Corporate South Africa demands certainty as Growthpoint cautions on expropriation

Certainty on key policies is needed

CORPORATE South Africa needed certainty on key government policies, including expropriation of land without compensation, before it would be prepared to “pull the trigger” and invest in the country, said listed Growthpoint Properties.

Growthpoint chief executive Norbert Sasse said yesterday that companies that had been focusing offshore in the past couple of years and hoarded cash would be more inclined to invest in the country now with the improved sentiment and recent political developments.

But Sasse stressed that clarity was needed on policies, such as expropriation without compensation, the Mining Charter and the financial services charter, before “the money started mobilising”.

Sasse said he personally believed that not too much should be read into the expropriation without compensation policy. “It’s more about agricultural land. Yes, land expropriation is on the agenda, but I think there will be a sensible answer.

“You can’t just willy nilly take all the land away and not pay compensation. They will change it (the policy) in a sensible way, one hopes,” he said.

Growthpoint is the largest South African primary listed real estate investment trust and owns and manages a diversified portfolio of 559 property assets, including 463 properties across South Africa valued at R80.1 billion.

Growthpoint invested R1.1bn in retail, office and industrial developments in South Africa in the six month to December and has R2.25bn in capital expenditure commitments to a number of developments that will be completed between now and September next year.

It also made property acquisitions to the total value of R1.1bn in the six months to December, the largest of which was the acquisition of the remaining 58 percent in the N1 City Mall in Cape Town for R922.1 million.

It also sold 10 properties for a total of R478.6m in this period.

Sasse added that Growthpoint had made good progress in recycling its capital and sold assets for about R3.2bn since the beginning of this year, which still had to be transferred, including Investec Sandton, Hatfield Plaza in Pretoria and Turbine Square in Newtown in Johannesburg.

He said about 5 percent of Growthpoint’s South African property assets by value had been assembled into four portfolios for sale, which could raise about R6bn.

The deadline for expressions of interest was February 13 and 23 offers were received from various parties, which were being evaluated, he said.

Growthpoint yesterday reported a 6.5 percent growth in distributions a share to 101.2 cents in the six months to December from 95c in the previous corresponding period. Total distributable income increased by 10.6 percent to R2.9bn from R2.7bn. Group net asset value grew 3.9 percent to R25.93 a share.

Footprint

Growthpoint’s investment activities in the reporting period focused on growing its international footprint, which now accounts for 24 percent of its assets by book value and 19.6 percent of its earnings before interest and tax.

Sasse said Growthpoint planned to grow both the value of its foreign assets and foreign earnings before interest and tax to 30 percent over the next three years, which would require a further about R10bn of investment offshore. He said that solid financial performance was achieved in a very challenging South African operating environment to continue the company’s 14-yearplus track record of uninterrupted dividend growth.

Shareholders could expect this positive performance to continue, Sasse said.

Shares in Growthpoint dropped 0.61 percent on the JSE yesterday to R29.50.