Aug 29, 2012
Growthpoint distribution rises 6.1%, office demand remains weakBack
Cape Town|Africa|Gautrain|Growthpoint|Growthpoint Properties Australia|Industrial|Public Investment Corporation|Rental|Rosebank|Africa|Australia|South Africa|Brooklyn Mall|Central Pretoria Gautrain Station|Centurion Station|Gautrain|Hatfield Station|MIDRAND STATION|River Square|Rosebank Gautrain Station|Waterfall Mall|Arrears Management|Property|Gautrain|Gautrain|Norbert Sasse
© Reuse this
Improved portfolio occupancy levels and arrears management, as well as the positive performance of Growthpoint Properties Australia (GOZ) pushed the distribution from 131c in 2011, to 139c a linked unit, said CEO Norbert Sasse.
Overall, group vacancies fell to 4% in 2012, from 5% in the prior year, with the group achieving a renewal success rate of 75.2% in 2012, up from 2011’s 65.8%.
Sasse noted that total arrears fell to a near-record low of 6.5% of total monthly collectables at R32.6-million this year, compared with R34.8-million, in 2011.
The office sector, which was expected to remain weak over the next year, proved to be challenging during the year under review. However, on the back of aggressive leasing strategies, including lowering renewal rentals, vacancies in Growthpoint’s office portfolio fell from 8.1% to 5.8% during the year, with renewal success rates of 74.6%. Renewal rental growth fell to -1.5% in 2012, from 2.1% in the prior year.
Sasse said that the company was focused on strategies aimed at increasing demand in the office sector and, in line with this, was developing a portfolio of assets along the Gautrain route to entice better office rentals.
This included the proposed R700-million, 35 000 m2 Rosebank office development, near the Rosebank Gautrain station; the R105-million, 6 700 m2 Midrand Town Centre, of which 2 500 m2 would be let to the Gautrain Management Agency, near the Midrand Gautrain station; and the 25 000 m2 Lakeside Centurion office development, close to the Centurion Gautrain station.
Further developments included a potential 200 000 m2 mixed-use development near the Central Pretoria Gautrain station, for which Growthpoint was still securing the rights, and a development near the Hatfield Gautrain station.
Meanwhile, Sasse stated that the industrial sector had a “good run” with solid trading conditions, and continued positive demand for warehousing and distribution units. Vacancy rates fell to 3.4% in the year ended 2012, from 4.3% in 2011, with a renewal success rate of 74%, up from 63.1% in the prior year. However, renewal growth rates dropped to 4% in the year under review, compared with 7.1% in 2011.
The retail sector also recorded a positive performance with a vacancy rate of 3.1%, a renewal success rate of 81.1% and renewal rental growth of 6.7%. Arrears dropped from R16.9-million in 2011, to R14.8-million in 2012.
The company also committed R780-million for retail redevelopments, refurbishments and extensions for Brooklyn Mall, which would account for R250-million over the next 18 months, Kolonnade, River Square, Northgate, Waterfall Mall and Walmer Park.
In its first full year under Growthpoint, the V&A Waterfront, in Cape Town, recorded vacancy rates of 1.6%, compared with 3.5% in 2011, with a renewal rental growth of 2.7% and renewal success of 83.7%.
Growthpoint bought 50% of the V&A Waterfront for R4.9-billion, in partnership with the Public Investment Corporation, last year.
The group reported that the Clock Tower Precinct redevelopment was completed and recorded an occupancy of about 73%, while the Food Court refurbishment would be complete by November 2012 and the new 18 100 m² Allan Gray head office development was on track to be complete by September 2013.
Meanwhile, the group’s Australian assets remained a strong focus as the transactions and yields in the Australian market “surpassed many local opportunities, representing a better use of capital”, commented Sasse.
Growthpoint invested a further R1.5-billion in GOZ in two rights issues, growing its total investment to R3.1-billion. Growthpoint’s 64.5% holding in GOZ held a market value of R4.3-billion.
Growthpoint, with a market capitalisation of R40.1-billion at June 30, reported that, for the first time, its combined property assets reached a value of R53.1-billion.
The group had 403 properties in South Africa worth R35-billion, as well as, through its 64.5% holding in GOZ, 41 properties in Australia valued at R13.1-billion. Its 50% interest in the V&A Waterfront alone was valued at R5-billion.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Other Construction News
Phase 3 construction of the Maclear Wastewater Treatment Works (WWTW) upgrade project, in the Eastern Cape’s Joe Gqabi district municipality, will start in June this year, says South African black-owned engineering firm Gibb, This phase will include the construction...
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.