Wrap Text
Group Unaudited Interim Results and Cash Dividend Declaration for the six months ended 31 December 2023
Growthpoint Properties Limited
Approved as a REIT by the JSE
(Incorporated in the Republic of South Africa)
Registration number 1987/004988/06
ISIN: ZAE000179420
JSE Share code: GRT
("Growthpoint" or "the Company" or "the Group")
GROUP UNAUDITED INTERIM RESULTS AND CASH DIVIDEND DECLARATION FOR THE SIX
MONTHS ENDED 31 DECEMBER 2023
The Group unaudited interim results for the six months ended 31 December 2023 (HY24), as
compared to the six months ended 31 December 2022 (HY23), are set out below:
Group salient features
- Key performance indicators improved for all three South African (SA) sectors
- The V&A Waterfront was a standout performer driven by the positive impact of
increased tourism with distributable income increasing by 13.7% to R380.7m (HY23:
R334.7m)
- Access to liquidity was proven with R2.8bn of new bonds issued during HY24 with an
additional R1.0bn post HY24
- In terms of achieving our ESG objectives, specifically our 2050 carbon neutral pathway,
we entered into a milestone Power Purchase Agreement with Etana Energy for the
annual purchase of 195GWh renewable energy, representing 32.0% of total current
annual electricity consumption, effective 1 July 2025
- High interest rates continue to negatively impact distributable income of the Group
with total cost of funding increasing by 16.9% to R2 127m (HY23: R1 819m)
- Net asset value per share, based on the SA REIT definition, decreased by 3.9% to 2 067
cents per share (cps) (30 June 2023 (FY23): 2 151 cps)
- Distributable income per share (DIPS) decreased by 8.6% to 71.2 cps (HY23: 77.9 cps)
- Dividend per share decreased by 8.6% to 58.8 cps (HY23: 64.3 cps).
Strategy
In line with Growthpoint's vision "to be a leading international property company providing
space to thrive", the strategy incorporates:
The streamlining and optimisation of the SA portfolio
- Disposed of nine SA properties, including two office properties, for R635.4m (HY23:
R756.3m)
- R141.0m proceeds generated on the disposal of completed residential units of The Kent
development, La Lucia
- Three properties (FY23: one) with a value of R76.3m held for sale at HY24 (FY23:
R18.0m)
- R1.0bn of capex and development costs spent, including the redevelopment of
Longkloof Studios, Gardens, Cape Town and Bayside Mall in the Western Cape.
Growthpoint Investment Partners (GIP)
- GIP assets under management of R17.9bn (FY23: R17.9bn)
- R340.0m capital was raised from new investors for Growthpoint Student
Accommodation Holdings (RF) Limited (GSAH), demonstrating appetite for this niche
investment asset class
- Growthpoint received R52.0m (HY23: R48.1m) of management fees from the three
funds: GSAH, Growthpoint Healthcare Property Holdings (RF) Limited (GHPH) and Lango
Real Estate Limited (Lango)
- Dividends received reduced to R48.6m (HY23: R79.0m), due to a lower proposed
dividend, taking into account elevated arrears, with negotiations underway to settle
arrears before FY24 and a lower shareholding in GHPH, and the negative impact on
rentals by the introduction of the National Student Financial Aid Scheme (NSFAS) rental
cap, higher interest rates and the expiry of the rental guarantees from the original
vendors on the GSAH portfolio.
International
- Offshore income grew by 4.3% in Rand terms to R796.0m (HY23: R763.0m)
- Offshore investments contributed 32.5% to Growthpoint's DIPS and comprise 43.5% of
Group property assets
- Growthpoint Properties Australia Limited (GOZ), of which we own 63.7% (FY23: 63.7%),
saw its Loan-to-Value (LTV) increase to 37.6% (FY23: 36.1%) due to a 3.8% decline in
property valuations. GOZ declared a distribution of A$9.65 cps (HY23: A$10.7 cps)
translating into a distribution of R551.2m for Growthpoint (HY23: R533.6m), including
R31.9m (A$2.8m) relating to dividend withholding tax over accrual in FY23
- Capital & Regional plc (C&R), of which we own 68.1% (FY23: 62.4%), remains focused
on needs-based retail shopping centres. LTV increased to 39.8% (FY23: 37.0%), as a
result of a 2.1% decline in property valuations. C&R declared a dividend of £2.95 pence
per share (HY23: £2.75 pence per share) translating into a dividend of R88.5m for
Growthpoint (HY23: R50.4m). Growthpoint invested an additional £21.8m (R527.6m) as
part of an open offer for the acquisition of Gyle Shopping Centre in Edinburgh
- Globalworth Real Estate Investments Limited (GWI), of which we own 29.5% (FY23:
29.5%), owns a diversified office and industrial portfolio in Poland and Romania. GWI
declared a dividend of €11.0 cps (HY23: €15.0 cps) translating into a dividend of
R146.1m for Growthpoint (HY23:R166.6m)
- Growthpoint elected to receive the scrip dividend alternative for the June 2023
dividends for both C&R and GWI, which were reinvested in the current period.
Liquidity and capital management
Whilst the LTV trajectory is upwards in the short to medium term, we remain focused on
strategic initiatives that will preserve our liquidity and balance sheet in the long term:
- R6.2bn unutilised committed facilities for SA (FY23: R6.6bn)
- R1.0bn cash balances on the SA balance sheet (FY23: R1.7bn)
- R422.5m (before income tax) cash retained (HY23: R465.9m) as a result of the 82.5%
dividend pay-out ratio
- The SA LTV, including GHPH and GSAH, based on the SA REIT LTV definition, remained
conservative at 34.8% (FY23: 32.9%)
- Group LTV, based on the SA REIT LTV definition, increased to 42.0% (FY23: 40.1%), due
to negative property valuations in GOZ and increased interest-bearing borrowings in SA
- Interest cover ratio decreased from 2.9 times at FY23 to 2.5 times at HY24
- 76.7% of the SA long-term interest-bearing borrowings are hedged (FY23: 77.7%).
Performance
- During the period 644 308m² of SA space was let and all key property metrics showed
an improvement despite the challenging domestic economy
- SA renewal success rate of expiring leases increased to 79.0% (HY23: 61.2%)
- Negative rent reversions on renewal in SA has improved significantly to -7.1%
(HY23: -16.1%)
- SA and Group vacancies improved to 9.2% (FY23: 9.7%) and 8.5% (HY23: 9.4%)
respectively
- Total revenue increased by 4.0% to R7.1bn (HY23: R6.8bn)
- Operating profit increased by 0.2% to R4.5bn (HY23: R4.4bn)
- Finance costs increased by 16.9% to R2 127m (HY23: R1 819m), mainly as a result of
higher interest rates impacting the unhedged portion of borrowings for SA and GOZ as
well as the refinancing of interest rate swaps and cross-currency interest rate swaps
- Funds From Operations (FFO) per share, based on the SA REIT FFO definition,
decreased by 18.0% to 64.8 cps (HY23: 79.0 cps)
- Distributable income decreased by 9.3% to R2 414m (HY23: R2 662m)
- Basic earnings per share decreased by 91.5% to 4.64 cps (HY23: 54.73 cps), mainly due
to negative fair value adjustments on investment property, interest-bearing borrowings
and derivatives
- Basic headline earnings per share decreased by 34.2% to 56.59 cps (HY23: 85.99 cps).
Prospects
While our diversified portfolio and income streams position us defensively for FY24, the LTV
trajectory is upwards in the short to medium term. As such we will focus on strategic initiatives
to preserve liquidity and balance sheet strength in the long term.
Given the impact of high interest rates across our local and international businesses, which will
be greater in the second half of FY24, we expect DIPS to decline by 10% – 12% for FY24.We
endeavour to maintain a payout ratio of 82.5%.
The above forecast has not been reviewed or reported on by the Company's auditors and is the
responsibility of the Board of Directors.
Regulatory requirements
The condensed results for the period ended 31 December 2023 are unaudited.
This short form announcement is the responsibility of the Board of Directors and does not contain
full or complete details. Any investment decisions by investors and/or shareholders should be
based as a whole on consideration of the Group consolidated interim financial statements which
may be downloaded from the Company's website.
https://growthpoint.co.za/investor-relations/financial-reports/ and
https://senspdf.jse.co.za/documents/2024/jse/isse/GRTE/Interim24.pdf
Interim dividend
Notice is hereby given of the declaration of the interim dividend number 76 of 58.80000 cps
for the period ended 31 December 2023. The dividend has been declared from income
reserves.
Other information:
- Issued shares as at declaration date: 3 430 787 066 ordinary shares of no par value
- Income Tax Reference Number of Growthpoint: 9375077717
Shareholders are advised that the dividend meets the requirements of a "qualifying
distribution" for the purposes of section 25BB of the Income Tax Act, No 58 of 1962 (Income
Tax Act). The dividends on the shares will be taxable dividends for South African tax purposes
in terms of section 25BB of the Income Tax Act.
Tax implications for South African resident shareholders
Dividends received by or accrued to South African tax residents must be included in the gross
income of such shareholders and will not be exempt from income tax in terms of the exclusion
to the general dividend exemption contained in section 10(1)(k)(i)(aa) of the Income Tax Act
because they are dividends distributed by a REIT. These dividends are, however, exempt from
dividend withholding tax (dividend tax) in the hands of South African resident shareholders
provided that the South African resident shareholders have provided to the Central Securities
Depository Participant (CSDP) or broker, as the case may be, in respect of uncertificated
shares, or the company, in respect of certificated shares, a DTD(EX) form (dividend tax:
declaration and undertaking to be made by the beneficial owner of a share) to prove their
status as South African residents. If resident shareholders have not submitted the above
mentioned documentation to confirm their status as South African residents, they are advised
to contact their CSDP or broker, as the case may be, to arrange for the documents to be
submitted before the dividend payment.
Tax implications for non-resident shareholders
Dividends received by non-resident shareholders from a REIT will not be taxable as income and
instead will be treated as ordinary dividends which are exempt from income tax in terms of
the general dividend exemption section 10(1)(k) of the Income Tax Act. Any dividend received
by a non-resident from a REIT is subject to dividend tax at 20%, unless the rate is reduced in
terms of any applicable agreement for the avoidance of double taxation (DTA) between RSA
and the country of residence of the non-resident shareholder. Assuming dividend tax will be
withheld at a rate of 20%, the net amount due to non-resident shareholders is 47.04000 cps. A
reduced dividend withholding tax rate in terms of the applicable DTA may only be relied on if
the non-resident shareholder has provided the following forms to their CSDP or broker, as the
case may be, in respect of uncertificated shares, or the company, in respect of certificated
shares:
- A declaration that the dividend is subject to a reduced rate as a result of the
application of the DTA
- A written undertaking to inform the CSDP, broker or the company, as the case may be,
should the circumstances affecting the reduced rate change or the beneficial owner
cease to be the beneficial owner, both in the form prescribed by the Commissioner of
the South African Revenue Service. If applicable, non-resident shareholders are advised
to contact the CSDP, broker or the company to arrange for the above mentioned
documents to be submitted before dividend payment, if such documents have not
already been submitted.
Salient dates and times
2024
Last day to trade (LDT) cum dividend Tuesday, 9 April
Shares to trade ex dividend Wednesday, 10 April
Record date Friday, 12 April
Payment date Monday, 15 April
Notes:
1. Shares may not be dematerialised or rematerialised between the commencement of
trade on Wednesday, 10 April 2024 and the close of trade on Friday, 12 April 2024,
both days inclusive.
2. The above dates and times are subject to change. Any changes will be released on
SENS.
Sandton
13 March 2024
Equity sponsor: Investec Bank Limited
Debt sponsor: ABSA Bank Limited
Date: 13-03-2024 08:30:00
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