Welcome, everybody, to GDi Property Group's annual results. I'm Steve Gillard, and I have David Williams, our CFO, here with me. This year, we really were wanting to execute on strategy, and we believe we've had a very, very positive year. We've got the DA approved, and we're going to construction commenced. We'll very shortly commence.
We've signed a building contract in relation to WS2, which is the building next to Australia Square, and completion will be late 2022. Already, we've had strong leasing activity there, but we feel that once we start to build, there'll be significant interest in that building. One Mill Street, we've had the DA approved. We're seeking tenant pre commitment and or project partners to potentially build that building. There is, again, strong and there's some good solid inquiry out there.
And we've done a lot of work in relation to lease expiries in the Perth market, and a lot of them would come exactly when the completion of these buildings would be there. 50 Cabell Avenue, we exchanged contracts to settle upon or about the 31st August. It was sold at $8,000,000 above the last December valuation. And I'll just run again with West Radius Square, we've leased levels 1 to 12. Our level 7 has been taken up by the way pole.
And we've got some good solid interest for some other floors in there. CapEx program there all but complete, and the building looks in great condition. The real success story has been 5 Mill Street. We've increased the occupancy there from about 60% to 86%. We've done about 14 lease deals in that building.
Leasing activity is the strongest I've seen probably for 5 years in Perth, particularly in that sort of range from sort of 100 to 500 square meters. But now we're finding a lot of the bigger inquiry coming out. CapEx program is well underway on 180 Hay Street. We've already had a small uplift there. We've got numerous inspections, and we feel that we'll there is some activity there in relation to trying to lease that building up.
So we're quite confident on that one. Just to talk about 50 Cabell Avenue. We purchased that inclusive of cost for about $49,200,000 The building was ideal for us. When we bought them, it was only about 54% occupied. Net income of $2,600,000 We spent $18,400,000 including incentives on new lifts, air conditioning, plumbing upgrades.
And it's now 97% occupied. Broadband Davis rating would probably go to 5% in the next assessment. And we've exchanged contracts at a price net sale price of about $109,000,000 So it's been a very successful outcome in relation to 50 caball over the year. And I was reluctant to sell it. We feel that we've added out significant value to that building, and it was time to let it go.
Annual returns is listing, 13.3%. We look, we're very happy the way we are. We're basically out of all of our East Coast property. We're still in Townsville, which is a syndicate. We've done a couple of leasing deals there, but we're really focused on Perth, and we've got some significant added value to come in that market.
And we couldn't be happier where we are and where we're structured at the moment. We see significant upside in West Australia Square with the leasing, the development of WS2. There's significant profit there. Also significant upside in Mill Green and Hay Street. We also see significant upside in the car yards that we purchased.
Recent sales over there, there's been 4 or 5 recent sales around 4% to 4.25% cap rates, which would add significant value to that portfolio and virtually double or more investors' returns. So we've been looking to probably sell a couple of those payouts and or get them revalued, but we feel they would have strong interest in the current market. Our LDR on the sale of Avenue when it settles would be approximately 10%, and we've got significant firepower to purchase assets. We have been looking, but we feel the market, is a bit overpriced for us and way above replacement cost. But we've got a lot of upside in our existing portfolio, and we can see today when we see opportunities that are very attractive to us.
We're continuing that forecast distribution of £0.075 per security. We've got a small team. We've just acquired David Ochington, who is outstanding. We think we've got a very, very specialized team, and we're ready to go and add value to our assets and look to the future. Our ETA just fell in touch.
I'll pass you over now to David Williams to talk through the financials.
Okay. So those following the presentation, we're on to Page 7. The NTA went from $1.27 in December to $1.25 at June. We didn't get anything revalued at December at June, sorry. All of the assets were revalued in December.
We will look at that valuation cycle in December this year. The balance sheet doesn't include the 8,000,000 dollars upside from the sale of 50 Capital Avenue. The drop of the NTA was the result of maintaining the distribution in excess of cash flows because of the re leasing program, principally at Australia Square, which I'll talk about later. FFO was 5.37 dollars It was less than last year, again, because of the re leasing program, but importantly, in excess of quite significantly where we gave guidance now this time last year and where internally we thought we'd get to most likely on the back of the very successful leasing at particularly 50 Cabell Avenue with maintenance of a lot of the tenants that were expiring and new tenants going in there and 5 North Street, which contributed more than we thought they would this time last year. That distribution of $0.0775 and we're very pleased, as Steve said earlier, to maintain that again into FY 'twenty two.
Looking at the contributors to our FFO and the property business, Basically, 50 Capital Avenue and Mill Green contributed what they did in FY 2020. And the big drop in difference has been Australia Square. It's going for 3 leasing cycle. We made a comment that FY 2021 will be the low point of Westray Square's contribution. So we're back on the upward trend now.
So we've been late from months that are 12 and there's interest in the upper floors. So I'll let Steve talk about losing interest there later. The funds management division obviously enjoys the very strong distributions we received from the dealerships and also from DDO number 42. There's a lot of upside in 42. That's the Townsville asset as Assam and that gets leased up.
Corporate and administration expenses have been largely flat and jump around a little bit. They did increase slightly because of things like insurance costs this year, which had gone up. Certainly, the one item now on our business is going up a lot more than inflation. Interest expense is higher. We did have more drawn debt and we did refinance our facility in May 2020 at a slightly higher margin than it was previously.
And the incentives to spread across all the assets this year, For those who own this last year, there was a very big incentive line with the Whitehall deal in FY 2020. This year, it spread far more evenly across our asset base. If you look at the balance sheet on Page 9, Obviously, the non current assets up to sale is 50 cattle. There is a small structural fleet in the building next door that is €1,240,000 of that. We're talking to the buyer with 50 cab and others about that, but it still helps the sale and I don't think it will be there by December.
The investment properties weren't revalued in June, they were in December. The investment property does include about $5,000,000 now for money spent to date on the delivery of Australia Square 2. If you go through the details of the account that you might have, you can have a look at that and see how that's parked out. Not really much else there. The debt number has gone up and that's the debt has gone up because of buying 100 and 83 and also the maintenance of the distribution.
Page 10, we announced we signed on just surprises at the end of last week the new debt facility to build Australia Square 2, extend the whole facility out 3 years and give us a lot more firepower again on settlement of 50 Catalonian. So that is explaining on the pro form a what it looks like in 31 August, we'll have about 85 dollars of just general working capital to spend plus the 85,000,000 to build with Straight Square 2. So it gives us plenty of opportunity to keep going on the asset management initiatives and capital management initiatives. And one of the main capital management initiatives will be maintenance of the distribution again.
Yes. So remember, I mean that we're straight to cost, so that's the odd million to build it, but that's including all incentives and everything there. But also that 60 odd million includes revitalizing the whole area around Australia Square and WS2. Talking about the Perth market. You saw that the vacancy rates came down to about 16 odd percent.
Look, there's strong leasing interest over there. We're still harnessed a bit by the COVID situation in the East Coast. A number of bigger deals, we believe, have been sort of delayed, probably more because they can't get staff. It's very hard for projects to staff and to get moving without staff. And the border closures have affected that.
However, we've seen strong net absorption in that market. We've seen the labor force. And we'll see we've seen population growth, but we'll see some strong population growth coming up. If you look at the infrastructure projects, WA is right there just below New South Wales. And I believe there'll be some more projects sort of announced in the shorter term, short to medium term.
But we just look at all the individual properties there. You'll see that we haven't pushed the valuation. You'll see the cap rates and are quite conservative on the basis of particularly a number of other sales which have gone ahead. So we see significant upside in all of our assets, and we've been looking to revalue at the end of this year. You'll note that we've got an average cap rate of 7.24%, but that's on in relation to the Talia portfolio, but that's on mega ramp.
Comparable sales of recent sales are in the 4% to 4.25%, and we will be looking to maximize the value of that portfolio. 180 Haynesburg, we've had a few inspections, nothing is yet, but we feel that, that will have strong interest. It's magnificent, the renovation of it now with the KA, with the car parks and the location outlook in the Wacker. It's just a great building, and there's plenty of upside there. Townsville, we've been harnessed by border closures.
The federal government basically said they want to take the space, but they just can't get people up there, etcetera. We've done a smaller leasing deal in there in recent times. But once we see some clarity and some freedom in the borders, we'll hopefully lease that up straight there. We've got a strong development pipeline. We've got Dave Hofferton on board, who's the ex Head of Development Link Lease and Multiplex, which and we've got a building in WS2, which is a fairly simple construction.
It's good timber. It's going to be 5 to 6 green space. So it's neighbors rating. It's ideal. It will be the first of its kind in Perth.
It's in the Premier location overlooking the Swan River in Brookfield Place, right next to West Australia Square, which is now classed as a premium building. So we're very excited about that project. And you'll note that Dex has paid $16,600 a meter for the 49 percent share of Woodside. And we feel that we'll certainly get valuations in that range once we get the strong tenant demand. We've got a number of tenants looking at it, but we're going full steam ahead, and we think builders and they will come.
And it's just we believe it's going to be very high in demand at rents which are lower or around what 30 year old buildings are in Perth. And the same could be said for 1 Mill Street. We are looking to really push ahead with that and do some demolition shortly and look for partners to go ahead and build that property. We've got some strong interest. We'll hope even if we get some free commitment, we'll probably go ahead with that because we feel that we can build it at way below what cut previous sales compared to Woodside and the Chevron building.
And also, the rents would be at or below or around what 30 year old building and premium buildings are there. The funds management business, we didn't add anything, just haven't seen value. We bid on a number of things, but they're just getting a bit hot at the moment. There's significant inbuilt performance fees. We've got IKEA, who are we've done some work for them.
They're building a click and collect paying for it themselves. So we're hopefully confident they'll stay, and we believe it's in the top 5 stores in the world profitability. The one which we really want to get leased is GDI 36. We've done an additional bit of additional leasing there. We've got some strong interest in some lower floors, but and we believe there's some tenants coming out to the market, which this would be ideal for.
So look, there's upside. We're working on the ideal portfolio, GDI38, to rezoning that Broadmellow property. And when you think so there's a huge upside and also in relation to Bassanteen in Perth. I think the value is in the 7s, and there's been recent industrial sales over there between 4% and 4.25%. So I'll leave to speak to Dave about the profit and loss.
I think we can all read that through. We are rolling our sleeves up. We've got a great team in Perth. It's a shame I can't get over there, but we're speaking daily and more than that. We've teams meeting various things, but we've achieved our goals in relation to getting WS2 up and running, selling Capital Avenue, doing a huge amount of leasing deals over there.
And we could see that we've got a very exciting year ahead of us and award chest on our balance sheet for any opportunities that come up. So I think it's opportune time for questions. If there's any questions, please, we'd be delighted to answer and discuss anything. So I'll open that up now, please. Certainly.
We have the first question from the line of Carlos from Renaissance Asset Management. Please go ahead. Hi, guys. Just on Page 5, you talk about the increased inquiry in the market for leasing. Was just wondering whether you could characterize the strength in inquiry.
I think you mentioned, Steve, it's been very strong tenants between 1500 meters, but larger tenants now starting to move. I was just wondering whether you could tell us give us a bit more color on the types of industries. Is it just mining? Or is it a lot broader than that? If you could shed some light on that.
We've got federal government for about 2,500, 3000 square meters. We've got state government. There's 2 big inquiries around 20,000 to 25,000 square meters. We've got a number of lawyers. We've got a number of engineering firms.
Look, I think you're finding that a lot of companies are expanding in WA and getting themselves over there because of the stabilization of COVID, etcetera. And so look, there's a bigger inquiry coming. We're just sort of they've just shot it. The green shoots are there. We've there's been a lot of inquiries from 100 to sort of 500 meters.
We've done sort of 15, 16, 17 leasing deals there. We had a tenant who reduced base in 180 Lake Terrace, but they've just taken an additional 1500 square meters. That was an engineering company with some projects. So they were there. They reduced the space.
Now they've taken it back up. But we've got Wapol expanding the Belize. So look, the bigger inquiries coming. There's big mining huge mining companies looking to expand a bit as well. And there's been a lot of insurance companies.
We've had insurance companies expanding and coming to the market. And we've spent a lot of time spent a lot of money looking at all of the risk leases and various things there. We think we've got a database second to none in Perth. And we feel that there's going to be strong interest, particularly in our newer buildings. And with Australia Square, it really is now a premium building.
And it's there's certainly strong interest. And what we've done again, like we did with Golden Street, was lease the bottom up. So we've leased all the floors up to level 12. We've got a couple running on level 13 and 14. But we would have liked to have a bit more done.
But we think we've had a very good year in relation to leasing, and we've achieved the sale of Cavill and also got both DAs and start of construction on WS2. My second question is on the car yards. You mentioned that you may sell a couple of the car yards. So any gains on those flow through the fund and eventually into your P and L for your own for your part ownership? Yes.
When we bought them for about $40,000,000 $98,000,000 we hold 47%. We think that we could probably be in the vicinity of doubling in value. That has been a fantastic investment for us. And there is strong demand. There's a couple on the market.
There's some at CD dealerships around that 90 while we're in the see what they do. We just but we've had approaches to buy the lot, but we may put a couple up on the market or do that and realize the gains there. They're just great investments for land in great locations in prominent metropolitan areas. But certainly, we're in the business of achieving results, and we believe that with a long way, it would be an ideal time, and it just hits the sweet spot in the market at the moment.
Okay. Thank you.
Thank you. We have our next question from the line of Shane Shalley from Harbour Asset Management. Please go ahead.
Yes, good afternoon guys. Thank you very much for your time. I've just got 2 quick questions if I may. First one, just could you talk through the funding structure behind the new developments in Perth since it's on balance sheet? Or whether you think about bringing partners in?
Where are you at on those?
Well, WS2, we're going to build a brand of about 6,000 square meter, and there's probably a potential in the mid teens of value. There's significant profit there. It's a cheap construction. There's no excavation. If it's timber light frame, we can build it within 12 months.
And we're going to expect that, and we're going to do that on balance sheet. In relation to 1 Mill Street, we wouldn't do that on our own. We'd look to a partner with that. It may be a situation you sell half the size and bring in a partner with that. So certainly but if you're fully pre committed, you wouldn't have it on those various things.
But we're look at a lot of alternatives there. We've got 8 or 10 people, very strong interest in relation to partnerships there. So we 1st of all, we wanted to just achieve some leasing up, achieve the sale of cattle, get the DA and start construction on WS2, and our big project now is 1 Mill Street to maximize the value of that property.
Got you. Just my second question. You mentioned for the funds that you looked at a number of assets, nothing quite past the Smith test, past the achievements, I should say?
We pushed the business in What
are you looking for? What's like it, okay?
Sorry, you go. Yes. Yes. We like land rich properties or properties below replacement cost in great locations or properties with a bit of a twist where there's vacancy where we can add value. We're not in the business of buying industrial, and we always pay us at 3%, 4% cap rates where at 4x replacement cost or office buildings at 2x and 3x replacement cost where there's going to be huge potential vacancy coming up.
So we've been looking at opportunities. We've been looking at funds managers. We've been looking at a number of things to really take GDI into the next step. We feel that we're just not going to buy anything for the sake of it and build our funds management and lose money on things. We prefer to buy things where we're going to maximize the value to our investors.
And it's probably delayed that correction by 12 months with COVID. But we feel that there will be some opportunities coming up already. We feel there's going to be a 1,000,000,000 or couple of 1,000,000,000 properties coming up on the East Coast. It's going to shake a few tails. But if we see the value, we'll certainly buy from on the balance sheet and also our Funds Management division.
We're looking at some industrial in WA because that's huge demand at the moment and vacancy is decreasing. And also, but we got in there, but we didn't bid 4.15% cap rates and we missed
get.
Well, I think we'll wrap it up there. And thank you so much for being a part of this conference call. Obviously, we're doing number 1 on 1 meetings, and David and myself are there anytime if you'd like to answer any questions or talk anything. And we thank you so much for your participation today. Thank you, sir.
This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you all.