Growthpoint Properties Limited reports its trading update for the nine months from 1 July 2023 to 31 March 2024. The company’s strategies focus on optimizing the South African portfolio and international investments.
Strategy Update
South African Portfolio
- Invested R2.3bn to enhance portfolio quality.
- Developed R1.6bn of new assets, primarily logistics warehouses.
- Targeting R4bn in asset disposals for FY24 and FY25.
- Enhanced ESG initiatives.
International Expansion
- Optimizing international investments.
- Supporting value unlock initiatives at Globalworth Real Estate Investments Ltd (GWI).
South African Portfolio Performance
- Total Space Let: 878,107m²
- New Space Let: 330,586m²
- Renewed Leases: 547,521m²
Key Performance Indicators (KPIs)
| Indicator | Retail | Office | Industrial | Total |
|---|---|---|---|---|
| Vacancy | 4.8% | 15.6% | 4.8% | 8.5% |
| Renewal Success Rate | 89.0% | 56.6% | 76.5% | 75.0% |
| Weighted Average Renewal Growth | -2.9% | -14.7% | -4.4% | -6.3% |
| Weighted Average Renewal Lease | 3.8 | 3.7 | 3.6 | 3.7 |
| Weighted Average Future Escalation | 6.5% | 7.2% | 7.5% | 6.9% |
| Total Arrears (Rm) | 38.3 | 55.0 | 34.4 | 129.5 |
Capital Management
- R1.7bn spent on developments and capital expenditure.
- Sold and transferred 10 non-core properties for R665.4m.
- Signed sale agreements for R1.3bn, with R1.9bn approved for sale in FY25.
Utilities Management
- Diesel costs for nine months ended March 2024: R103.5m (lower than R140.0m in FY23).
- Diesel cost recoveries: 78.0%.
Sector Performance
Retail Sector
- Improved portfolio quality through disposals and new tenancies.
- Renewal success rate: 89.0%.
- Rental reversions: -2.9%.
- Notable sales: City View and City Mall for R202.0m and R263.0m respectively.
Office Sector
- Let 148,220m² of office space.
- Reduced vacancies from 19.2% at FY23 to 15.6%.
- Rent reversions improved to -14.7%.
Industrial Sector
- Added 61,652m² of speculative development.
- Tenant retention decreased to 76.5%.
- Positive rental growth on renewals in the Western Cape.
Trading and Development
- Completed two student accommodation projects for Wits University.
- Residential units at Kent, La Lucia transferred, realising R141.0m in proceeds.
V&A Waterfront Performance
- Earnings before interest and tax increased by 11%.
- Retail sales and visitor numbers increased by 17% and 11% respectively.
- Negligible vacancies at 0.14%.
Growthpoint Investment Partners (GIP)
- R17.9bn of gross assets under management.
- Additional R240m invested in Growthpoint Student Accommodation REIT (GSAH).
International Portfolio
- Received a preliminary expression of interest from NewRiver Reit plc for Growthpoint’s 68.1% stake in Capital & Regional plc (C&R).
- Detailed updates available in the separate publications of GOZ, GWI, and C&R.
Treasury and Capital Management
- Total nominal SA debt increased to R42.3bn.
- Issued a new 10-year listed bond for R1bn.
- Weighted average interest rate remained at 9.6%.
Environmental, Social and Governance (ESG)
- Focused on efficient operations and global ESG best practices.
- Total installed solar PV capacity targeted to increase to 40.3MWp by FY24.
- Retained level 1 B-BBEE rating for FY24.
Conclusion
Growthpoint Properties reports improved performance across domestic portfolios and continued strong contributions from GIP and the V&A Waterfront. International investments are expected to perform in line with guidance.