Growthpoint heads into 2022 with solid balance sheet and strong liquidity
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GROWTHPOINT Properties, South Africa’s largest primary listed Reit, delivered 6.2 percent growth in revenue and R5.1 billion in distributable income for its year to June 30.
Distributable income fell 7.8 percent. On a per share basis, it declined 19.1 percent to 148.1 cents, mainly due to 408 million new shares issued through a R4.3bn equity raise in November 2020 and the December 2020 dividend reinvestment programme, which raised an additional R577 million.
The new equity combined with South African asset sales of R559m and R864.8m being retained for the 2021 financial year after income tax, in line with an 80 percent payout ratio, added R6.3bn to group liquidity.
This significantly strengthened its balance sheet. Chief executive Norbert Sasse said: “Growthpoint’s diversification by geography, sector and income stream has buffered performance in an unprecedented environment, supported by our prioritisation of liquidity, balance sheet strength and quality of earnings.”
He said the results showed a healthy and stable business with lower gearing and R6bn-plus of new liquidity, enabling it to pursue strategic initiatives and declare a dividend of 80 percent of distributable income.
Growthpoint achieved healthy loan-to-value levels – its SA LTV reduced to 35.1 percent from 39.8 percent – despite a further 7.4 percent devaluation of its SA portfolio, which has fallen in value by 16.2 percent since Covid-19’s arrival in South Africa.
Over the past two financial year ends, the South African portfolio value had been written down by R12.5bn due to poor property fundamentals, driven mainly by income uncertainty from the country’s economic challenges. “We are committed to retaining our Reit status and paying dividends twice a year of at least 75 percent of distributable income,” said Sasse.
Growthpoint, with property assets of R152.8bn, owns and manages a diversified portfolio of 431 assets across South Africa valued at R68.8bn, a 50 percent interest in the V&A Waterfront, with its assets valued at R8.8bn, and has R11.7bn in assets under management via its funds management operations.
It owns 55 properties in Australia valued at R49.5bn through a 62.2 percent holding in ASX-listed Growthpoint
Properties Australia and seven community shopping centres in the UK valued at R10.5bn through its 52.1 percent investment in LSE- and JSE-listed UK Reit Capital & Regional.
It owns an interest in 66 properties in Romania and Poland, with Growthpoint’s share valued at R15.2bn, through a 29.3 percent investment in LSE AIM-listed Globalworth Real Estate Investments.
Its SA portfolio performance improved slightly in 2021, mainly due to fewer Covid-19 discounts and deferrals and the reversal of R85m previously provided for bad debts.
Performance in SA was hindered by the disruption to economic and social activity by the extended lockdown periods, changing restrictions and forced work-from-home.
Growthpoint provided R475m in discounts and R191m in rental deferrals since the beginning of Covid-19 in April 2020, a large contribution to sustain its tenant base and support the economy. The average rental collection rate for its South African portfolio was 99.7 percent, and it recovered R173m, or 90.1 percent, of total rental deferrals granted since the onset of the pandemic.
The contraction of South Africa’s economy had a big impact on the office sector. Growthpoint’s SA office portfolio saw renewal successes improve somewhat, but vacancies rose to 19.9 percent from 15.4 percent, primarily in Gauteng and the Sandton area, due to business failures, space downsizing and slow letting stemming from uncertainty.
“We expect further pressure on operational metrics and more business rescues and liquidations, a lack of liquidity in the market and pressure on valuations,” Sasse said.
Growthpoint shares closed 1.22 percent lower at R14.53 on the JSE yesterday.