Growthpoint Properties has achieved impressive returns from its assets, locally and abroad, beating market expectations in its 2017 financial year.
The real estate investment trust’s decision to invest in Australia, close to a decade ago, had paid off with this subsidiary reporting its strongest year on record. Its recent investment in Romania also gave its results a kicker.
Growthpoint increased its dividend 6.5%, to 195.8c, for the year to June, it reported on Wednesday. It had predicted dividend growth of 5%-6% for the 2017 financial year.
The company grew its international exposure to 30% of its asset value of R122.3bn, assembling a portfolio of assets for its new healthcare fund and receiving income from its new trading and development business for the first time. CEO Norbert Sasse said he attributed the positive results to a good performance from the group’s investments as a whole, along with new income streams introduced in 2017.
“Growthpoint delivered distribution growth ahead of guidance in an extremely tough South African market where any growth is good growth,” he said.
Growthpoint owns and manages a portfolio of 547 property assets. This includes 471 properties in SA valued at R76.9bn and Growthpoint’s 50% interest in the properties at Victoria & Alfred Waterfront, Cape Town, valued at R8.7bn. It owns 57 properties in Australia valued at R32.5bn through its investment in Growthpoint Properties Australia (GOZ) and 18 properties in Romania valued at €1bn through its investment in Globalworth Real Estate Investments.
Growthpoint’s size and diversity made it strongly defensive, Sasse said. GOZ had its best year to date, delivering a 9.6% increase in distributable income. It also increased its tangible assets by 10.3%. However, the rand’s improved strength against the Australian dollar and a higher-than-expected withholding tax, saw its 15.4% contribution to its total distributable income remain stable.
WATCH: Growthpoint Properties MD Estienne de Klerk chats to BDTV about the company’s annual results, which saw it post a larger than expected dividend
During the financial year, Growthpoint launched its Central and Eastern European investment strategy by investing €186.4m in 24.3-million Globalworth shares.
Growthpoint’s results were slightly ahead of guidance with several new contributors to the bottom line, Meago Asset Management director Jay Padayatchi said. “Perhaps the most interesting part of the results stems from the performance of the retail trading density growth up only 1.3%, reflective of the duress that the consumer and consequently the retailer is under.
“This is a theme that you would expect to see continuing as the results season unfolds and most likely a continuing theme into the medium term.”