Growthpoint launches American Depositary Receipt (ADR) Programme

Estienne de Klerk, Executive Director of Growthpoint Properties says the company aims to increase the percentage of foreign shareholding to enhance the diversification of our shareholder base.

Growthpoint Properties Limited, later today, it will launch its American Depositary Receipt (ADR) Programme on the over-the-counter (OTC) market in the United States through a sponsored ADR program with BNY Mellon.

Growthpoint becomes the second listed property company to launch an ADR programme, following in Redefine Properties’ footsteps.

Last month Redefine became the first local listed property company to launch an ADR programme, through a sponsored scheme with financial services company BNY Mellon.

Growthpoint recently became a REIT (Real Estate Investment Trust) on 1 July 2013.

Each Growthpoint DR represents two ordinary shares and trades on the OTC market in the U.S. under the symbol “GWPTY.” Growthpoint ordinary shares trade on the JSE under the symbol “GRT.”

Estienne de Klerk, Executive Director of Growthpoint explains the rationale for the programme, “We aim to increase the percentage of foreign shareholding in Growthpoint to enhance the diversification of our shareholder base.”

The investment proposition for US investors is that they can now buy a dollar denominated share in a South African based diversified property company that distributes all its net rental income every half year.

Lauren de Klerk, Vice President of BNY Mellon's Depositary Receipts business, says that the international acceptance of the REIT structure has meant that two South African property opportunities became available this month to US investors. “We expect more to follow and will work closely with Growthpoint to enhance its profile and meet its objectives. Now 34 of the JSE top 40 have a DR programme,” she says.

Growthpoint management has worked with the industry body, the SA REIT Association, and the South African National Treasury for over six years to get the REIT (Real Estate Investment Trust) structure in place. This became possible in South Africa this year and international investors are familiar with the REIT label. 

Once all listed property companies and property unit trusts have converted to a REIT, South Africa is expected to have the eighth largest REIT sector globally. Growthpoint is the 40th largest REIT globally by market capitalisation and is the largest REIT in emerging markets.

“Now that the REIT status is in place, we want to leverage this status to enhance our ability to access capital, as we are a capital-intensive business. The REIT structure will put South Africa on the map as a choice for REIT investors and specifically REIT indices. Global REIT indices represent general trends in real estate equities worldwide, where real estate activities represent the ownership, disposal and development of income-producing real estate. It also allows small investors to obtain exposure to large commercial property,” says De Klerk.