Growthpoint Properties pays out 7.5% for half-year

CEO Norbert Sasse, attributes the results to significant growth in local property portfolio and its offshore investment, Growthpoint Properties Australia (GOZ).

Growthpoint Properties, SA’s largest REIT company, on Wednesday reported distribution growth of 7.5% to 84.4c a share for its six-month interim period to 31 December 2014.

Despite tough local economic conditions, it produced an annualised total return of 29.1% for investors, with its distributable income up 29.4% from the prior half-year.

Speaking at a presentation of the company’s interim results, in Johannesburg, Growthpoint CEO Norbert Sasse, attributed the results to significant growth in local property portfolio and distributions from its 64.5% holding in Growthpoint Properties Australia (GOZ).

This is the first full six-month period that Growthpoint’s acquisitions of Abseq, Tiber and its listed investments in Acucap and Sycom have contributed to its revenue, resulting in its revenue increasing by 20.6%.

The group’s local property portfolio contributed 65.6% to its distributable income, while its holding in GOZ made a 17.0% contribution. The 50% stake in the V&A Waterfront contributed 8.8% and Growthpoint’s listed investments made an 8.6% contribution to distributable income.

Portfolio and Vacancies

Total portfolio vacancies increased from 4.9% to 6.4%, of which around 1,0% can be attributed to portfolio exposure to Ellerines.

Retail vacancies are 4.4%, of which around 2.0% account for offices at shopping centres, and vacancies left by Ellerines.

Office vacancies are at 8.4% and Industrial vacancies moved 3.0% to 5.8%.

Growthpoint owns a portfolio of 431 properties in South Africa, 51 properties in Australia through its investment in GOZ and a 50% interest in the properties at V&A Waterfront, Cape Town.

At the close of its half-year, it also held listed investments of R5,3 billion comprising a 34.6% stake in Acucap Properties and a 15.6% stake of Sycom Property Fund. Growthpoint’s consolidated property assets and investments were valued at R83,5 billion.

Its peer, SA’s second largest property fund, Redefine Properties is also playing catch-up game. It announced two new deals recently, including the purchase of a German retail portfolio for about R2bn in partnership with foreign-listed subsidiary Redefine International, and the acquisition of office-focused Leaf Capital’s portfolio.

Development and Acquisition pipeline

The group acquired the remaining 50% interest of Inyanda 1, 2, 3 and 4 in Parktown, Johannesburg offices for R388 million. It also acquired an industrial property, Monte Carlo in Pinetown, Durban, for R21 million.

It disposed of six properties for R107 million, achieving a combined R18 million profit on cost.

The company invested R804,7 million in redevelopments and improvements to its properties. The investment included R173 million in development and capital projects at the V&A Waterfront.

The fund has further secured a R3,2 billion development and acquisition pipeline in SA, the largest development being its 55% share in the new R3,0 billion Discovery head office in Sandton. It also acquired industrial development land in Samrand for R360 million.

Analyst comment

Stanlib’s head of listed property funds, Keillen Ndlovu says Growthpoint delivered decent returns for its size and type of assets, more so in a tough environment.

"We like the fund because of its clean and simple structure. It has one of the best disclosures and corporate governance in the listed property sector," Ndlovu said.

Yesterday Growthpoint said Estienne De Klerk had been appointed Managing Director, having taken on additional responsibility for certain company functions. De Klerk was previously an Executive Director.