Property giant GPT slammed as too ‘woke’ for growth
GPT chairman Vickki McFadden was forced to defend the property giant’s efforts on environmental and social issues after activist investor David Kingston slammed the company for being too “woke”.
At the $8 billion company’s annual shareholder meeting, Mr Kingston, whose K Capital has been an investor for five years, repeatedly castigated the board for failing to deliver on capital growth and total shareholder return.
Twenty years ago, it had been the second-largest real estate investment trust (REIT), but was not even in the top five now, he said.
GPT’s average TSR over the past five years of a “miserly” 4 per cent annually was “totally unacceptable”.
Mr Kingston also described as GPT as a “fallen icon” and the “Growthless Property Trust” and said that investors would have been “dramatically” better off buying Sydney residential property.
“REITs are meant to deliver income plus capital growth. The TSR in property if well-chosen and well-run should be around 10 per cent,” he told the AGM in his initial prepared remarks. “GPT’s TSR over the last five years has averaged 4 per cent – a big failure to deliver.
“It is a concern that the annual report has so many references to non-commercial objectives. Yes, ESG is important but the GPT annual report is a high-water mark for woke approach.
“Indeed, the annual report reporting suite includes a modern slavery statement. I’ll be honest, I didn’t bother to read that.
“Being woke is ok for philanthropists, but GPT is not delivering a good outcome for its owners over a long term.”
Most of Mr Kingston’s remarks were directed at Ms McFadden – who was also up for re-election – after noting that GPT’s chief executive Russell Proutt has only recently come on board, taking over from long-serving Bob Johnston.
“Do you think I’m right that you are too woke, and you have lost the commercial attitude which is necessary to make money and deliver proper investment returns?” Mr Kingston asked.
“[It’s] a bit of a trade-off: yes, you’ve got to be conscious of ESG but if you’re too paranoid about woke issues, you tend to be a profitless business or certainly a growthless business.”
During her address, Ms McFadden had extolled GPT’s successes in on the ESG front, including its ranking second among listed real estate companies in the S&P Global Corporate Sustainability Assessment 2024Sustainability Yearbook.
GPT was also ranking fifth globally from more than 3700 listed companies across 27 markets, and first in the property sector, on a gender equality rating.
“Our strategic objective as I’ve outlined is to achieve growth. And, as you call us ‘growthless’, that hasn’t been to the level that we would like to see, and there are a variety of reasons for that,” Ms McFadden said.
“But I do not accept that we are too woke.
“There is, within the group, an understanding, and it’s embedded in the way we think, that we will have high regard to the sustainability and other social and governance requirements that are expected of a group to operate.
“But that has to be in the context of profitable sustainable growth which produces the right return on capital.”
Despite the robust critique from Mr Kingston and other investors, all five of the resolutions put to the meeting – including the re-election of Ms McFadden and the remuneration – were soundly endorsed with near 98 per cent or more in favour.
GPTs stock gained 3¢, or 0.7 per cent, to close at $4.25 after it reaffirmed its guidance on earnings and distributions in its quarterly business update.
Citi analyst Howard Penny described the result as stable and one the market would receive “constructively”.
“Retail and logistics continued to produce resilient growing operational performances. Office occupancy remains stable, however higher risk of lower occupancy in 2024 and 2025 is possible due to lease expiries during the periods,” he wrote in a client note.
