Growthpoint reports huge expansion

Posted On Friday, 25 August 2006 02:00 Published by
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Growthpoint reported a 11,1% increase in distributions to 81,3c a linked unit for the year to June
By Nick Wilson

Growthpoint Properties, the largest listed property company on the JSE with a market capitalisation of more than R10bn and more than R15bn worth of properties, said if market conditions remained stable it should show solid distribution growth in the next financial year.

Growthpoint reported a 11,1% increase in distributions to 81,3c a linked unit for the year to June.

The company announced the increase to the market last month so it could coincide with the special distribution made by industrial-focused sister com- pany Metboard Properties.

Growthpoint acquired Metboard recently.

At the time, Growthpoint attributed the double-digit growth to a strong performance from its underlying property portfolio, as well as savings from the refinancing of debt via the capital markets.

The company said the market value of its linked units had also increased by 18,1% during the year under review and that total income return plus capital appreciation for the year was 27,1%.

Growthpoint has grown dramatically over the past year.

CEO Norbert Sasse said at the end of last year that the total value of assets was R9,1bn. Assets have now grown to more than R15bn.

Sasse said the value of acquisitions made during the year came to a further R4,3bn.

He said Growthpoint had also sold about R200m worth of properties, and spent about R250m on capital expenditure.

The company's property portfolio was revalued and had increased by R1,5bn in value.

But one challenge Growthpoint is now facing because of its major expansion is the dilution of its empowerment partner's 14,2% interest in the company.

In September last year Growthpoint announced that a consortium, which included former justice minister Penuell Maduna and former director of public prosecutions Bulelani Ngcuka, would acquire a 14,2% interest, in a R1bn deal.

Because of the acquisitions Growthpoint has made since then and the units it has issued in part payment, the empowerment stake has been diluted to 12,9%

It will dilute further to about 11,2% after the issue of Growthpoint units for the Metboard transaction.

"At the moment we don't have a situation where once empowered means always empowered.

"Every time you issue new shares it will dilute the existing empowerment partners unless they apply for more shares.

"The whole of SA has this issue to contend with. It is one of the major unresolved issues with regards to empowerment," said Sasse.

Meanwhile, the Metboard transaction will significantly increase Growthpoint's exposure to industrial property to about 23% of the total portfolio by value.

It was previously about 7%.

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Publisher: I-Net Bridge
Source: I-Net Bridge

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