Growthpoint notes V&A Waterfront rebound, improving fundamentals for industrial, retail sectors

International property company Growthpoint Properties has reported a 1.3% year-on-year increase in distributable income per share to 157.6c for the financial year ended June 30.

Revenue increased by 5.3% to R13.7-billion, compared with R13-billion for the 2022 financial year, while operating profit increased by 2.1% year-on-year to R8.9-billion.

Growthpoint’s dividend a share increased by 1.3% to 130.1c.

Its net asset value (NAV) a share, based on the South Africa Real Estate Investment Trust (SA Reit) NAV definition, however, decreased by 0.3% to R21.51.

Growthpoint pointed out on September 13 that the V&A Waterfront, in Cape Town, had rebounded strongly with a “stellar performance” for the financial year under review.

This comes on the back of the recovery in both domestic and international tourism, with a 21.5% year-on-year increase in Growthpoint’s 50% share of distributable income from the V&A Waterfront to R668.4-million.

Meanwhile, over 1.19-million square metres of space was let by the company in South Africa during the year under review, as vacancies improved to 9.2% from 10.1% in the prior financial year.

Some fundamentals have also started to improve for the industrial and retail sectors, while the office sector appears to have stabilised, Growthpoint states.

“Renewal success declined to 64.9% for the period from 75.1% for the comparative period, and renewal growth remains under pressure at negative 12.9% for the period compared to negative 12.8% in the comparative period.

“Until the South African economy enters a growth phase, letting conditions will remain challenging,” notes Growthpoint.

Further, funds from operations (FFO) per share, based on the SA Reit FFO definition, decreased by 4.4% to 148.6c a share.

Group vacancies increased to 9.4%, compared with 9.3% in the prior financial year.

“We remain focused on liquidity and balance sheet strength to enable us to pursue our strategic initiatives,” states Growthpoint, adding that it had a R1.7-billion cash balance at the end of the prior under review.

Further, R500-million in proceeds were received on the sale of a convertible loan in Growthpoint Healthcare Property Holdings (GHPH).

Unused committed facilities for South Africa stood at R6.6-billion, compared with R10.3-billion in the prior financial year.

STRATEGY

In line with Growthpoint’s vision to be a “leading international property company providing space to thrive”, the company’s strategy incorporates the streamlining and optimisation of the company’s South African portfolio.

This includes the disposal of 29 properties for R1.5-billion in South Africa during the 2023 financial year, compared with R2.1-billion in the prior financial year.

GROWTHPOINT INVESTMENT PARTNERS

In April last year, Growthpoint announced its “funds management business” will be formally named Growthpoint Investment Partners (GIP).

The company states that GIP assets under management grew by 14.7% to R17.9-billion, from R15.6-billion in the comparative period.

Further, GIP increased its management fees received to R98-million compared with R67.2-million for the comparative period.

“R750-million was raised from new investors to support both GHPH and Growthpoint Student Accomodation Holdings, demonstrating appetite for these niche asset classes.”