GROWTHPOINT PROPERTIES
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rowthpoint has a fairly long history — it was founded in 1987 and initially owned only SA property assets. The company grew through mergers & acquisitions, the most notable being a 50.1% stake in Growthpoint Properties Australia (GOZ) in 2009. In 2011, it continued its SA acquisition story, buying a 50% stake in the V&A Waterfront, before acquiring JSE-listed Acucap and Sycom in 2015. Recently, Growthpoint has diversified its income streams even further. The company launched a health-care property fund in 2017 and invested in Poland and Romania in 2016 through LSE-listed Globalworth. In 2019, Growthpoint acquired a controlling stake in UK mall owner, Capital & Regional. Growthpoint also seeded a pan-African property fund, Growthpoint Investec African Properties, with $50m, which has since increased its assets to over $600m and was recently renamed Lango Real Estate. At December 2020, the SA portfolio comprised 41% offices, 36% retail, 18% industrial, 4% health care and 1% other. On an earnings before interest and tax basis, 74% of income is derived from the SA portfolio (including 4% from its 50% stake in the V&A Waterfront), 20% from GOZ, 5% from Globalworth and 1% from Capital & Regional. In 2020, many property companies elected to defer dividend decisions, given the negative impact of Covid. Growthpoint was one of few THE PROPERTY HANDBOOK
property companies with the balance sheet flexibility and income-generating capacity to continue paying cash dividends. Growthpoint’s income stream has remained of a sustainable and recurring nature, with little nonrecurring income forming part of its earnings. Covid has, nevertheless, led to asset impairments and lower rental income due to relief granted to tenants and higher vacancies. The SA portfolio was particularly negatively affected, with GOZ providing an offshore buffer, protecting the overall income stream and mitigating the scale of asset impairments. As of December 2020, rental collections had returned to near 99% of rebased rental levels across the SA portfolio. Reduced portfolio valuations now appear at more appropriate levels. As a constituent of the top 40
PORTFOLIO SPLIT Total value: R132.869bn
SA portfolio — 53.5% V&A Waterfront — 6.8% Growthpoint Australia — 23.3% Globalworth Real Estate Investments (CEE) — 12% Capital & Regional (UK) — 4.4% Source: Growthpoint Properties
index, Growthpoint is a bellwether of the SA property market and offers reasonable liquidity and diversification across more than 400 property assets and various subsectors. Management has, over time, demonstrated conservative balance sheet management and a prudent approach to capital allocation. Globalworth and the GOZ acquisitions stand out in this regard. Other acquisitions will take time before they can fully deliver on expectations. Given the scale of operations and contributions to the bottom line, Growthpoint remains a property play focused on SA, Australia and Central and Eastern Europe. After its R4.3bn accelerated bookbuild in late 2020, the company is well capitalised. Rental income has largely been rebased to more sustainable levels after the knock from Covid. We believe management will be disciplined in future capital allocation and will focus on operational improvements. We see little wrong and much right with its strategic direction. It remains a suitable investment for those targeting income growth and capital over the short and long term. Ahmed Motara, property analyst, Stanlib
GROWTHPOINT PROPERTIES (JSE code: GRT) As at December 30 2020 Head of company and title Market capitalisation Dividend per share NAV per share Total return (12 months to May 31 2021) (%) Total vacancy (%) Group loan-to-value ratio (%) Tel no & website
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Norbert Sasse (Group CEO) R43.1bn 58.5c (1H2021), 106.0c (1H2020) R21.32 28 10.3 (SA portfolio) 40.7 +27 011 944 6000; www.growthpoint.co.za
FINANCIAL MAIL July 2021