Growthpoint defers final payout of a dividend

GROWTHPOINT Properties was unable to declare a growing dividend for the first time in 16 years for the year to June 2020, but a final payout based on 75 percent of distributable income for the year is being considered.

Chief executive Norbet Sasse said yesterday that distributable income per share fell 16.05 percent to 183.1 cents per share for the year, after distributable income fell by R952 million.

“Never before has Growthpoint experienced such a challenging operating environment. Following a detailed strategic review, the board is prioritising liquidity and balance sheet strength in the short term, considering the weak property fundamentals in South Africa in particular, and the current cycle of falling asset values and rising gearing levels,” he said.

The group would continue along a strategy of internationalisation, optimising its South African portfolio and introducing new revenue streams through third-party trading and development, as well as funds management, he said. The dividend fell 51.4 percent to 106c per share. As a precautionary measure to bolster liquidity, the decision on a final dividend was deferred until December 2020, or possibly earlier. Sasse said the South African portfolio lost about R600m of income in 2020 due to the “dramatic” impact of Covid-19.

Included in the lower distributable earnings was a R61m lower dividend from the Growthpoint Properties Australia subsidiary, a R107m contribution from the 52 percent stake in UK retail group Capital & Regional, which was included in results for the first time, a R59m contribution from Globalworth Real Estate Investments, which has properties in Romania and Poland, and R72m less from the investment in Victoria & Alfred Waterfront, which was effected negatively by the lockdown and restrictions on tourism.

Of the R600m impact in South Africa, R520m related directly to the effects of lockdown on tenants in April, May and June, and of that amount R277m related to discounts provided to tenants. Net deferred rentals amounted to R141m.

The group’s net interest bill increased by R503m, due primarily to debt increasing to R43.3bn from R35.2bn. Reasons for the increase in debt included the acquisition of the stake in Capital & Regional, investment to maintain a shareholding in Globalworth, disposals, R600m for the Growthpoint Investec Africa Property fund and foreign exchange translation value changes due to a weaker rand.

Net asset value per share fell 7.6 percent to R23.07. The group’s overall property value increased 18.7 percent to R166.7bn helped by the acquisition of control of Capital & Regional, impacted by significant currency movements and notwithstanding that the South African assets were valued downwards by 8.8 percent, or R7.1bn.

Growthpoint invested a further R4.2bn offshore during the year. Its international investments now comprised 40.8 percent of property assets by book value and 28.2 percent of earnings before interest and tax.

The group had unused bank facilities of R3.4bn in South Africa and separately of R4.3bn in Australia.

The share price closed 0.86 percent lower at R12.69 on the JSE yesterday.