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Acquisitions not a top priority for Growthpoint Properties

Posted On Saturday, 29 August 2015 13:14 Published by
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Growthpoint Properties has shifted its focus to its own developments as it struggles to find reasonably priced new acquisition opportunities in the local property market.


The biggest South African listed real estate investment trust has enjoyed a steady period of growth over the past five years. In 2010, the fund’s assets were worth R35bn. They are now valued at R100bn, including a R22bn stake in Growthpoint’s offshore subsidiary, Growthpoint Australia.

The number of properties in Growthpoint’s portfolio has grown from 456 in 2010 to 525 at the end of June.

CEO Norbert Sasse said yesterday at the release of the group’s full-year results to June that conditions were challenging for the fund.

 “In this difficult environment, Growthpoint needs to bed down its acquisitions and consolidate, unlock value in our larger portfolio. So essentially we will upgrade the quality of our existing buildings but even though we won’t turn down acquisition opportunities if they work, we feel there is very little that we can buy in SA at the right price and as such we are pursuing more of our own developments,” he said.

 The fund posted distribution growth of 7.5% for the year.

The fund’s South African portfolio contributed 75.8% to its total distributable income and achieved like-for-like net property income growth of 6.2%.

Overall vacancies rose from 4.9% to 5.7% during the year. Vacancies in its industrial portfolio rose from 3% to 5.3%. Retail vacancies grew from 4.5% to 3.3% and office vacancies were steady at 8%, outperforming the South African Property Owners Association national office vacancy benchmark of 10.6%.

 Growthpoint Australia had a strong year, delivering a 36.4% total return for shareholders on the Australian Stock Exchange.

But analysts said the distribution prospects for Growthpoint overall for the next financial year were disappointing.

“The results were in line with market expectations but the outlook of 5% to 6% distribution growth is below expectations of 7% to 7.5%,” Stanlib’s head of listed property funds Keillen Ndlovu said.

Maurice Shapiro, portfolio manager at , agreed that the distribution forecast was disappointing.

 “I thought the results were excellent given the tough environment in which they operate. The predicted distribution for 2016 is disappointing but I think given conditions here and in Australia, it is justified.” 

Source: BD

Last modified on Saturday, 29 August 2015 16:00
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