JSE-listed real estate investment trust (Reit) Growthpoint Properties has announced that its funds management business will be called Growthpoint Investment Partners to reflect its strategy to co-invest and co-manage specialist alternative real estate investment portfolios in which Growthpoint is a capital partner and management partner.
Growthpoint had favoured sole-ownership investments in South Africa almost exclusively, but identified internationalisation, local portfolio optimization, trading and development, and co-investment as its core strategies in 2014.
In response, it created a new platform to deliver its co-investment and co-management strategy.
“This platform has been rebranded Growthpoint Investment Partners, and will continue to further diversify Growthpoint’s assets by harnessing new opportunities through co-investment in order to create sustainable value for Growthpoint’s stakeholders and investment partners,” it said.
Its new tactic as an investment partner, namely leveraging the management skills that have grown Growthpoint into a leading international property company, have proven a defensive growth strategy in the low-growth, capital-constrained South African market, and led to a co-investment approach that has quickly gained traction, Growthpoint added.
“From a zero-base in 2018, Growthpoint Investment Partners has already topped its targeted R15-billion of assets under management by 2023. It is aiming to double this in the next five years.
“The growth of Growthpoint Investment Partners is adding meaningful depth to the real estate market by creating access to alternative opportunities in the unlisted and co-invested environment for the broader investment community, its investment partners, as well as Growthpoint,” the company highlighted.
“The time has come to create a formal identity for this robust partnership platform. Growthpoint Investment Partners has gained strong momentum and is successfully attracting co-investment capital.
“It delivers one of our core strategies, but has a distinctive investment model different from Growthpoint Properties’, and we wanted to reflect this in its new name,” explained Growthpoint Group CEO Norbert Sasse.
Growthpoint Investment Partners’ investment model starts with Growthpoint backing each investment with an anchor stake of about 20%. Co-investors then contribute up to 80% of the capital to the opportunity.
Each investment has gearing of about 40%. The ability to scale each opportunity is a key consideration and differentiating the assets from Growthpoint’s core South African portfolio in the office, retail and industrial property sectors.
Since 2018, it has launched unlisted investments in specialist alternative real estate asset classes, namely African, excluding South Africa, income-producing commercial real estate; South African healthcare property; and South African student accommodation.
“Growthpoint is a cornerstone investor in these investments and plays a management role. Each has introduced new co-investment opportunities that leverage Growthpoint’s management and capital strengths.
“All have related positive long-term socioeconomic impacts and enjoy access to Growthpoint’s excellent governance oversight frameworks, and extensive dedicated environmental, corporate social investment and sustainability resources,” the company detailed.
Further, through Growthpoint, the Growthpoint Investment Partners platform affords its investments Reit status.
However, the unlisted investments provide exposure to direct real estate that tends to be driven by long-term fundamentals rather than listed real estate volatility driven by short-term sentiment.
“The growth and scale of Growthpoint Investment Partners to date has established it as a leading investment partner in alternative real estate markets. Its new name not only reflects its significance for Growthpoint, and its success in unlocking new real estate co-investment opportunities with its investment partners, but also its positive impacts and exciting prospects for considerable future growth,” Sasse said.