JOHANNESBURG - South Africa’s largest listed property investment holding company Growthpoint Properties yesterday said it had refused to give the embattled Edcon rental reprieve in the retailer’s latest turnaround attempt.
Growthpoint said it was among the landlords approached in December 2018 to consider a rental reduction for retail space leased to Edcon’s brands.
However, the company said its business model, which was based on contractual leases that provide a steady stream of annuity income, made it difficult to agree to the request for a rental reduction.
Group chief executive Norbert Sasse said Growthpoint participated in the restructuring of Edcon by providing it with an equity injection of R110million in return for a stake.
“Growthpoint is participating in the restructuring of Edcon, but this should have no material impact on rental income Growthpoint has reduced its exposure to Edcon in recent years to 110000m² in its retail portfolio,” Sasse said. “This should decrease by a further 18000m² or more in the next two years.”
This month Edcon said that it had secured R2billion in new cash and rent deductions as part of a recapitalisation plan.
Growthpoint said it was pinning its domestic growth hopes on V&A Waterfront as it expected little growth from the rest of its local operations.
The group said it would continue to explore various alternatives to facilitate the portfolio asset sale of its South African properties.
It said the V&A Waterfront, which benefits from local and international tourism, was positioned to deliver growth.
The V&A Waterfront is a 23-hectare mixed-use property development situated in and around the historic Victoria and Alfred Basins, in Cape Town.
Growthpoint said it disposed of twelve properties in the six months to end December R2.8bn.
It said it would rely on its offshore properties for growth, due to deteriorating conditions in the local property sector.
The group has a 66percent stake in Growthpoint Properties Australia, which owns 59 properties valued at R38.3bn.
Sasse said that there was a solid development pipeline in Romania and acquisition opportunities in Poland.
The group reported 5.9percent growth in distributable income to R3.1bn during the period.
It said its property assets increased 4.3percent to R138.7bn, while office renewal success rate rose from 54.5 to 62.6percent.
The company said that low economic growth, weak demand and oversupply in the office sector, together with property disposals, had resulted in more office space being vacant.
Vestact portfolio manager Michael Treherne said: “Growthpoint’s vacancy for office space grows to 10percent (from 8.6percent), and industrial vacancy grows to 5percent (from 4 percent). Tells you where the South African economy is at the moment.”
Growthpoint rose 0.94percent on the JSE yesterday to close at R24.73.