Growthpoint sees tough second half
• Trust posts 6.1% growth amid tough conditions
SA’s largest local real estate group, Growthpoint Properties, has sounded a warning about tougher domestic conditions in the second half of its 2017 financial year. Norbert Sasse, CEO of the R76bn real estate investment trust, said attracting and retaining tenants had become harder.
SA’s largest local real estate group, Growthpoint Properties, has sounded a warning about tougher domestic conditions in the second half of its 2017 financial year.
Norbert Sasse, CEO of the R76bn real estate investment trust, said attracting and retaining tenants had become challenging in an economy that was constrained.
“We are dealing with a difficult environment domestically. The portfolio’s occupancy levels improved but we’re attracting and retaining clients at a cost in a fiercely competitive and weak market, and this is placing net property income under pressure,” said Sasse, speaking after the release of results for the six months to December.
Growthpoint reported distribution growth of 6.1% for the six months to December, in line with market guidance of between 5% and 6%.
“Demonstrating resilience and continuing our 12-year-plus track record of uninterrupted distribution growth for investors, Growthpoint has performed well in a tough market,” said Sasse.
In order to improve the quality of its South African portfolio, Growthpoint acquired R1.2bn of properties during the reporting period. The company’s largest development project, in partnership with Zenprop, is the Discovery medical aid group’s new head office in Sandton.
Growthpoint owns 50% of the Victoria & Alfred (V&A) Waterfront, the most valuable commercial property in SA.
“The development of the V&A Waterfront Silo Precinct is almost complete and progress on its Canal District development is continuing.
“During the period, we invested R311.8m in development and capital expenditure at the V&A Waterfront and made commitments to a further R363.9m of investment,” he said
Growthpoint’s goal was to increase its distributable income from international investments to about 30% over the next five years, Sasse said. Towards the end of last year, the group launched its central and eastern European investment strategy by investing €186.4m in an initial stake of 24.3-million shares in Globalworth, which owns offices in Romania.
“These are steady, unexciting results with subdued commentary. Growthpoint tends to be very conservative so I would be surprised if they stray from guidance,” said Evan Robins of Old Mutual Investment Group.
Stanlib’s head of listed property funds, Keillen Ndlovu, said Growthpoint was prudent and being managed well.
“We are happy with the results. They are in line with expectations. Growthpoint is simple, well-run and easy to understand.
“Management has been cautiously and prudently working on boosting their distribution growth and keeping up with the market trends. However, the market is closely watching their expansion into eastern Europe,” Ndlovu said.