Growthpoint Properties today posted distribution growth of 6.9% per share for its half-year to 30 June 2017, taking its full-year distribution growth to 6.5% per share and delivering results ahead of its market guidance.
Growthpoint increased its annual distributions 10.4%, paying ZAR5.6 billion to shareholders this financial year. It also made significant strategic progress, boosting its international exposure to 30.0% of its asset value of ZAR122.3 billion, assembling a portfolio of assets for its new Healthcare Fund and receiving income from its new Trading and Development business for the first time.
Norbert Sasse, Growthpoint Properties CEO, attributes the positive results to a good performance from Growthpoint’s investments as a whole, along with new income streams introduced this year.
Growthpoint maintained high occupancy levels, achieved good leasing results, and kept its costs well contained. The overall expense ratio of its South African portfolio remained stable at 27.1%.
“Growthpoint delivered distribution growth ahead of guidance in an extremely tough South African market where any growth is good growth. We are pleased to report a solid set of results that continues our 14-year track record of uninterrupted dividend growth and represents significant strategic progress in our business,” says Sasse.
Growthpoint is the largest South African primary listed REIT.
Growthpoint owns and manages a diversified portfolio of 547 property assets.
Its South African balance sheet remains well capitalised. Even though Growthpoint’s gearing increased from 33.7% to 35.0% during the year, mainly to fund investment activities, it remains at conservative levels.
“Growthpoint’s balance sheet has grown substantially in recent years. At this size, we recognise that no single initiative will move the needle for growth, so we are taking a multifaceted approach, as well as growing the international assets on our balance sheet,” explains Sasse.
“GWI has surpassed our due diligence expectations and delivered on its distribution guidance. Since finalising our transaction in December 2016, GWI is achieving letting uptake faster than anticipated, it undertook its first bond issue sooner than expected and achieved better terms on its bond issue than projected,” says Sasse.
“We don’t intend for this income to be a material part of our profits. Given the many opportunities that come our way, it makes sense to leverage the skills in our business to earn development fees and trading profits. By taking a low-risk approach, we are confident that this revenue will become part of Growthpoint’s predictable, sustainable income streams,” says Sasse.
“Even in the face of South Africa’s inadequate economic growth prospects and weakening domestic property fundamentals, we will preserve our risk profile while remaining driven by opportunity and demand. Growthpoint will seek ways to outperform and continue to create sustainable value for our shareholders,” concludes Sasse.