Growthpoint guides on lower distribution


Growthpoint guides on lower distribution


Published Date: 2021-03-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

Growthpoint guides on lower distribution

The REIT says its board will take the likely impact of Covid-19 as well as its liquidity requirements into account when deciding on its payout.

Growthpoint Properties says it's likely to report a decline of as much as a third in distributable income per share (DIPS) when it announces its first-half results this week. Ahead of that, its board of directors will determine how much will be paid out to shareholders as a distribution.

In a trading statement, the real estate investment trust (REIT) said its DIPS for the six months to end-December was likely to be 29% to 33% below the 106c it reported a year earlier. While its board would take the uncertainty surrounding the impact of Covid-19 on its business, as well as its short and medium-term liquidity requirement and loan-to-value (LTV) ratios into account, its distribution per share would be at least 75% of DIPS.

Apart from its SA property portfolio, Growthpoint owns a 50% stake in the V&A Waterfront in Cape Town and a majority stake in London-listed shopping centre owner Capital & Regional. It also owns stakes in ASX-listed Growthpoint Properties Australia and AIM-listed Globalworth Real Estate Investments (GWI).

In an accelerated bookbuild in November, the company placed 358.3 million shares with investors at R12 per share, raising gross proceeds of R4.3 billion. It said the proceeds would be used to pay down debt. Due to the ongoing impact of Covid-19 it wants to reduce its leverage and maintain a strong balance sheet and also have the flexibility to have cash for development and investment activities.

As part of its new capital plan, it said it had postponed some development activities to save costs and would dispose of R1 billion to R1.5 billion of non-core assets within its SA portfolio this year, with further disposal opportunities being reviewed. While it had been able to maintain dividend payout ratios of close to 100% of distributable earnings in recent years, it said its policy would now be to pay out at least 75% after taking any ongoing capital and funding commitments into account. Under JSE rules, REITs are required to pay out at least 75% of distributable income as dividends.

Following the share placement, Growthpoint said its loan-to-value (LTV) would decrease from 43.9% to about 41.5% on a pro forma basis. Its debt covenant remained strong, with its strictest LTV covenant being 55%.

Its results are scheduled for release on Wednesday. Its shares closed 0.4% up at R14.14 on Friday.


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