On 8 December 2011 a representative proceeding was issued against GPT Management Holdings Limited and GPT RE Limited (together, GPT) in the Federal Court of Australia.
The proceeding was brought on behalf of persons who:
- acquired GPT securities between 27 February 2008 and 6 July 2008; and
- had entered into litigation funding agreements with Comprehensive Legal Funding LLC as at 7 December 2011.
Accordingly, this class action is closed to new clients.
If you would like to register your interest in joining the class action should this position change, please follow the link below.
Background to Class Action
GPT is one of Australia’s oldest diversified listed property trusts, with an asset base of about $13.9 billion. The company’s primary investments are in high quality Australian real estate in office, industrial and retail sectors.
On 7 July 2008, GPT released a statement to the Australian Securities Exchange (ASX), which dramatically downgraded its forecast earnings for the 2008 calendar year by 27%, and its distributions per security (DPS) by 30%.
The class action against GPT alleges that it engaged in misleading or deceptive conduct and breaches of continuous disclosure obligations in relation to and following the release of its 2007 Full Year Statutory Accounts.
In particular, the statement of claim for the proceeding alleges that GPT Group:
- Did not have a reasonable basis for the distribution guidance made on 27 February 2008 (which was subsequently affirmed on 1 May 2008);
- Did not have a reasonable basis for the earnings guidance provided on 1 May 2008; and
- Failed to disclose key assumptions underpinning its various forecasts, notwithstanding the vulnerability of those assumptions given the prevailing market conditions.
February 2008 Earnings Guidance
On 28 February 2008, GPT released its results for the 2007 calendar year. In these results, GPT stated that its earnings would be “flat” (about $600m) for 2008, but that the company’s strategy was focussed on future growth, with a particular focus on unwinding its European joint venture with Babcock & Brown, which was unpopular due to its high cost and perennial underperformance.
May 2008 Earnings Guidance
On 1 May 2008, GPT held its Annual General Meeting, at which GPT’s Chairman confirmed the February 2008 Earnings Guidance during the course of his address, and underscored the strong position of the company in an uncertain economic environment. He said:
“This year like last year, GPT will generate over $600 million in net operating cash flow which will be distributed to you our owners. In 2004 before GPT became independent the figure was $440 million. That translates to a 30 per cent uplift in distributions from 22 cents per security to 28.9 cents per security in three years.”
On 22 May 2008, GPT released its March Quarterly update. The update was generally positive, stating that “the performance of GPT’s high quality investment portfolio remains solid.” Importantly, the company determined not to provide any confirmation or revision of its EPS or DPS guidance in conjunction with the announcement.
Corrective Disclosure
GPT did not revise or withdraw the February 2008 Guidance or the May 2008 Guidance until its corrective disclosure on 7 July 2008, when it dramatically downgraded its earnings and DPS forecast for the 2008 calendar year. GPT announced that:
- Forecast operating income was downgraded 27% from $633m to $464m;
- DPS was downgraded 30% from 28.9c to 20.0c; and
- Earnings per security was downgraded from 29.4c to 21.2c.
In response to the downgrade, the price of GPT stapled securities fell by 24% over the following two trading days.
Commencement of Proceedings
A class action against GPT was filed in the Victoria District Registry of the Federal Court of Australia and served on GPT on Thursday 8 December 2011. The class action was commenced by Slater & Gordon on the instructions of the representative applicant, Modtech Engineering Pty Limited. The matter has been listed for directions on 7 February 2012.
The class action has been defined to cover investors who:
- acquired GPT securities between 27 February 2008 and 6 July 2008 (the claim period); and
- as at 8 December 2011 had entered into a funding agreement with Comprehensive.
Can I join the class action?
Currently, the class action is closed to persons who had not signed a litigation funding agreement before 7 December 2011.
If you wish to register your interest in joining the class action should this position change, please follow the link below to our online registration form.
If you register with us, we will inform you if you are able to become a group member of the proceeding at any stage in the future.
Contact Us
If you are a client of Slater & Gordon and wish to discuss this matter further, please contact Grace Cisternino on (03) 9949 8719.
Non-clients should register their details online using the link above.