Real Estate Investor Magazine South Africa September 2018 | Page 38

LISTED
Making sense of REITs
A
South African REIT is a listed property investment vehicle that is similar to internationally
recognised REIT structures from around the world. Listed Company REITs or Trust REITs
are publicly traded on the JSE REIT board and qualify for the REIT tax dispensation.
GROWTHPOINT
CEO Norbert Sasse
Growthpoint posts 6.5%
distribution growth and
achieves key strategic suc-
cesses
Growthpoint is the larg-
est South African primary
listed REIT. It creates val-
ue for its stakeholders with
innovative and sustainable
property solutions that pro-
vide space to thrive. It is the most liquid and tradable way to
own commercial property in South Africa with an average of
R5.9bn of shares traded each month. Its size and diversity on
three continents and across property sectors make Growth-
point strongly defensive, and its quality earnings are under-
pinned by high-quality physical property assets.
Growthpoint owns and manages a diversified portfolio of
512 property assets including 454 properties across South Af-
rica valued at R78.6bn and Growthpoint’s 50% interest in the
properties at V&A Waterfront, Cape Town, valued at R9.1bn.
Growthpoint owns 57 properties in Australia valued at
R33.6bn through its investment in ASX-listed Growthpoint
Properties Australia (GOZ). It also owns 48 properties in Ro-
mania and Poland, 100% valued at EUR2.1bn through its 29%
share in LSE AIM-listed Globalworth Investment Holdings
(GWI) and its 21.6% share in Warsaw-listed Globalworth Po-
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SEPTEMBER/OCTOBER 2018 SA Real Estate Investor Magazine
land Real Estate (GPRE).
Growthpoint Properties announced distribution growth of
6.5% per share for its full year to 30 June 2018 for investors,
delivering a solid set of results that match its market guidance.
For the first time Growthpoint’s distribution exceeded 200
cents per share for the year, paying out 208.6 cents per share.
Its distributable income also exceeded the R6bn mark for the
first time; it increased annual distributions by 10.1%, paying
R6.1bn to shareholders this financial year. Group property
assets increased 8.7% to R132.9bn with most of the growth
coming from Growthpoint’s internationalisation.
Norbert Sasse, Group CEO of Growthpoint Properties, at-
tributes this positive performance to the strong contributions
from its investment in Central and Eastern Europe (CEE)
and the V&A Waterfront, as well as a solid performance by
its South African property portfolio and rigorous cost controls.
Sasse reports: “At half-year we indicated that this may
well be the toughest domestic operating environment that
Growthpoint has yet faced, and the second six months of the
year confirmed this. Any growth is good growth in this mar-
ket and we are pleased to have achieved a solid set of results
that deliver on our guidance and strategies. Growthpoint per-
formed well to continue its 15-year-plus track record of unin-
terrupted dividend growth.”
Currently the 23rd largest company in the FTSE/JSE Top
40 Index, Growthpoint is a Top 10 constituent of the FTSE
EPRA/NAREIT Emerging Index. It is also a constituent of
the FTSE4Good Emerging Index for the second successive
year and has been included in the FTSE/JSE Responsible In-
vestment Index for nine years running.
Growthpoint progressed its three key strategies during the
year; optimising and streamlining its South African portfolio,
internationalising and introducing new income streams to its
business, including funds management and third-party trad-
ing and development. Growthpoint let over a million square
metres in its South African portfolio and achieved vacancy
levels below industry benchmarks. Even so, its vacancies crept
up from 4.4% to 5.4%. Growthpoint is still achieving 7.4% av-
erage future escalations on rentals and the overall expense ratio
of its domestic portfolio remained under control at 27.5%.
Growthpoint’s investment focused on growing its interna-
tional footprint, which now accounts for 27.7% of its assets
by book value and 20.5% of its earnings before interest and
tax (EBIT). The significant progress made this year takes it in
close range of its target of 30.0% by the end of 2020.