Archives for March 2021

Growthpoint Properties (JSE: GRT) has commenced the turnkey development of the first NTT data centre in Africa at Centralpoint Innovation District in Samrand, Johannesburg.

The cutting-edge development of Johannesburg 1 Data Centre – dubbed JOH1 – is being developed by Growthpoint on behalf of NTT Ltd., the world-leading global technology services provider, and Dimension Data, the South African systems integrator and managed services provider which represents the NTT Ltd. business in the Middle East and Africa.

Growthpoint provides space to thrive with innovative and sustainable property solutions. It has established itself as one of South Africa’s leaders in developing signature buildings tailored to leading local and multi-national brands and businesses’ exacting requirements.

NTT operates one of the largest data centre platforms in the world, with over 160 data centres spanning more than 20 countries and regions.

The multi-million-Rand, 12-month development project, which broke ground in September 2020, can currently be seen rising out of the ground. It will comprise 6,000sqm of IT space and 20 MW of IT load facility. JOH1 will also feature high-end offices with an NTT Technology Experience Lab (TEL), all supported by specialised state-of-the-art security solutions. 

The data centre is being built to tier-three standards. The JOH1 project is scheduled for practical completion in the fourth quarter of 2021 and NTT intends to launch it in 2022.

Designed to the leading international standards of NTT Ltd.’s Global Data Centres division, the opportunity to develop JOH1 in Centralpoint Innovation District was identified locally in South Africa by Dimension Data and Growthpoint as early as 2017. The site’s ideal proximity to an electrical substation with ample generation capacity provides the massive advantage of extremely cost-effective electrical infrastructure set-up.

Estienne de Klerk, Growthpoint’s SA CEO, says, “We are pleased to support the growth strategy of the Global Data Centres division of NTT Ltd. and to see this collaboration with our esteemed partner Dimension Data coming to fruition. Growthpoint is thrilled that NTT selected our Centralpoint Innovation District to increase its capabilities and global capacity and chose the Growthpoint development team for its first data centre in Africa.”

South Africa leads the market for data centres in Africa, and Joburg is the country’s data centre capital. The Growthpoint-owned 42-hectare Centralpoint Innovation District enjoys a premium position in a high-demand hub for data centres and technology businesses in the city. It is distinguished by a unique combination of functionality and appeal. Security, power availability, diverse fibre connectivity, easy access of the highway and customized designs are key considerations for businesses in this market, and Centralpoint offers this all at an extremely high level. It also features beautiful, landscaped gardens in a well-maintained public precinct managed by a dedicated property owners association.

JOH1 is Growthpoint’s fourth development in this vibrant, growing business community. Others include the 10,000sqm Bakers SA Limited’s warehouse and distribution facility and regional offices, the 27,000sqm Sterling Industrial Park comprising eight freestanding units built over two phases and the Centralpoint Innovation District’s Property Owners Association’s offices.

Leon Labuschagne, Growthpoint’s Head of Industrial Development, says, “The projects to date have been tailored for third-parties as well as Growthpoint’s portfolio of assets because Centralpoint is such a prime location. The Centralpoint district development is market-driven and responds to the demand for quality, efficient, high-tech, logistics and warehousing facilities in great locations.”

Centralpoint is conveniently located in Midrand, just off the N1 Samrand off-ramp between Johannesburg and Pretoria with easy access to the east and west of Johannesburg and Pretoria. It enjoys superb highway access to the N1 North and South, and N14, easy connection to the R21 on route to OR Tambo via Olifantsfontein road, and is well served by public transport.

Vukile Property Fund (JSE: VKE), the leading retail REIT (real estate investment trust), has commenced the strategic upgrade of Daveyton Mall in the Ekurhuleni Metro, Gauteng.

A pioneering property, Daveyton Mall is one of the first township malls developed in South Africa. It opened in 1993 with more than 60 shops focused on easy, convenient shopping for Daveyton residents.

Today, nearly 30 years later, this successful mall’s retail mix is still led by its original anchor tenant, Pick n Pay, with OBC Chicken, Mr Price, Pep, Jet and various national and local brands, including Ackermans, Clicks, Sport Scene, KFC and Debonairs.

Laurence Rapp, CEO of Vukile, says Daveyton Mall has a remarkable history and legacy and is a prize asset in Vukile’s core portfolio of defensive, dominant shopping centres. The mall stands out among its best-located retail properties, positioned at the gateway to Daveyton in a bustling hub opposite a busy taxi rank adjacent to community and council buildings.

“Daveyton Mall is an excellent shopping centre asset that trades phenomenally well across all retail categories and enjoys huge tenant demand and a very loyal customer base that deserves the best. At Vukile, we strive for retail spaces that all stakeholders can be proud of and enjoy, and aim to create exceptional experiences with safe, comfortable and conducive environments for our tenants and customers. Our R90.4m investment in Daveyton Mall’s strategic upgrade will ensure it is optimised for the next generation of shoppers,” says Rapp.

He adds, “As a strong long-term business, Vukile continues to invest in our core portfolio to generate sustained results from these shopping centres well into the future. The upgrade of Daveyton Mall has been a long time coming, and with various delays, including the uncertainty of Covid-19, you could even say it is overdue. The time has come to move forward with this major modernisation project. We have settled on the best possible scheme to add value to a key asset, and we are confident this upgrade is a good, low-risk, defensive investment in an excellent asset that serves a great community.”

As is Vukile’s way, the refurbishment of Daveyton Mall is centred around its customers. The new upgrade will put Daveyton’s rich artistic legacy front-and-centre with a unique new look inspired by its community. Artistic splashes of bright colour will be incorporated into its new glossy modern aesthetic, which also includes spaces to showcase the work of local artists.

All shopper-facing areas of Daveyton Mall will be modernised, inside and out. Its landmark Eiselen Street exterior façade will be remodelled with its entrances transformed into welcoming beacons, additional tenant signage communicating its interior purpose and improved traffic flows for cars using its free parking.

Inside, the upgrade will add more natural light, shiny new tiling throughout and fresh bathrooms. Higher and brighter shopfronts will be better configured to make space for more retailer variety, and its retail area will be increased by some 2,000sqm. Better shopper flows and sightlines are on the cards, and tenant adjacencies will also be improved.

Creating a new bright, airy interior for the mall will be an eco-friendly exercise by illuminating its courts with natural sunlight. New bulkheads will bring the mall in line with the latest trends while allowing light into the mall. It will also receive added energy-saving interior and exterior lighting. The new outside lighting supports Daveyton Mall’s remarkably customer-centric trading hours – open from 7am daily until at least 7pm on weekdays and 6pm on weekends and holidays.

A highlight of the upgrade is the all-new food court, which will add an entirely new dimension to Daveyton Mall. It will introduce sit-down dining with inside and outside seating areas. While currently somewhat at odds with the context of Covid-19, the new seating and pause areas planned for Daveyton Mall meet the long-term vision for the mall’s future aligned with its customers’ love of meeting, connecting and enjoying a genuinely social shopping experience. Daveyton Mall’s food court will feature the menus of Romans Pizza, Pedros Chicken, Chicken Xpress, and more.

Taking this legacy mall confidently into the future, Vukile will introduce cutting-edge innovations. In an exciting move, Daveyton Mall customers can look forward to free Wi-Fi access. The upgrade also supports the operation of the mall and its tenants, with state-of-the-art CCTV and foot counting systems. What is more, it will be equipped with a standby generator to power its common areas during electricity outages.

Construction of the upgrade began on 8 March for completion by 10 December 2021, in time for the festive season. The mall will trade as usual during the entire construction process. The development will take place in three phases to minimise disruptions for shoppers and tenants. Most interior work will be done after regular trading hours.

Rapp concludes, “Daveyton is a strong, engaged community that is proud of its mall, and we are proud to have worked well together over many years. As we build the future of Daveyton Mall, we are particularly pleased to build on our relationships with this great community.”

 

/ends

 

Released by:

Vukile Property Fund

Laurence Rapp, CEO

Tel: 011 288 1032

www.vukile.co.za

Twitter : @VukilePropFund

Facebook : @vukilepropertyfund

 

For more information contact Anne Lovell on 083 651 7777 or Anne@marketingconcepts.co.za

• Liquidity improved to R1.3 billion at period end 
• Generated R885.1 million in cash proceeds post interim-period end through part disposal of  investment in MAS Real Estate Inc. 
• Group interest cover ratio of 1.40 times 
• Distributable income per share declined by 57.5% 
• Rental collection rate for the South African portfolio improved to 100.6% 
• South African portfolio valuation decreased by 3.2% on a like-for-like basis ▪ South African portfolio occupancy levels improved to 96.4% 
• 31 791m2in developments under way since period end; over 85.0% pre-let ▪ Ellipse Waterfall development passed R1.0 billion in sales 

Tuesday, 23 March 2021. Attacq Limited (“Attacq”), the JSE-listed REIT developing Waterfall City, today released its financial results for the six months ended 31 December 2020, against a subdued  economic backdrop, exacerbated by the COVID-19 pandemic and associated lockdowns. 

The group’s distributable income per share declined by 57.5%. The decline is mainly due to R53.8  million in rental discounts granted, and MAS not paying a dividend for the period given the uncertainty  caused by the pandemic. In the comparative period, a MAS dividend of R121.2 million was received.  The rental relief provided, continued in the 2021 financial year and during this period was mainly to  support gyms, restaurants, cinemas and hotels in the South African portfolio which were more severely  affected by the lockdown restrictions.  

Commenting on the results Melt Hamman, CEO of Attacq said, “2020 was an extraordinary year with  significant uncertainty, resulting in continued pressures on the overall economy and property  sector. However, Attacq’s diversified and quality property portfolio and; diligent capital  management plus its debt reduction plan has supported us during this period and will ensure  the company is well-positioned to benefit from a future recovery.” 

Since the start of the pandemic, management’s focus has been on the group’s liquidity and capital  structure. In doing so, available liquidity as at 31 December 2020 improved to R1.3 billion (30 June  2020: R1.1 billion) and an interest cover ratio (ICR) of 1.40 times was achieved. 

The South African portfolio improved the occupancy rate of 96.4%, compared to 93.6% at 30 June  2020. Rental income declined by just 1.3% to R1.12 billion which is testament to the resilience of the  property portfolio. 

“Our client-centric, proactive and collaborative approach allows us to listen with understanding  and therefore enables us to provide bespoke solutions to our clients’ unique business needs. 

At Attacq, we pride ourselves on providing an authentic client experience to create sustainable  value for all our stakeholders. This is reflected in our clients’ willingness to remain within our  portfolio and high occupancy rates,” said Jackie van Niekerk, incoming CEO of Attacq. 

Despite the current unprecedented trading conditions, the portfolio attracted the likes of Boehringer  Ingelheim, Auditor-General South Africa, FNB and Cotton On. Newly let spaces in our retail portfolio  are testament to the quality of our retail assets and demand from retailers. Examples of this at the Mall  of Africa include: Gap, Kauai, Paul’s Ice Cream, Hydraulics and Yokico. 

Waterfall City, the mixed-use development where people can work, live and play, remains a key driver  in Attacq’s core business. For the six months under review, one midi warehouse of 4 603m2 GLA was  completed, with the Nexus Courtyard Hotel, Building 4 at Corporate Campus and 269 residential units  under construction at period end. The Courtyard Hotel opened for trade on 1 March 2021 whilst the first  two towers of Ellipse, Newton and Kepler, are expected to be completed by the end May 2021 with  transfers commencing before the end of June 2021. “The developments at Waterfall remain a strong  proposition for all stakeholders and Attacq continues to see healthy levels of enquiries for  quality safe, sustainable spaces,” commented Hamman. 

Attacq’s reduced its shareholding in MAS post period end, the Group disposed of R885.1 million MAS  shares resulting in Attacq’s shareholding in MAS decreasing to 10.9%. Raj Nana CFO of Attacq said, “Our strategic focus on capital management and liquidity in order to improve our debt capacity  has been a key priority for Attacq. The disposal proceeds will be deployed towards paying down  our interesting-bearing debt, reducing our euro debt and funding upcoming development  opportunities. Attacq is currently trading under cautionary relating to the proposed disposal of  an investment property; the proceeds of which will be utilised to further reduce debt.” 

To support the preservation of liquidity, the board resolved in June 2020 not to pay a final dividend for  the year ended 30 June 2020, nor an interim dividend for the first half of FY21. 

“Although we still anticipate short to medium term challenges, our strong business  fundamentals put us on a good trajectory for growth. We remain focused on creating remarkable  experiences where people can connect whilst striving towards our vision of becoming the best  provider of community spaces,” concludes van Niekerk. 

-Ends-

ENQUIRIES 

Attacq Limited +27 12 010 3489 

Minisha Patel +27 82 920 4426 

Instinctif Partners +27 (0) 11 447 3030 

Boitumelo Matjila +27 (0) 73 265 0231 

Tshene Wedi +27 (0) 82 659 831 

Website: www.attacq.co.za 

NOTES TO EDITOR 

Attacq Ltd is a leading Real Estate Investment Trust (REIT), with an award‐winning property portfolio  worth over R24 billion in total asset value. Attacq delivers exceptional and sustainable growth through  its real estate investments and its developments in Waterfall City, Waterfall Logistics Hub and retail  precincts. Supported by one of the most comprehensive and diverse real estate asset portfolios in South  Africa, Attacq creates safe, sustainable spaces where people can connect, unwind and thrive. 

Bolstered by its four key drivers, namely (1) the South African portfolio, (2) developments at Waterfall  (3) its investment in MAS Real Estate Inc. (which has a presence in Central and Eastern Europe) and  (4) the rest of Africa retail investments, Attacq is firmly positioned as one of the country’s preeminent  REIT’s, offering growing income distributions. Through its developments, Attacq is engages with diverse  communities of people centred around a shared interest. Be it a safe and secure living environment, a  shopping destination or a productive business space – Attacq’s developments are more than just  buildings; they embody the company’s collective commitment to creating, world‐class spaces in which  all people can live, work and play. 

For more information and our latest news, go to www.attacq.co.za, like us on Facebook or follow us on Twitter.

Growthpoint declares half-year dividend off strong balance sheet and liquidity base

Growthpoint Properties Limited (JSE: GRT) delivered 12.5% growth in revenue and R2.5bn in distributable income for its six-month period to 31 December 2020, amid the Covid-19 pandemic.

Compared with the six months to end-2019 before the impacts of Covid-19, distributable income decreased 21.6% which on a per share basis decreased by 31.0% to 73.1 cents per share, mainly because of 408m new shares issued in November 2020 through a R4.3bn equity raise and the dividend reinvestment programme, which raised an additional R577m.

Norbert Sasse, Group CEO of Growthpoint Properties, attributes a steady first-half performance to the better-than-expected showing from its South African portfolio, trading and development delivering handsomely, income from funds management gaining impetus and its Australian investment outperforming in its offshore portfolio.

Sasse comments, “Growthpoint continued to prioritise balance sheet strength and liquidity, and focused on the factors that we can control in this market. As a consequence, our results show a very stable business that is in good shape. We’ve lowered our South African gearing comfortably within our target range and have R5bn of liquidity. Growthpoint has a strong balance sheet, enabling us to pursue our strategic initiatives and declare a dividend of 80% of distributable income. By paying our shareholders an interim dividend, we are reinforcing Growthpoint’s commitment to retaining our REIT status and our intention is to continue paying dividends twice a year of at least 75% of distributable income.”

The positive outcomes of Growthpoint’s focus on liquidity and balance sheet strength are evident in its half-year numbers. Growthpoint’s consolidated SA REIT loan-to-value (LTV) decreased from 43.9% to 40.7% during the six months, with its SA LTV reducing from 39.8% to 35.5% and an interest cover ratio (ICR) of 3.8x. Growthpoint reduced its nominal debt in South Africa from R43.4bn to R37.8bn during the period through R4.4bn of repayments and R1.2bn due to the stronger domestic currency. It has R5bn of unutilised committed facilities and R1.1bn of cash on its balance sheet at 31 December 2020. Growthpoint achieved its healthy loan-to-value levels, despite a further 3.6% devaluation of its South African portfolio, which decreased in value by 13% over the 2020 calendar year as a consequence of unsupportive property fundamentals driven mainly by growth in income uncertainty.

Contributing to Growthpoint’s balance sheet strength was a R4.3bn equity raise in November 2020 at R12.0 per share, which was 2.7x oversubscribed. Additionally, 43.2% of shareholders elected the share alternative, raising R577m through the FY20 November distribution reinvestment programme. By reducing its FY20 dividend pay-out ratio to 80%, Growthpoint retained R827m after paying tax of R154m, and will retain R499m distributable income for the half-year by again applying an 80% pay-out ratio.

Growthpoint creates value through innovative and sustainable property solutions that provide space to thrive. It is the most liquid and tradable way to own commercial property in SA. Growthpoint is a FTSE/JSE Top 40 Index company and a constituent of the FTSE EPRA/NAREIT Emerging Index. It has also been included in the FTSE4Good Emerging Index for four successive years and in the FTSE/JSE Responsible Investment Index for more than a decade and has achieved a level 2 B-BBEE rating

It owns and manages a diversified portfolio of 434 property assets across SA valued at R71.0bn, a 50% interest in the V&A Waterfront, Cape Town, valued at R9.0bn, and R12.0bn in assets under management via its funds management operations. Growthpoint owns 57 properties in Australia valued at R49.8bn through a 62.2% holding in ASX-listed Growthpoint Properties Australia (GOZ) and seven community shopping centres in the UK valued at R11.3bn through its 52.1% investment in LSE- and JSE-listed UK REIT Capital & Regional. Through its 29.3% investment in LSE AIM-listed Globalworth Real Estate Investments (GWI), it owns an interest in 64 properties in Romania and Poland, of which Growthpoint’s share is valued at R15.9bn.

During the half-year, Growthpoint’s South African portfolio achieved a 97% average rental collection rate, and recovered R125m, or 68%, of total rental deferrals granted since the onset of the pandemic. It let more than 633,000sqm of space and its renewal success rate increased from 66.4% to 68.0%. Arrears of R494m are well provided for. However, several portfolio fundamentals continued to weaken, with vacancies rising from 9.5% to 10.3% and average rental reversions moving from -6.7% to -13.9%. Given the state of the market in the half-year, a bigger than usual portion of its portfolio was externally valued, with its retail portfolio value decreasing by 3.2%, offices 4.7% and industrial 3.1%.

Growthpoint intensified its focus on right-sizing its portfolio through the strategic sale of non-core assets, a programme which it commenced in its 2017 financial year and has since sold R7.5bn in properties. Despite little liquidity and a challenging sales environment, it sold five properties during the period for R497.7m at book value and held two valued at R55.5m for sale at half-year end.

Development expertise is a competitive advantage for Growthpoint. While Growthpoint doesn’t distribute non-recurring income, its trading and development activity proved very profitable during the half-year, earning R128m of third-party trading profits, development fees and rental income. In step with the current market, development was curtailed to around a third of previous levels, and speculative development avoided. Turnkey developments for the Growthpoint investment portfolio remain a key focus, as well as third-party developments.

The South African retail property portfolio vacancies edged up slightly from 3.7% to 4.8%, excluding offices and space under development. While the renewal success rate improved, renewal growth, escalations and arrears all came under pressure. Trading densities, and net property income reduced in this portfolio, which accommodates gyms, restaurants, cinemas, and other tenants severely impacted by the COVID-19 lockdowns. Growthpoint granted R66.6m in discounts and R2.2m in deferrals to its retail tenants. Community and convenience centres outperformed larger malls, and value retail attracted the most spending. On-demand shopping services such as OneCart and Checkers Sixty60, which shop from retailer’s shelves, positively impacted in-mall sales. Growthpoint finalised the Edcon business rescue legacy, writing off both the arrears and investment.

Growthpoint’s South African office portfolio vacancies rose from 15.4% to 18.0%. Renewal successes and arrears improved, but all other metrics in this portfolio deteriorated. Growthpoint granted R14.4m in discounts and R8.4m in deferrals to its office tenants. It’s new Altron campus redevelopment at Woodmead Office Park in Woodmead was completed after the period in February, with rental commencing on a long-term lease from this month.

Growthpoint’s industrial portfolio continued to outperform relatively, despite vacancies increasing from 7.1% to 8.2%, mostly due to the slower letting of new developments in Cape Town and Durban, and an upward trend in business failures in our tenant base. It reported steady escalations, arrears and net property income levels, but renewal success and growth rates decreased. Growthpoint remains focused on modernising its industrial portfolio and selling non-core industrial assets.

“There is some optimism about a rebound in South Africa, but the property industry lags many other sectors and is slower to reflect a change in trends. Any improvement will take time to filter through. There is likely to be a multi-year recovery in GDP. Even if the economy grows at forecast levels of between 3.3% and 4.6% in 2021, off the low base of a 7.0% contraction in 2020 it will take two to three years to reach pre-COVID-19 levels. We expect further financial and operational headwinds. We still see many business rescues and liquidations. There is a lot of capacity in the office and retail sectors, and it isn’t yet possible to gauge the structural shifts of work-from-home. In this difficult environment, our relatively stronger balance sheet gives us great comfort,” remarks Sasse.

The V&A Waterfront was severely impacted by various lockdown restrictions, the absence of foreign tourism, its cruise terminal’s closure, and leisure limitations. Retail turnover decreased by 36% compared to the 2019 half-year. Hotel occupancy rates were 20% compared to 70% during the same six months in 2019 and precinct footfalls nearly halved, notwithstanding good local tourism support. The V&A’s robust office portfolio proved resilient due to a high percentage of blue-chip tenants, supporting low vacancies and no material lease terminations. As an essential service, the fishing industry traded and paid rental throughout the period. Casual shipping and yachting remained strong. The cumulative impact was a 48% decline in net property income, with pressure on collections, arrears and property values.

Notwithstanding its challenges, the V&A Waterfront achieved several highlights, including completing a new 9,350sqm head office development for Deloitte, approving a 6,900sqm head office for Investec, leasing most of the ex-Edgars space to Zara, and introducing an incubator for early-stage food industry businesses, Makers Landing.

“The return to lockdown level 1 supports performance, but with the global impacts of the pandemic, it is difficult to know when international tourists will return, which is critical for the V&A Waterfront. However, it remains a strong asset with solid property fundamentals,” explains Sasse.

Growthpoint’s capital light funds management strategy allows it to access third party capital and leverage its management strength in the unlisted and co-invested environment. Growthpoint continued building its first two funds and plans to launch a third fund invested in purpose-built student residential accommodation. During the half-year, this strategic focus earned Growthpoint R16.3m in asset management fees and distributions of R62.2m from the hospital fund. It also received a maiden dividend of R3.7m from the Africa fund, which Growthpoint elected to reinvest, and a distribution from the management company is expected to be paid to Growthpoint before 30 June 2021.

Sasse explains, “Our funds management model is a core strategy. The co-investment and co-management model are effective and particularly attractive in this market.”

The healthcare fund, Growthpoint Healthcare Property Holdings (GHPH), in which Growthpoint has a 61.8% shareholding, grew half-year distribution per share by 7.5% to 40.8 cents per share. The fund has a R2.7bn portfolio of four hospitals and a medical chamber. Growing its portfolio, the acquisition of 51% of the 100-bed Busamed Paardevlei Hospital in Somerset West is final and awaiting transfer. Cintocare Hospital, developed by Growthpoint in Pretoria, opened in December 2020 and is to be acquired by the fund. A USD80m equity and convertible debt package from the International Finance Corporation is in the final stages of negotiation and is intended to finance development and acquisition opportunities, for which the healthcare fund has a healthy pipeline of around R4.5bn.

Growthpoint has a 16% shareholding in Lango Real Estate (formerly Growthpoint Investec Property Fund or GIAP), which owns a USD638m quality portfolio of income-producing real estate assets, comprising 11 prime office and retail properties in Ghana, Nigeria, Zambia and Angola. Lango performed well throughout the pandemic to pay its maiden distribution to shareholders.

In January 2021, Lango acquired the final minority stake in the Standard Chartered office building in Accra, Ghana, and now owns 100% of the asset. It is in advanced discussions with potential investors to raise additional capital. In line with capital raised, it has assembled an exciting pipeline of assets for investment as it continues to lead the African real estate market.

Growthpoint’s international investment remains at steady levels of around 40% of its property assets by book value and just over a quarter of earnings before interest and tax. It intends to refine its approach to offshore investment.

GOZ is a core investment for Growthpoint, with its defensive portfolio of quality office and industrial assets with strong tenancies. GOZ’s dividend decreased from AUD11.8 cents per share to AUD10.0 cents per share, as it chose to reinforce its capital structure thereby decreasing its pay-out ratio. COVID-19 had little impact on GOZ’s earnings and performance. Underpinning its resilience, 97% of its tenants comprise big corporates and government, and it has no retail assets. Rental collection rates remained above 98% throughout the pandemic, and GOZ closed the period with a portfolio occupancy of 95%, which will increase to 97% in the second half. Significant longer-term leases were signed during the six months – including hardware chain Bunnings as a key tenant for Botanicca, taking the portfolio’s weighted average lease expiry to 6.2 years. During the half-year, its asset values increased and gearing levels decreased further to a low 29.9% with good liquidity of over AUD400m cash available

“GOZ enjoys a strong capital position with gearing well below its target range, supported by positive property fundamentals and prospects for acquisitions and fund management, as well as merger and acquisition opportunities. A faster economic recovery is expected for Australia, and GOZ’s quality metropolitan office portfolio is expected to be particularly resilient, while its industrial portfolio is poised to benefit from the rapid growth in e-commerce,” reports Sasse. GOZ has guided a distribution of AUD20.0 cents per share for its 2021 financial year.

Growthpoint’s Central and Eastern European investment platform, Globalworth, comprises office and industrial assets, with little retail property. It has 38 assets in Poland and 26 in Romania. By retaining cash to reinforce balance sheet strength, Globalworth delivered significantly diluted dividends of EUR15.0 cents per share. Its inaugural green bond raised EUR400m in July 2020, with a 2.95% coupon for six years, and was 2x oversubscribed. Globalworth’s portfolio proved defensive, with rental collections at 98.7% across 2020. It completed three new developments in a relatively quiet period with investment activity suspended. It closed 2020 with a portfolio occupancy of 91.7% including options, reflecting slower take-up of space in the new developments due to COVID-19.

“Globalworth has been relatively unaffected by the pandemic, with its strong balance sheet and a solid base of multinational tenants which favour the region,” Sasse points out.

In the UK, Capital & Regional was hard hit by Covid-19, and Growthpoint’s investment case in this pure retail REIT was severely impacted, notwithstanding its favourable community centre strategy, with a high proportion of non-discretionary retail. While all its shopping centres remained open throughout 2020, only around 30% of retailers could trade for the full year. There was some reprieve during the six months, and in mid-December 98% of the portfolio was trading before lockdown restrictions were re-introduced. Exacerbated by the pandemic, 17 national retailers faced business failure. Together, this placed pressure on income (down GBP15.1m), values (down 27.5%), and leverage (net LTV of 65%). Capital & Regional has signed waivers for all current income covenants with all its financiers. Its high cash reserves of over GBP80m protect its liquidity position. Even in this challenging environment, Capital & Regional collected 80% of rental during the 2020 calendar year and reported a resilient 92% commercial occupancy at end-December.

“The UK’s easing of restrictions should allow all non-essential retailers to re-open by mid-April. However, the pandemic has accelerated structural shifts already underway in UK’s retail industry. More certainty is needed to properly assess Capital & Regional’s altered retail landscape and business needs and determine the best approach to address its debt levels and shape its future,” says Sasse.

Growthpoint remains focused on protecting its balance sheet and optimising its advantages in a persistently challenging environment.

“In an extremely uncertain time, we have demonstrated the benefits good liquidity and balance sheet strength. This will remain a clear focus and priority, which supports our sustainability and performance for all our stakeholders, and enables Growthpoint to continue to advance its strategic thrusts,” concludes Sasse.

/ends
RELEASED BY:
Growthpoint Properties Limited
Norbert Sasse, Group Chief Executive Officer
Tel: +27 (0) 11 944 6249
www.growthpoint.co.za
www.facebook.com/Growthpoint
www.twitter.com/Growthpoint
www.linkedin.com/company/growthpoint-properties-ltd
www.youtube.com/GrowthpointBroadcast