JSE-listed real estate investment trust (Reit) Growthpoint Properties on Wednesday reported distribution growth of 6.1% for the six months to December 31, delivering performance comfortably in line with market guidance.
Growthpoint achieved an increase in total distributable income of 10% from its prior half-year and improved portfolio vacancies from 5.7% to 5.4%, while boosting the value of its property assets to over R120-billion.
Growthpoint CEO Norbert Sasse attributed the positive distribution growth to the continued performance of its South African property portfolio, a strong contribution from its V&A Waterfront investment, and growing distributions from its 64.3% holding in Growthpoint Australia (GOZ), which was enhanced by a successful currency hedging strategy.
Growthpoint recorded a 48.8% increase in its unsecured debt during the period, while also seeing a 59.5%, or R2.2-billion, increase in bonds issued, with more banks holding Growthpoint bonds as high-quality liquid assets.
It also continued to use cross currency interest rate swaps to fund further investment into GOZ, and has now introduced euro debt and euro cross currency interest rate swaps for its European investment. GOZ contributed 15.9% to Growthpoint’s total distributable income and forecasts growing its distributions per share by 4.9% for this year.
However, even with its successful currency hedging strategy, the strengthening rand to Australian dollar could have a negative impact on the unhedged distributions received from GOZ.
Meanwhile, Growthpoint also increased focus on its internationalisation strategy. “We are looking to effectively double the contribution that offshore property exposure has to our bottom line, which at the moment is around 15%,” said Sasse.
On Wednesday, the JSE reported that five new Reits had listed on the stock exchange during 2016.
Sasses noted that “a whole bunch of” foreign Reits listed on the JSE in 2016, which has a net negative effect on South African-listed property funds.
