Growthpoint warns of flat distribution growth as tenants become pickier
The property group experienced 5.3% growth in full-year distributable income to end-June, but says growth, if any, will be marginal in 2020
SA’s largest listed real estate company, Growthpoint Properties, grew its distribution per share 4.6% in the year to end-June, but warned due to pressure on rentals growth in the next year might be low.
Growthpoint, which owns half of the V&A Waterfront, upped its dividend 4.6% to 218.1c per share to end-June, marginally exceeding its guidance of 4.5% for the period.
Distributable income rose 5.3% to R6.4bn, while the group’s net asset value per share gained 0.7% to R25.39. Growthpoint’s share closed at R23.50 on Tuesday, implying it is trading at a discount of about 8%.
Growthpoint, which has a portfolio of 450 directly owned properties in SA valued at R78.3bn, said on Wednesday that weak economic growth in SA is putting its growth at risk for 2020.
“Domestic tenants continue to downsize their space, which is placing pressure on all property fundamentals,” the company’s statement reads.
“Tenants are spoilt for choice and negotiations on renewal and new lets are tough,” the company said.
It is expecting its international investments to contribute positively to growth in 2020, saying that due to strong economic fundamentals in Poland and Romania, London-listed Globalworth Real Estate Investments (GWI) is expected to perform well.
Growthpoint owns 29.8% of GWI, a stake of R7.7bn, while its stake in the V&A Waterfront is worth R7.6bn.