Growthpoint shareholders get a boost

*Correction: A previous version of this article stated that Growthpoint Properties bottomline declined from the previous period, when in fact it had grown. 

Johannesburg – Growthpoint Properties reported an increase in profit of R4.7bn is up R1.1bn from R3.6bn reported in the previous period.  

The property group, which is the largest South African primary listed Real Estate Investment Trust (REIT), released its unaudited results for the six months ended December 31, 2016 on Wednesday.

A total of R4.4bn is attributable to shareholders, this is up from R3.1bn in the previous period. A dividend of 95c was declared, which is up 6.1%. According to its results announcement, the group’s distributions increased by R244m or 10% to R2.7bn. This is attributable to the performance of the South African portfolio, particularly the V&A Waterfront.

A 17% growth in sales was reported at V&A Waterfront, partly because of the weaker rand. A total of R256m income was generated.

Growthpoint Properties Australia (GOZ), of which Growthpoint has a 64.3% stake, also contributed to the increased distributions. A currency hedging strategy led to distributions from GOZ being received at a rate of R10.79 to the Australian dollar, compared to R10.28 in the previous period.  

Gross revenue increased by 10.4%. Overall South African operations increased revenues by 5.1%. GOZ operations increased revenues by 31.7%, this is attributable to the acquisition of the GPT Metro Office Fund (GMF).

Development and capital expenditure

Development and capital expenditure in South Africa came to R1.1bn. Of this Discovery head office accounted for R371m. The South African operations also acquired five office properties for R1.2bn.

Outstanding commitments to developments amount to R1.8bn, this includes Discovery head office’s share (55%) of R697m, and Exxaro head office and engineering and construction management firm AECOM at R550m, among others. Further commitments regarding property acquisitions amount to R582m.

Development and capital expenditure at the V&A Waterfront amounted to R312m. Growthpoint's share of the V&A Waterfront's commitments for the period came to R364m.

In Australia, Growthpoint acquired six office properties for R5bn. Other development and capital expenditure for GOZ came to R76m. GOZ has outstanding commitments of R218m.

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Growthpoint expects the property and economic environment in South Africa to remain weak. However the contributions from V&A Waterfront and GOZ is expected to be consistent, said the SENS. Growthpoint cautioned that the unhedged portion of the GOZ income could be negatively impacted by further strengthening of the rand. 

Growthpoint South Africa acquired a 26.9% stake in the London Stock Exchange, Alternative Investment Market-listed Globalworth, last year. The Globalworth transaction is expected to contribute to earnings for the second half of the 2017 financial year.

Given the negative outlook for South Africa, coupled with the volatility of the rand, the Growthpoint Board still expects dividend growth to be similar for the rest of the year.