Growthpoint remains upbeat on its growth

GROWTHPOINT Properties remains bullish about its distribution growth prospects despite admitting that the low growth domestic environment was having a negative impact on consumers and the retail environment.

Norbert Sasse, the chief executive of the listed property company, said yesterday that its previously communicated distribution growth rate of between 7 percent and 7.5 percent for its 2015 financial year, which was in line with the average growth rate achieved over the past five years, was attainable for the full year to June.

Growthpoint yesterday reported a 7.5 percent growth in distributions to 84.4c in the six months to December from 78.5c in the previous corresponding period.

Shares in Growthpoint yesterday fell 1.42 percent to R29.23.

Mark Saner, an analyst at Imara SP Reid, said Growthpoint’s results were in line with expectations, with the weaker exchange rate assisting returns from Growthpoint Australia.

“Australian dollar exposure continues to increase with Growthpoint Properties Australia (GOZ) now accounting for 26 percent of the total net property income,” he said.

Saner said the increased vacancy rate in the industrial and office sectors was not surprising but was something to keep a close eye on for any further signs of weakness, particularly as the low growth economy was likely to continue to put pressure on vacancies within the office sector.

The company produced an annualised total return of 29.1 percent for investors, with its distributable income up 29.4 percent from the prior halfyear. Revenue rose by 20.6 percent to R3.64 billion from R3.02bn.

Property expenses increased by 16.8 percent to R756 million from R647m. Vacancies in its South African portfolio increased to 6.4 percent from 4.9 percent, with about 1 percent attributed to portfolio exposure to Ellerines.

Sasse attributed the positive results to significant growth in, and a solid performance from, the South African property portfolio and increased distributions from its 64.5 percent holding in GOZ, which were further enhanced by the weaker rand against the Australian dollar.

The business acquisitions of Abseq Properties and the Tiber Group of Companies, and the listed investments in Acucap and Sycom also had a positive impact on the results.

Growthpoint’s South African property portfolio contributed 65.6 percent of its distributable income with its distributions from its 50 percent stake in the V&A Waterfront contributing 8.8 percent to its distributable income.

Growthpoint’s holding in GOZ delivered a 26.4 percent annualised total return for the six months and contributed 17 percent to its total distributable income.

Sasse said retail sales at the V&A Waterfront increased by 18.7 percent on a rolling 12month period to December and the precinct’s offices were reporting positive activity with a low 3.3 percent vacancy rate.

Results in line with expectations, with weaker exchange rate assisting returns from GOZ.

He said V&A Waterfront hotel occupancies and rates were moving up, the fishing and industrial facilities remained fully let and it continued to introduce more residential opportunities to meet demand.

Growthpoint invested R173m in development and capital projects at the V&A Waterfront during the period and also committed R459.2m for its contribution to new developments, including the Grain Silo precinct.

Acquisitions by Growthpoint in South Africa included the remaining 50 percent interest of Inyanda 1, 2, 3 and 4 in Parktown in Johannesburg, which combined totals 16 799m of offices for R388m and the Monte Carlo industrial property in Pinetown in Durban for R21m.

Growthpoint has secured a R3.2bn development and acquisition pipeline in South Africa.

The largest development is its 55 percent share in the new R3bn Discovery head office in Sandton. It also acquired key industrial development land in Samrand for R360m.