JSE-listed property investment holdings company Growthpoint Properties achieved 12.5% year-on-year growth in revenue and R2.5-billion in distributable income for the six months to December 31, 2020.

It has declared an interim dividend of 58.5c a share.

On a year-on-year basis, the company’s operating profit increased by 8.5% to R4.43-billion, while headline earnings a share increased by 5.1% to 73.84c.

Growthpoint, however, reported a loss a share of 42.24c.

By reducing its 2020 financial year dividend payout ratio to 80%, Growthpoint retained R827-million after paying tax of R154-million, and will retain R499-million in distributable income for the half-year by again applying an 80% payout ratio.

Compared with the corresponding period in 2019, distributable income decreased by 21.6%, which on a per share basis decreased by 31% to 73.1c apiece, mainly because of 408-million new shares having been issued in November 2020 through a R4.3-billion equity raise and the dividend reinvestment programme, which raised an additional R577-million.

CEO Norbert Sasse attributes the interim performance to a better-than-expected showing from its South African portfolio and improved trading and development. This is in addition to income from funds management gaining impetus and the company’s Australian investment's good performance for its offshore portfolio.

Growthpoint’s focus on liquidity and balance sheet strength resulted in its consolidated South African real estate investment trust (Reit) loan-to-value (LTV) decreasing from 43.9% to 40.7% during the six months.

The company’s domestic LTV reduced from 39.8% to 35.5%, and stands at an interest cover ratio of 3.8 times.

During the six months to December 2020, Growthpoint reduced its nominal debt in South Africa from R43.4-billion to R37.8-billion through R4.4-billion of repayments and R1.2-billion as a result of the stronger rand.

At the end of the period under review, Growthpoint had R5-billion of unused committed facilities and R1.1-billion of cash on its balance sheet.

Growthpoint achieved its LTV levels despite a further 3.6% devaluation of its South African portfolio, which decreased in value by 13% over the 2020 calendar year as a consequence of unsupportive property fundamentals driven mainly by growth in income uncertainty.

Contributing to the company’s balance sheet strength was a R4.3-billion equity raise in November 2020 at a price of R12 apiece, which was 2.7 times oversubscribed.

Additionally, 43.2% of shareholders elected the share alternative, raising R577-million through the 2020 financial year November distribution reinvestment programme.

Sasse adds that Growthpoint continued to prioritise balance sheet strength and liquidity and focused on the factors that the company can control in the market. “We have lowered our South African gearing comfortably within our target range and have R5-billion of liquidity.”

Further, he says Growthpoint’s strong balance sheet enables it to pursue strategic initiatives and declare a dividend of 80% of distributable income. “By paying our shareholders an interim dividend, we are reinforcing Growthpoint’s commitment to retaining our Reit status and our intention is to continue paying dividends twice a year of at least 75% of distributable income.”

Growthpoint owns and manages a diversified portfolio of 434 property assets across South Africa, valued at R71-billion. The company also owns 57 properties in Australia valued at R49.8-billion, through a 62.2% holding in ASX-listed Growthpoint Properties Australia and seven community shopping centres in the UK valued at R11.3-billion through its 52.1% investment in LSE- and JSE-listed UK Reit Capital & Regional.

Through its 29.3% investment in LSE- and Aim-listed Globalworth Real Estate Investments, Growthpoint owns an interest in 64 properties in Romania and Poland, of which Growthpoint’s share is valued at R15.9-billion. 

During the interim period, Growthpoint’s South African portfolio achieved a 97% average rental collection rate, and recovered R125-million, or 68%, of total rental deferrals granted since the onset of the Covid-19 pandemic. It let more than 633 000 m² of space and its renewal success rate increased from 66.4% to 68%.