Extracts of retail-related aspects of Growthpoint’s recent results.
Growthpoint Properties Limited has posted distribution growth of 6.5% per share for its six-month interim period to 31 December 2017, confidently achieving on-target performance.
The company increased total distributable income by 10.6% from its prior half-year to a substantial R2.9bn. Group property assets increased 4.4% to R127.7bn and group net asset value grew 3.9% to R25.93 per share.
Norbert Sasse, Group Chief Executive Office of Growthpoint Properties, attributes this positive performance to the strong contributions from the V&A Waterfront and Globalworth Real Estate Investments (GWI), solid performance from the South African property portfolio, and stringent cost controls.
Growthpoint owns and manages a diversified portfolio of 559 property assets including 463 properties across South Africa valued at R80.1bn and Growthpoint’s 50% interest in the properties at V&A Waterfront, Cape Town, valued at R8.7bn. Growthpoint owns 56 properties in Australia valued at R31.2bn through its investment in ASX-listed Growthpoint Properties Australia (GOZ) and 39 properties in Romania and Poland, 100% valued at EUR1.8bn through its investment in LSE AIM-listed Globalworth Investments (GWI).
“In South Africa, Growthpoint made good progress in our recycling of capital. We have sold assets of around R3.2bn since the beginning of January 2018, which are waiting to transfer, including Investec Sandton, Hatfield Plaza and Turbine Square. In addition, about 5% of our South African property assets by value have been assembled into four portfolios for sale. The deadline for expressions of interest was 13 February, and 23 offers were received from various parties, which we are evaluating,” reveals Sasse.
Growthpoint owns 91 properties in the Western Cape, which is facing a severe water crisis. Its main focus until the end of 2017 was reducing water consumption. Growthpoint decreased water use by 41.0% in its office portfolio and 27.0% in its retail portfolio. Its priority now is to include alternative water sources, with solutions varying from boreholes to chemical toilets where there is no water security.
Distributions from Growthpoint’s 50.0% stake in the V&A Waterfront, Cape Town, made a steady 6.9% contribution to its EBIT, compared with 6.8% at the prior half-year. This asset continues to deliver robust performance and is achieving strong demand, with essentially no vacancies or arrears.
Development in the Canal District continues apace. Waterway House is complete and houses blue-chip office tenants BAT and EY, and signature retail tenants Porsche, Ducati and Ferrari. The 1 400-bay Battery Park parking garage will open by mid-year to support the V&A Waterfront’s growing office sector. The three-acre urban park above the garage will be family-friendly green space with pockets of destination retail activation. The Dock Road Junction office node has been let to Regus and its adjacent Queens building is awaiting heritage approval for a vibrant retail concept.
“We expect continued strong growth in the office and hotel sectors at the V&A Waterfront, and steady growth from its retail, marine and residential components. With strong property fundamentals in place, its development pipeline is well matched to demand. We are, however, mindful of the risk the water crisis poses to tourism spend,” adds Sasse.
Sasse concludes: “Growthpoint will remain opportunity-driven and seek ways to outperform while conserving our risk profile. We will continue to create value for all stakeholders.”
Growthpoint is the largest South African primary listed real estate investment trust (REIT). It creates value for its stakeholders with innovative and sustainable property solutions that provide space to thrive. It is the most liquid and tradable way to own commercial property in South Africa. Its size and diversity make Growthpoint strongly defensive, and its quality earnings are underpinned by high-quality physical property assets.