Growthpoint’s domestic portfolios perform well despite tough conditions

All three of Growthpoint Properties’ domestic portfolios are showing improved performance, despite challenging economic conditions in SA, while its international investments are expected to perform in line with guidance.

In a nine-month trading update, SA’s largest JSE-listed real estate investment trust (Reit), reaffirmed guidance of a 10%-12% decline in full-year distributable income per share due to the negative effect of high interest rates, which had been more pronounced in the second half.

Growthpoint has assets in SA, the rest of Africa, Eastern Europe, Australia and the UK, with an increasing emphasis on the number of assets it holds offshore. 

In its SA portfolio, total space let in the period was 878,107m². Significant letting of 330,586m² of new space improved vacancies from 9.7% in 2023 to 9.2% at the half-year mark, and are currently at 8.5%.

The group spent R1.7bn on developments and capital expenditure in the nine months. Excluding the disposal of the Kent residential apartments, it sold and transferred 10 noncore properties for R665.4m, at a R2.6m loss to book value. Delays obtaining Competition Commission approval and rates clearance certificates as well as delays at the Deeds Office have resulted in a lower value of disposals than expected.

It signed sale agreements, with properties awaiting transfer, to the value of R1.3bn, with a number of these expected to transfer before the end of June, and a further R1.9bn of properties approved for sale in the 2025 financial year.

Given the lower levels of load-shedding, diesel costs for the period declined to R103.5m from R140m.

To simplify the business, Growthpoint has prioritised and refined two of its core strategies. The strategy to optimise its SA portfolio is focused on improving its quality through investing about R2.3bn in its core portfolio to protect and enhance its value through active asset management initiatives. It is developing R1.6bn of new high-quality assets, particularly modern logistics warehouses for the industrial portfolio. It is targeting R4bn of asset disposals for 2024 and 2025 combined.

Its international expansion strategy has been refocused on optimising its investments. 

It plans to continue to grow assets under management and generate diversified returns through Growthpoint Investment Partners and Trading & Development while seeking a long-term sustainable solution to the capital requirements of the V&A Waterfront, which is expected to show growth in the next three to five years.

The V&A funds its development pipeline via a combination of shareholder and third-party funding. It has R2bn of committed third-party facilities, of which R1bn was raised during the period and R1.75bn is in the form of green loans.

Growthpoint will release its full-year results on September 11.

mackenziej@arena.africa