Growthpoint Properties, SA’s largest real estate company, is forcing its investors to take their dividends in cash, rather than reinvesting them in shares. If the group, which is trading at a discount to its net asset value (NAV) per share, were to allow the reinvestment of dividends, it would have to issue new shares, which would lead to a weakening of its NAV per share. This is because the denominator value of the NAV per share metric would increase but the assets would remain the same. Growthpoint’s share price has been under pressure over the past year, in line with its peers. It has lost 16% since March 2018. On Monday, it closed 2.97% lower at R23.51. The company’s SA CEO, Estienne de Klerk, said the group’s NAV was about R25.70, hence it closed at a discount of 8.5% to NAV on Monday. In its financial results for the six months to December 2018, Growthpoint told its shareholders that its board had agreed to offer shareholders “a dividend reinvestment alternative”.

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