Property group Growthpoint is to sell its 55% share in the Discovery head office building known as Discovery phase 1, and acquire a 45% share in the Discovery phase 2 building.
South Africa’s largest listed property group said the disposal price for its stake in the Discovery phase 1 building is R2.317bn, and the acquisition price for the interest in Discovery phase 2 building is R323.1m, giving total net proceeds of R1.994bn.
Its interest in Discovery phase 1 will be sold to Discovery Propco and the acquisition of the 45% interest in Discovery phase 2 building is from Truzen 114 Trust. On implementation, Growthpoint will own 100% of the Discovery phase 2 building, the group said on Friday.
The group said the transactions are consistent with its capital allocation discipline and approach to actively managing the composition of the domestic portfolio.
As part of the process, Growthpoint continually assesses opportunities to optimise portfolio balance, including selectively realising value from assets where concentration considerations or longer-term portfolio objectives warrant such action.
“In this context, Discovery phase 1 was identified for disposal, notwithstanding its P-grade quality, allowing Growthpoint to responsibly manage exposure while maintaining overall portfolio quality,” it said.
Discovery phase 2 is a prime, P-grade, multi-tenanted office building, providing improved income diversification and reduced letting risk relative to single-tenant assets
— Growthpoint
The disposal reduces the group’s office exposure in Gauteng and Sandton, and contributes to a reduction in single tenant asset concentration within this node.
It also supports the continued rebalancing of its South African portfolio toward sectors and regions that are expected to deliver more stable and resilient income profiles over the longer term, including retail, logistics and increased Western Cape exposure, it said.
Growthpoint said the disposal of Discovery phase 1 will result in a higher reported office vacancy percentage as a large, fully-let asset is removed from the portfolio. The Discovery phase 2 acquisition supports the overall transaction structure and enables Growthpoint to retain an appropriate presence within the Sandton Summit precinct, it said.
“Discovery phase 2 is a prime, P-grade, multi-tenanted office building, providing improved income diversification and reduced letting risk relative to single-tenant assets. The asset was acquired at an attractive value, which is considered appropriate in the current market environment and supports the quality and sustainability of the group’s retained office portfolio,” it said.
Business Day reported previously that Growthpoint is doubling down on its presence in the Western Cape and expanding its logistics and industrial portfolio.
“These areas continue to benefit from strong fundamentals, reliable infrastructure and sustained demand,” the group said in its annual report.
“Cape Town’s resurgence as a global travel destination has significantly boosted performance. Tourism, conference activity and cruise volumes have returned to pre-Covid-19 levels, supporting strong performance across retail, hospitality, leisure and residential. Tenant demand remains high with zero vacancies in key sectors,” it said.
Growthpoint is also set to develop the Cape Winelands Airport precinct, a multibillion-rand infrastructure project aimed at becoming the Western Cape’s next major aviation, logistics and tourism hub. The development is expected to feed into the V&A Waterfront, which remained Growthpoint’s top performer in bringing income and is expected to produce double-digit earnings in 2026.
The financial effects of the Discovery building transaction will be reported in Growthpoint’s interim results on March 11.
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