Growthpoint Properties Reports Strong Growth: Vacancies Down to 8.5%

  • Growthpoint Properties reports improved vacancy rates, down to 8.5% as of March 2024.
  • Significant leasing activity with 330,586m² of new space let during the reporting period.
  • Focus on strategic portfolio optimization and international expansion to drive future growth.

Growthpoint Properties Limited reports its trading update for the nine months from 1 July 2023 to 31 March 2024. The company’s strategies focus on optimizing the South African portfolio and international investments.

Strategy Update

South African Portfolio

  • Invested R2.3bn to enhance portfolio quality.
  • Developed R1.6bn of new assets, primarily logistics warehouses.
  • Targeting R4bn in asset disposals for FY24 and FY25.
  • Enhanced ESG initiatives.

International Expansion

  • Optimizing international investments.
  • Supporting value unlock initiatives at Globalworth Real Estate Investments Ltd (GWI).

South African Portfolio Performance

  • Total Space Let: 878,107m²
  • New Space Let: 330,586m²
  • Renewed Leases: 547,521m²

Key Performance Indicators (KPIs)

IndicatorRetailOfficeIndustrialTotal
Vacancy4.8%15.6%4.8%8.5%
Renewal Success Rate89.0%56.6%76.5%75.0%
Weighted Average Renewal Growth-2.9%-14.7%-4.4%-6.3%
Weighted Average Renewal Lease3.83.73.63.7
Weighted Average Future Escalation6.5%7.2%7.5%6.9%
Total Arrears (Rm)38.355.034.4129.5

Capital Management

  • R1.7bn spent on developments and capital expenditure.
  • Sold and transferred 10 non-core properties for R665.4m.
  • Signed sale agreements for R1.3bn, with R1.9bn approved for sale in FY25.

Utilities Management

  • Diesel costs for nine months ended March 2024: R103.5m (lower than R140.0m in FY23).
  • Diesel cost recoveries: 78.0%.

Sector Performance

Retail Sector

  • Improved portfolio quality through disposals and new tenancies.
  • Renewal success rate: 89.0%.
  • Rental reversions: -2.9%.
  • Notable sales: City View and City Mall for R202.0m and R263.0m respectively.

Office Sector

  • Let 148,220m² of office space.
  • Reduced vacancies from 19.2% at FY23 to 15.6%.
  • Rent reversions improved to -14.7%.

Industrial Sector

  • Added 61,652m² of speculative development.
  • Tenant retention decreased to 76.5%.
  • Positive rental growth on renewals in the Western Cape.

Trading and Development

  • Completed two student accommodation projects for Wits University.
  • Residential units at Kent, La Lucia transferred, realising R141.0m in proceeds.

V&A Waterfront Performance

  • Earnings before interest and tax increased by 11%.
  • Retail sales and visitor numbers increased by 17% and 11% respectively.
  • Negligible vacancies at 0.14%.

Growthpoint Investment Partners (GIP)

  • R17.9bn of gross assets under management.
  • Additional R240m invested in Growthpoint Student Accommodation REIT (GSAH).

International Portfolio

  • Received a preliminary expression of interest from NewRiver Reit plc for Growthpoint’s 68.1% stake in Capital & Regional plc (C&R).
  • Detailed updates available in the separate publications of GOZ, GWI, and C&R.

Treasury and Capital Management

  • Total nominal SA debt increased to R42.3bn.
  • Issued a new 10-year listed bond for R1bn.
  • Weighted average interest rate remained at 9.6%.

Environmental, Social and Governance (ESG)

  • Focused on efficient operations and global ESG best practices.
  • Total installed solar PV capacity targeted to increase to 40.3MWp by FY24.
  • Retained level 1 B-BBEE rating for FY24.

Conclusion

Growthpoint Properties reports improved performance across domestic portfolios and continued strong contributions from GIP and the V&A Waterfront. International investments are expected to perform in line with guidance.


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