With a weak domestic macroeconomic environment, SA’s largest property company, Growthpoint, says offshore expansion remains a key driver and priority for the group.
Its offshore investments represent 43.5% of property assets by book value and 28.4% of earnings before interest and tax.
The hard currency dividend income from its international investments increased from R1.4bn to R1.5bn.
“We are looking to find better growth markets compared to SA, and we will allocate more capex in markets where we have control,” CEO Norbert Sasse said.
Growthpoint is a JSE-listed real estate investment trust (Reit) that owns a diversified property portfolio across Africa, Australia, the UK and Eastern Europe. It also owns a 50% stake in the V&A Waterfront in Cape Town. Its group assets are valued at R160.8bn.
“GOZ [Growthpoint Australia], which remains our core investment, delivered its best performance, and continues to invest in high-quality assets and the fund management platform,” Sasse said.
In SA and on the rest of the continent, growth will come from Growthpoint Investment Partners (formerly the fund management business) comprising three unlisted funds with R15.6bn of assets under management.
The group realised R67.2m in management fees, and is targeting growing assets under management to R30bn by end-June 2027.
Growthpoint Investment Partners launched in 2018 as the group shifted its focus to offshore investing, and capital light strategy through co-investing to grow the platform.
Investments include Growthpoint Student Accommodation Reit, Growthpoint Healthcare Reit and Lango Real Estate.
“These investments are strategic for our immediate growth of assets under management rather than assets on the balance sheet, and we continue to seek new co-investment opportunities,” Sasse said.
SA portfolio
Estienne de Klerk, CEO of Growthpoint Properties SA, said there is improvement in property fundamentals, with a reduction in vacancies and bad debt.
However, the portfolio experienced a valuation writedown of R1.2bn (1.7%) for the year to end-June, mainly dragged down by the office portfolio that remains constrained.
Overall vacancies reduced from 11.6% in June 2021 to 10.3% this year. Arrears decreased from R308.2m in June 2021 to R195.3m, with total net bad debt write-offs, recoveries and provisions per income statement down from R30m to R24.4m.
Growthpoint collected R187m in Covid-19 rental deferrals granted to tenants, and this year granted R17m in Covid-related discounts versus R198m in the past financial year.
“We continue to manage assets to optimise their value over the long term and selling of noncore assets,” De Klerk said.
Growthpoint owns and manages a diversified core portfolio of 387 retail, office and industrial properties across SA valued at R62.7bn. It sold 37 properties for R2.1bn during the period, making a profit on book value of R240.9m with total properties sold sitting at R9.7bn since 2017.
De Klerk said the industrial and retail portfolios delivered improved performance, with vacancies in the office portfolio down from 22.4% in March to 20.7% in June.
Growthpoint delivered R5.3bn from its SA Reit funds from operations with distributable income per share of 155.6c, and a total dividend per share of 128.4c.
Sasse said this performance was due to the rapid rebound of the V&A Waterfront and strong performance from GOZ, improved SA finance costs and steadily growing contributions from Growthpoint Investment Partners.
However, he said that given high levels of uncertainty in the local and global macroeconomic environment, coupled with rising interest rates and inflation, distribution growth for the 2023 financial year is expected to be muted.
SA gearing was reduced to 37.9% from 40% in the same period last year. SA Reit net asset value per share rose 6.7% to 2,158c from 2,023c.
Growthpoint ended the period with R1.5bn cash on the SA balance sheet and R10.3bn of unused SA committed debt facilities.
“With a defensive, diversified business and a strong balance sheet, we are optimistic about our prospects, and we remain committed to creating and conserving value for all our stakeholders,” said Sasse.
By the JSE’s close on Wednesday, Growthpoint’s share price had fallen 0.69% to R13.01, giving it a market cap of R44.6bn.
Updated: September 14 2022
This article has been updated with new information throughout.
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