15,1% distribution growth for Growthpoint Properties Limited

Posted On Friday, 23 February 2007 02:00 Published by eProp Commercial Property News
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Growthpoint Properties Limited, today reported a growth in distribution of 15,1% for its interim period for the six months ended on 31 December 2006.

Norbert SasseThe combined 45 cents per linked unit distribution together with the increase in the Growthpoint linked unit price from R10,70 at 20 June 2006 to R12,35 at 31 December 2006 amounts to a 19,6% total return for the period, equivalent to an annualised return of 39,2%. Growthpoint’s linked unit price traded as high as R14,75 earlier today (22 February 2007).

“Market conditions indicate that similar growth in distributions to Growthpoint linked unit holders can be expected for the full year,” says Norbert Sasse, CEO of Growthpoint Properties Limited, South Africa’s largest JSE-listed property holding and investment company with assets currently in excess of R20 billion and a market capitalisation of over R15,5 billion.

Sasse attributes the strong distribution growth to improved property fundamentals, reductions in vacancies, increased rentals and cost efficiencies as well as the benefits of reduced cost of finance attained through Growthpoint’s commercial mortgage backed securitisation (CMBS) programme.  “The company’s increased distributions are underpinned by growth in rental income, representing quality of earnings, with capital profits retained and reinvested or utilised to settle debt. This ensures the sustainability of distribution growth,” notes Sasse.

At the close of the interim period Growthpoint’s vacancy level is a mere 2,8% across its entire portfolio of 430 quality well-located properties. “Current favourable economic conditions have resulted in increased demand for retail, office and industrial space and vacancy levels have declined substantially across all sectors,” explains Sasse.

Growthpoint, which is managed by Investec Property Group, continued to pursue acquisition and development opportunities in line with its strategic objectives and the period was marked by the conclusion of several major transactions which substantially increased property assets and rental streams.

In addition to normal rental escalations, a substantial increase in revenue can be attributed to the inclusion of income from the 163 properties acquired in terms of the Metboard Properties Limited and 25 properties acquired from Tresso Trading. Both were effective for the entire six-month period.

The company also took transfer of seven office properties acquired from the Business Connexion group for R325,6 million at an average yield of 8,5%. In addition Growthpoint acquired full ownership in Longbeach Mall purchasing the additional 49,9% holding in December 2006 for R138,1 million. As a result of attractive offers received, Growthpoint disposed of seven properties which no longer met its investment criteria for R85,6 million.

Growthpoint invested R168,7 million on new developments during the period, refurbishing and upgrading its property portfolio at yield enhancing returns. This included the development of the new Waterfall Mall Value Centre in Rustenburg and new offices at Constantia Office Park.

At the close of the period the company had entered into agreements to acquire a number of properties for a total of R646,1 million and major developments totalled R655,5 million.

Growthpoint also successfully instituted corporate action, substantially increasing its holdings in Paramount Property Fund during the period, resulting in ownership of more than 35% of the issued shares in Paramount. Consequently an offer was extended to all remaining Paramount linked unitholders to acquire their Paramount linked units in exchange for cash or one new Growthpoint linked unit for every 1,44 Paramount linked units. Growthpoint now owns 98,7% of the issued Paramount linked units and will exercise its entitlement in terms of the Companies Act to compulsorily acquire the remaining Paramount linked units and B debentures it does not already own.

The Paramount portfolio, which was consolidated in the balance sheet of Growthpoint at 31 December 2006, consisted of 77 properties valued at approximately R3,2 billion. The transaction also meets Growthpoint’s strategic objective of increasing its exposure to the Western Cape property market.

During December 2006, 22 million Growthpoint linked units, equating to 2,3% of linked units in issue at the time of the transaction, were acquired by Phatsima Properties (Pty) Limited in terms of a BEE transaction.

“In addition to Growthpoint’s previous BEE deals, should the “once empowered always empowered” principle be applied, Growthpoint’s empowerment shareholding now amounts to 16,5%,” notes Sasse.

Growthpoint offers investors a highly liquid, tradeable instrument, with R2,4 billion of Growthpoint linked units traded on the JSE Securities Exchange during the period, representing an annualised 46,0% of units in issue.

Growthpoint’s conservative gearing level remains largely unchanged at 42,7% with 79% of interest-bearing debt fixed at a weighted average rate of 9,3% at 31 December 2006.

Last modified on Friday, 25 April 2014 22:41

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