Growthpoint targets offshore investments
Aims to double non-South African distributable income
LISTED Growthpoint Properties has embarked on an aggressive internationalisation strategy to double the bottom line distributable income contribution from its non-South African investments over the next three to five years.
Growthpoint’s 64.3 percent holding in Growthpoint Australia (Goz) contributed 15.9 percent to the income in the six months to December.
In December, Growthpoint invested €186.4 million (R2.57billion) to acquire an initial 26.9 percent stake in Globalworth.
Globalworth, which owns an €1bn (R13.8bn) property portfolio and is the largest office-space owner in Romania, is listed on the Alternative Investment Market of the London Stock Exchange.
But Growthpoint chief executive, Norbert Sasse, yesterday confirmed that the investments in Goz and Globalworth would not enable Growthpoint to achieve its target for non-South African distributable income. Sasse said the company would have to invest “quite a bit more” to achieve this target.
“Globalworth, in two to three years’ time, will probably be contributing €150 million to €200 million to Growthpoint’s bottom line,” he said.
Sasse said Growthpoint was looking at internationalisation as a strategy to diversify and reduce its risk.
“It’s not just our business, but, without exception, the top 100 companies on the JSE are looking in one or another way at internationalisation as a strategy to diversify to reduce risk.
“You don’t want to have all your eggs in one basket and all your eggs in the rand basket, so you start looking at international opportunities.
“Clearly, our business is about growth, and if the domestic market is not producing the growth, you have to start thinking as a management team where you are going to find some growth,” he said.
Sasse said Growthpoint was the largest shareholder in Globalworth and could increase its stake in the company. However, the takeover threshold in Romania was 30 percent, and it would have to make an offer to minorities. “As we continue to look to grow the company, we will happily invest more. But we don’t have aspirations to rush in there and take over and make an offer to minorities to own 100 percent.
“We are looking at ways and means to continue to support the growth of that entity and its diversification in the country and in the region,” he said.
Growthpoint yesterday reported a 6.1 percent growth in distributions to 95 cents in the six months to December, from 89.5c in the previous corresponding period.
Portfolio vacancies improved from 5.7 percent to 5.4 percent, and the value of property assets was boosted to more than R120bn.
Sasse attributed the positive distribution growth to the continued performance of its South African property portfolio, a strong contribution from its V&A Waterfront investment, and growing distributions from Growthpoint’s holding in Goz that were enhanced by a successful currency-hedging strategy.
Growthpoint’s South African property portfolio contributed 75.4 percent to its distributable income. Growthpoint’s shares rose 0.72 percent yesterday to close at R26.67.