlist to track share price against fair value and FFO trends in one place. Once you hold the stock, use the Portfolio Command Center to cut through market noise and stay on top of the key updates that actually affect your thesis. For a longer term view, lean on the Community to see how other investors are thinking about office risk, distributions and valuation. By surfacing potential catalysts and risks early, you give yourself a better chance of staying ahead of the market instead of reacting to it late.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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