Growthpoint revenue rises 45% after acquisition run

Posted On Tuesday, 09 September 2003 02:00 Published by eProp Commercial Property News
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Property loan stock company Growthpoint Properties, which is managed by the Investec Property Group, posted solid results for the 12 months to June 30 this year, attributing surges in revenue and net property income to a large acquisition drive.

Norbert SasseGrowthpoint increased revenue by 44,7%, from R313,3m to R453m, net property income also surged 44,7% to R294,2m, while income before debenture interest grew to R231,0m, marking an increase of 70,4%.

Norbert Sasse, head of property asset and fund management for Investec and a director of Growthpoint, said the increases were largely attributable to acquisitions during the year, not only physical properties and the merger with Primegro, but also the acquisition of a listed property investment portfolio.

"Last year, we bought a parcel of listed property unit trusts and property loan stock shares from the Mines Pension Fund. That was a R650m transaction and the results of the acquisition are also incorporated in these sets of results," said Sasse.

The merger of Growthpoint and Primegro created the largest South African listed property company, with an asset base in excess of R5,3m and a market capitalisation of about R3,5m.

Growthpoint earlier announced a distribution to unitholders of 66,55c for each linked unit, or R227,2m.

Despite the acquisition drive and the costly merger, Growthpoint's total debt value is 39,7% of its total asset value, a relatively low gearing ratio.

Sasse said the average gearing ratio for property loan stock companies was more than 50%.

"We've managed to keep the gearing relatively low because acquisitions were paid for by a combination of debt and issuing new linked units," he said.

The dividend yield ratio, which is calculated by divid ing the company's distribution over its share price, is 12,1%.

Mariette Warner, who is head of fund management and securitisation at Standard Bank Properties and manager of Standard Bank Property Income Fund, said there had been so many changes in the portfolio since Primegro acquired all the assets of property loan stock company Richway early last year that reference to the history bore no relationship to the future performance of Growthpoint.

"If one analyses the distribution for the 12 months to June 2003 and annualises the distribution for the 15 months ended June 30 2002, there is a decrease in distribution of 2,9%. However, the distribution for the second half of the 2003 financial year is an 8% improvement on the interim results for the period July to December 2002.

"A substantial amount of this growth came from the purchase of the mines fund listed portfolio late last year. This transaction was income enhancing," said Warner.

She said the Primegro transaction had resulted in Growthpoint becoming SA's largest listed property vehicle, which sets a "positive precedent for future corporate activity".

"The major assets in the portfolio are of good quality. However, there will be some work involved in generating superior earnings growth. Management is forecasting flat earnings for next year."

Warner said the bottom line was that Growthpoint required extensive analysis in order to understand what was now a very different property vehicle.


Last modified on Saturday, 10 May 2014 09:47

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