Growthpoint Properties faces 11% Office vacancies

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Growthpoint Properties, which owns half of Cape Town's V&A Waterfront, says vacancies in its SA portfolio increased from 6.8% to 7.4%. Growthpoint Properties, which owns half of Cape Town's V&A Waterfront, says vacancies in its SA portfolio increased from 6.8% to 7.4%.

Strains facing the commercial property industry left South Africa's largest listed REIT Growthpoint Properties [JSE: GRT] with a significant lettable vacancy in its office portfolio.

At the end of the group's interim, Growthpoint's office vacancies jumped 11.5% due to SA’s weak economy.

Overall, its vacancies in SA increased from 6.8% to 7.4%, while vacancies in its Australian portfolio increased by a more modest 2.1%.

2019 was a year that presented very tough trading conditions compounded by low economic growth, socio economic challenges and failing State-owned Enterprises (SOE's).

According to the results, arrears and bad debts increased notably, with total bad debt expenses in SA surging to R20.8m, from R4m in the prior comparative period.

Growthpoint, which owns half of the V&A Waterfront, reported distributable income growth of 2.2% to R3.2bn, an increase in dividends per share of 0.2%, and a 14.9% increase in group property assets to R160.2bn.

Group profit rose 3.6% to R4.3bn.

Norbert Sasse, Group CEO of Growthpoint Properties, attributes the company’s increase in distributable income and asset value to its growth strategies, specifically internationalisation.

During the period, the company invested R4.2bn internationally, and in SA it reported R1.5bn of investment with another R1.2bn of commitments.

Growthpoint owns and manages a diversified portfolio of 563 property assets including 441 properties across SA valued at R79.2bn and a 50% interest in the properties at The V&A Waterfront, Cape Town, valued at R9.7bn.

It also has a 62.2% interest in Growthpoint Properties Australia (GOZ) – which includes 58 properties valued at R42.5 billion. Through its 29.4% investment in LSE AIM-listed, Globalworth Investment Holdings (GWI) it owns an interest in 61 properties in Romania and Poland, 100% of which is valued at EUR3bn,

About 35.2% of the group’s assets are offshore as of the end of December, from 30.3% at the end of June.

During the period, Growthpoint acquired a 51.1% controlling interest in UK shopping mall owner Capital & Regional, listed on the London Stock Exchange. It owns seven retail properties in the UK valued at R14.8 billion.

Growthpoint reaffirmed that its distribution per share growth for FY20, if any, is expected to be nominal.


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