Cautious Growthpoint holds back on dividend


Cautious Growthpoint holds back on dividend

Published Date: 2020-09-10 | Source: Stephen Gunnion | Author: Stephen Gunnion

Cautious Growthpoint holds back on dividend

The REIT deferred its decision on a final dividend until later this year as a precautionary measure to provide additional financial flexibility.

Growthpoint Properties says its growing geographic and sectoral diversity has put it in a position of strength to weather the Covid-19 storm. Still, the real estate investment trust (REIT) has reported a basic full-year loss after marking down the value of its property portfolio. For now, it has also held off on a final dividend for the year to end-June due to the uncertainty caused by the pandemic.

Offshore assets now make up 41% of Growthpoint's portfolio, up from 30% last year, following its acquisition of a 52.1% stake in LSE-listed shopping centre owner Capital & Regional. It also owns 62% of ASX-listed Growthpoint Properties Australia and 29% of AIM-listed Globalworth Real Estate Investments (GWI). Total property assets grew by 19% over the year to R167 billion.

Revaluations of its properties in SA, Australia and the UK resulted in a 5.7% decrease in the value of its investment property to R139 billion. The value of its SA property was cut by 8.8%, or R7.1 billion, while Capital & Regional was marked down by 14% (R1.1 billion). Growthpoint Properties Australia increased by 2.2% (R1.1 billion).

Its SA retail portfolio was worst hit by the Covid-19 pandemic due to the forced closure of retail tenants during the hard lockdown, except for those that provided essential services. The V&A Waterfront in Cape Town, which historically has been a standout performer for the property group, suffered disproportionately to the rest of the SA portfolio due to its strong reliance on international and domestic tourism.

While its investments in Growthpoint Australia and GWI were also affected by Covid-19, Growthpoint said it was to a lesser extent as a result of their focus on office and industrial properties, as well as strong customer bases weighted towards listed corporates and government in Australia, and large multinational tenants in Poland and Romania. Capital & Regional, with its 100% retail focus, faced extreme challenges as the pandemic came on top of an already weak environment in the UK.

Overall vacancy levels increased to 7.6% from 5.8%, with SA vacancies rising to 9.5% from 6.8% - mostly due to a big rise in office vacancies. Growthpoint said it had prioritised initiatives to retain tenants.

Total revenue increased by 7% to R12.4 billion and operating profit came in 0.7% higher at R8.55 billion. It reported a loss per share of 229.94c, down from earnings of 214.46c last year, while headline earnings per share fell 49% to 79.93c. Distributable income per share decreased by 16% to 183.1c and its net asset value per share declined by 7.6% to R23.076. It deferred a decision on its final dividend until December or possibly earlier.

Growthpoint provided no guidance for the year ahead, saying it was too early to quantify the ongoing effects on its operations. While the recovery of the V&A was dependent on the resumption of international tourism, it said Growthpoint Properties Australia and Globalworth would recover faster given the low impact of the pandemic on their businesses, their strong balance sheets, and liquidity positions as well as the strength of their tenancies.

Its shares fell 0.9% to R12.69 yesterday.

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