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Archives for March 2025

The power of co-ownership in international real estate investment

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THOUGHT LEADERSHIP: by Geoff Jennett, CEO of Emira Property Fund

We have long recognised the immense value of collaboration at Emira Property Fund. The real estate industry is traditionally dominated by sole-ownership-centric strategies, but we believe that co-ownership offers a smarter, more risk-adjusted approach to international investing. Our offshore investment journey — first into the United States and then into Poland — has reinforced this belief.

Co-ownership is not merely about shared ownership; it is about shared expertise, shared risk, and shared opportunity. It allows us to leverage the strengths of our partners, navigate local market complexities, protect against the downside and execute deals more effectively than if we were operating alone.

Learning from our US experience

Our entry into the U.S. market was not only a successful investment but an insightful exercise in understanding the true benefits of co-ownership. While practical challenges such as time differences and travel logistics exist when operating in this market, these are minor compared to the strategic advantages we gained.

Had we pursued a direct ownership model, we would have faced significant hurdles, particularly in acquiring quality centres and then the negotiations with funders and major national tenants. The reality is, when a local business leader with long-standing relationships in the market picks up the phone, doors open more readily than they would for an unfamiliar South African investor. Our partners in the U.S. brought these critical relationships to the table, ensuring greater access to opportunities, more effective negotiations and superior deal-making outcomes.

Some may argue that establishing an in-country team could achieve the same effect. However, in an incremental investment strategy like Emira has for our US investments, building such a team too early is costly and inefficient. Rather than assembling a high-salaried team for a relatively small initial portfolio, we opted to partner with an established expert, ensuring cost efficiency, immediate market penetration, and lower initial risk exposure.

Expanding the model to Poland

Having seen the tangible benefits of this strategy in the U.S., we confidently scaled our co-ownership approach in Poland. However, this was not simply a replication of our U.S. strategy; rather, it was an evolution of it.

The Polish opportunity was fundamentally different: rather than acquiring individual assets one by one with in-country partners, we took a stake in an existing company with a substantial portfolio of 37 developed assets. This gave us immediate scale, access to an established management team, and deep-rooted local expertise — all without the lengthy and costly process of building a presence from scratch.

Moreover, Poland presented unique challenges: language barriers, unfamiliar banking relationships, and a tenant landscape we were not well-versed in. Here again, co-ownership proved invaluable. Our partners in Poland have naturally mastered these intricacies, enabling us to function as experienced market players from day one.

The true meaning of collaboration

Many assume collaboration is about working together harmoniously, but in reality, it is about working effectively, even when differences exist. In co-ownership, partners will not always be perfectly aligned in approach, style, or execution. What matters is a shared commitment to the outcome and a structure that enforces true partnership.

At Emira, we firmly believe that for collaboration to be effective, all partners must have genuine skin in the game. This means sharing the risks and rewards equitably. Our structures ensure that if we profit, our partners profit; if we lose, they lose too. This balance creates a powerful incentive for all parties to make sound, strategic and long-term decisions.

Our model is not just theoretical—it is structured into our investments. Our co-ownership agreements ensure that our partners assume at least the same or greater degree of risk as we do. Their commitment is real, tangible, and embedded into the deal structure.

The risk-adjusted return advantage

Beyond the strategic benefits, co-ownership also enhances our risk-adjusted returns. We do not need to take on 100% of an asset’s risk to benefit from its potential upside.

For instance, in the US, our joint ownership of open-air power centres allows us to access non-recourse debt over each asset at favourable interest rates—terms that would have been far less attractive if we had entered as a standalone South African investor. Our partners’ established credibility in the market played a crucial role in securing these financial advantages.

Similarly, in Poland, rather than attempting to outmanoeuvre local specialists, we leveraged their expertise to secure a profitable position in an already successful business. This ensured that our entry was strategic, measured, and positioned for growing success.

The bigger picture: co-ownership as a competitive edge

Some sceptics have questioned why South African funds risk offshore opportunities rather than focusing exclusively on domestic investments. For Emira, the answer is simple: We are not attempting to outsmart investors native to foreign markets — we are partnering with them.

By aligning ourselves with on-the-ground specialists, we are not only reducing risk but also improving our access to deals, market knowledge, and operational efficiency. Rather than adopting a rigid, one-size-fits-all investment approach, we tailor each deal to the opportunity at hand.

 The strategic advantage

Co-ownership is not about compromise; it is about optimisation. It is about recognising that success in global markets requires humility—acknowledging that local expertise is an invaluable asset and that working collaboratively yields superior results.

At Emira, we take pride in our collaborative mindset — not just in our international investments but also in our domestic market. Our partnerships investing in Enyuka, Transcend, and The Bolton office-to-residential conversion are just a few examples of how we have successfully embraced co-ownership.

As we continue expanding our international footprint in the US and Poland, our co-ownership model will remain a cornerstone of our strategy. It reduces risk, enhances returns, and unlocks greater expertise. Doing business this way is also more enjoyable. When like-minded people who are committed to the upside, yet all face the downside consequences, gather around the table, you arrive at better solutions. It makes the journey not just more successful but also more rewarding and fun.

The real estate industry is full of players determined to control every aspect of their investments. At Emira, we believe in a different approach. We do not need to own everything outright to achieve success; we need to own the right pieces, in the right way, with the right partners.

And that, we have found, makes all the difference.

 

Burstone Group trading update for the year ending 31 March 2025

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Background

Burstone is a fully integrated real estate investor, fund and asset manager that has c.R42 billion gross asset value (“GAV”) under management and c.R25 billion third-party assets under management (“AUM”). Approximately 69% of the Group’s GAV is offshore, across western Europe and Australia. The Group’s AUM is set to increase in the short to medium term as the Group executes and grows its fund management platforms.

Strategic highlights

The Group has made significant progress over the past year in executing its stated strategy and growing its fund and asset management platforms.

  • Total third-party AUM grew from R8.9 billion to c.R25 billion with total fee revenue expected to comprise c.11% of earnings (Mar-24: 7.3%).
  • Europe:
    • Strategic partnership between the Group’s Pan European Logistics (“PEL”) portfolio and funds managed by affiliates of Blackstone Inc (“Blackstone”) (“the Blackstone transaction”) completed on 12 November 2024. The transaction has launched Burstone’s European funds and asset management strategy.
    • Burstone retains a 20% co-investment in PEL and retains the asset management of the c.€1 billion PEL portfolio.
  • Australia:
    • Irongate continues to provide a strong platform for Burstone to grow its fund management activities in Australia.
    • During the year, Irongate established an industrial platform with TPG Angelo Gordon, a global diversified credit and real estate investing platform within TPG, with approximately US$91 billion assets under management.
    • The new industrial platform has already concluded the acquisitions of A$280 million of industrial logistics assets in New South Wales and Queensland, deploying approximately A$133 million of equity into four Burstone’s equity investment into this platform, alongside TPG Angelo Gordon, is c.A$20 million (15%).
    • Irongate now manages c.A$625 million of equity across office, industrial, retail and residential assets from last year for some of the world’s leading real estate investors (Ivanhoe Cambridge, Phoenix Property Investors, Metrics Credit Partners and TPG Angelo Gordon). AUM has grown 28% over the period.
  • South Africa:
    • Burstone has made significant progress with a cornerstone investor to seed and then build to scale a South African focused diversified real estate platform (“SA Core Plus platform”). All material due diligence is now complete subject to various investment approval processes.
    • Burstone is targeting implementation of the SA Core Plus platform on the following basis:
      • Burstone to seed the platform with up to c.R5 billon of South African retail and industrial assets that fit within the investment mandate.
      • Burstone is expected to retain a significant equity interest in the SA Core Plus platform, which proportion of equity should naturally reduce over
      • A target LTV of 40%.
      • Burstone will act as a fund and asset manager of the SA Core Plus
    • The launching of the platform is anticipated before the end of the calendar Shareholders will be kept informed as key milestones are achieved.
  • Maintaining a robust balance sheet:
    • De-gearing and loan to value (“LTV”):
      • Post the implementation of the PEL strategic partnership with Blackstone, the Group settled debt of c.R5 billion.
      • Disciplined and continued capital recycling resulted in South African asset sales of approximately R0.9 billion in FY25.
      • Funding of capital expenditure and further investment into Australia, alongside TPG Angelo Gordon, partially offsets the reduced gearing impact of the Blackstone transaction and South African sale of assets.
      • The Group expects its LTV to be between 34% and 36% for
    • Successful refinancing of R6.6 billion of Group ZAR and EUR debt in August 2024 that has improved margins, extended the debt profile and provided greater flexibility with respect to sales and facility settlement.

Overall Group performance

  • The Group is expected to deliver full year results in line with previous full year guidance provided of approximately 2% to 4% lower than the 2024 financial year (“FY24”). This would deliver FY25 distributable income per share (“DIPS”) of between 101.44cps and 103.56cps (FY24: 105.67cps).
  • The dividend payout ratio is expected to be in line with the interim period (i.e. 90%), resulting in an expected increase in dividends per share of between 2% to 4% compared to FY24.
  • Key elements which have underpinned the Group’s performance:
    • The South African base like-for-like (“LFL”) net property income (“NPI”) is expected to be in line with the prior year, reflecting a resilient retail performance which is offset by declining growth in the office portfolio which continues to be impacted by negative
    • The European business is expected to deliver a marginal increase in LFL NPI mainly driven by positive rental reversions and indexation.
    • Group fee income is expected to grow significantly over the period, driven by European and Australian fund and asset management activity, resulting in fee income representing approximately 11% of earnings (FY24: 7.3%).
    • The Group has continued to focus on cost optimisation initiatives with operating costs expected to increase by between 1% and 2%.
  • Group net interest costs are expected to decline significantly, impacted by:
    • Proceeds from the Blackstone transaction and proactive refinancing efforts that have reduced the all-in cost of debt;
    • Partially offset by further investment in the Group’s Australian platform and maintenance capital expenditure in South Africa; and
    • The c.R0.9 billion in South African asset sales at a c.2.5% discount to book value, that led to net interest savings and contributed to a lower LTV ratio. However, the transactions were earnings dilutive.
  • The Blackstone transaction, which was effective from 12 November 2024, is expected to be marginally accretive on the Group’s results in FY25.

Performance of the South African business

  • LFL base NPI for the South African portfolio is expected to be in line with the prior
  • Total average vacancies across the portfolio are expected to increase to 5.5% (Mar-24: 4.2%) driven by a large industrial asset that became vacant in the second half of the year.
  • Total reversions over the period are expected to improve to negative c.5% (Mar-24: negative 3%).
  • The retail sector continues to deliver positive NPI growth, however, results have been impacted by the redevelopment of Zewenwacht Mall and associated vacancy linked to the introduction of a new second anchor.
  • The office sector continues to face negative reversions of c.20% (Mar-24: negative 6%) and average vacancies of c.8% (Mar-24: 6.4%).
  • The industrial sector has experienced strong letting activity with overall reversions of negative 5% driven by long dated leases of negative 17%.

Performance of the European business

  • The performance of the PEL platform is expected to deliver a positive LFL NPI growth mainly driven by positive rental reversions (c.13%) and indexation (c.4%), partially offset by higher average vacancies of c.4% (Mar-24: 1%).
  • Burstone has decided not to pursue the co-investment opportunity in the German light industrial platform. As such, the third-party management contract ended in December 2024.

Performance of the Australian business

  • The Group’s investment in Irongate continues to perform well, benefiting from the significant

growth in AUM and underlying real estate performance which is in line with the deal thesis.

  • The Irongate Group is well positioned to capitalize on a strong pipeline of
  • Irongate’s co-investment in the industrial platform with Phoenix Property Investors is performing well. The latest valuation shows a c.11% increase in asset value, driven by positive rental reversions and full occupancy, highlighting the platform’s strong leasing performance.

Proactive balance sheet management and successful debt refinancing

  • Successful refinancing of R6.6 billion of Group ZAR and EUR debt in August 2024 that further improves the Group’s funding and liquidity profile.
  • The PEL portfolio was successfully regeared and refinanced post the Blackstone transaction, extending the debt tenor in the platform to 5 years.
  • As at the date of this announcement, the Group holds R2 billion in undrawn committed available facilities and cash, excluding proceeds from disposals that have yet to be completed.
  • The Group remains well-hedged, covering over 90% of its interest rate exposure at rates below current market levels.
  • The Group’s investment in PEL has been hedged at 100% through a combination of Euro debt and Euro cross currency interest rate swaps (“CCIRS”) following the strategic partnership.
  • The Group’s investment in Australia is also 100% hedged AUD/ZAR via CCIRS in line with the Group’s policy.
  • The Group has R13 billion direct on-balance sheet property investments and c.R2.4 billion equity investments in fund management platforms.

Concluding remarks

The Group’s real estate portfolio is performing as expected and in line with guidance. Strategically the Group is pleased with the progress made across the business, notably in:

  • De-gearing the balance sheet, reducing LTV significantly;
  • Establishing a funds management business in Europe;
  • Driving solid AUM growth in Australia;
  • Advancing exclusive negotiations in South Africa to develop a fund management strategy;
  • Capitalizing on the internalisation, making strong strides in leveraging the Group’s platforms, processes, skills, and expertise across regions; and
  • Successfully refinancing debt while maintaining prudent balance sheet

The Group will continue to focus on the recycling of direct on-balance sheet investments and using the proceeds to co-invest in fund management platforms, which will result in a significant increase in third party funds under management.

Expanding the Group’s fund and asset management model offers multiple benefits for Burstone, particularly the ability to achieve enhanced integrated real estate returns. This approach combines traditional real estate asset yields with additional upside from operating a funds, investment, and asset management model, where the Group can earn management, leasing, and acquisition fees, as well as potentially generate performance fees through outperformance.

This hybrid model of traditional real estate investment, integrated with expertise across fund management, investment management, asset management and development management supports the Group’s strategy of delivering enhanced returns on capital deployed and maximising operational leverage from its scalable platform.

The year ahead offers great opportunity for the Group as it looks to execute and grow the fund and asset management platforms.

 

Hyprop delivers strong half year results

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Hyprop delivers strong half year results laying the foundation for further growth

Hyprop Investments, a specialist property retail fund listed on the JSE and A2X, published strong half year results for the period ended 31 December 2024, reporting double-digit growth in distributable income of 14.5% to R765 million and 14.4% increase in distributable income per share to 201.4 cents. The Group declared an interim dividend of 113.43 cents per share, equating to 95% of the distributable income from the SA portfolio for HY2025.

“The solid performance for the period is a result of the transformative strategic priorities outlined in 2018. The improved trading metrics of our portfolios affirm our centres’ relevance in their respective markets, coupled with our shoppers’ loyalty and resilience during the challenging economic times,” says Hyprop CEO Morné Wilken.

“Our confidence is based on the fact that our centres in South Africa and Eastern Europe are located in key economic nodes and supported by our management teams who have strong retail property expertise.”

For the period, Hyprop maintained a strong liquidity position and held R807 million of cash and R1.1 billion of available bank facilities. As a result of the recent sale of its sub-Saharan Africa portfolio to Lango Real Estate in exchange for shares, Hyprop has been released from all guarantees and commitments to the lenders relating the Africa debt. The balance sheet reflects a steady loan to value (LTV) ratio at 36.3% and cash collections from tenants in South Africa and Eastern Europe at 99.8% and 100.8% of net billings, respectively.

South African portfolio

“All key trading metrics were positive in the six months to end-December 2024. There was a slight increase in vacancies to 2.4% (excluding Pick n Pay at Hyde Park Corner, where Checkers has been secured as a replacement tenant), which is mainly due to rightsizing some anchor tenants’ stores which is in line with strategy. The low vacancy rate creates flexibility to improve and optimise the tenant mix,” Wilken says.

Tenants’ turnover rose 4.9% compared to the same period in 2023, while trading density (rands per square metre per month) lifted by 4.4%.

In this period, management focused on pursuing organic growth opportunities, such as the Somerset Mall expansion and the development of satellite offices around CapeGate Shopping Centre on a leasehold basis with development partners SOM and Giflo.

At Canal Walk, Western Cape’s only super-regional, new concepts such as the first JD Sports in the country, the first stand-alone Silki store in South Africa, and the maiden flagship store for Shift Espresso Bar were introduced. After rightsizing, the Edgars store on the first floor is trading extremely well, and the space it has vacated has been re-let to Jet, Home. Tech. Sleep. and another national tenant.

Somerset Mall is making good progress on its two-year expansion project to add 5 500m² of GLA for 50 new stores, retile and improve the centre’s flow. CapeGate’s initiatives to enhance the overall shopper experience included the installation of an advanced audio system and improved signage. The roof is being refurbished to enable the installation of 5 MW of solar panels. The centre management team at Table Bay Mall has been strengthened, following its acquisition in Hyprop’s 2024 financial year.

In Gauteng, Rosebank Mall has introduced several unique concepts and completed various projects, including upgrades for Tap & Go/Apple Pay at all pay stations and the control room, as well as the installation of e-hailing screens in the waiting areas. A new Checkers FreshX store is under construction at Hyde Park Corner and is scheduled to open in July 2025. Clearwater Mall, Woodlands and The Glen opened several new stores, all enhancing each centre’s tenant mix.

The SA portfolio’s distributable income grew to R454 million in the six months to end-December 2024. Excluding Table Bay Mall, rental and other lease income increased by 4% compared with the same period in 2023 and total revenue was up 4.7%. Utility costs were lower than in the comparable period, due to the reduction in loadshedding and the additional solar plants commissioned at Woodlands, Clearwater and Table Bay Mall. Net property income increased by 18.6% (10.7% excluding Table Bay Mall) over the first half of the 2025 financial year.

Eastern Europe portfolio

Tenants’ turnover grew 8.8%, with trading density increasing by 7.1%. There is strong demand for space in Hyprop’s four centres, which is reflected in the modest 0.2% vacancy rate at 31 December 2024.

City Center one West completed an extension and upgrade of its food court, introducing five new restaurants, while City Center One East, The Mall and Skopje City Mall attracted several high-profile tenants. At Skopje City Mall, Cineplexx renovated its cinema halls and successfully launched M House, a new roastery café, enhancing the food court’s offering.

Distributable income from the EE portfolio was R308 million, an increase of 34% over the comparable period, despite the rand strengthening by 4% against the euro. In euros, total revenue increased by 11%, due to indexation increases and strong growth in turnover-based rentals. Property expenses rose 9%, mainly because wages across the region increased, resulting in a 12% improvement in operating income.

ESG

Various energy initiatives are being pursued to manage energy costs and carbon emissions and ensure uninterrupted trading. As previously communicated, power purchase agreements (PPA) for solar energy are in progress. To protect the supply of water, backup tanks are being installed at Gauteng centres, while similar initiatives are planned for the Western Cape centres, based on recent water audit findings. Over the last five years Hyprop reduced its electricity usage by 29.6% and water consumption by 10.2%.  Five of Hyprop’s centres have achieved net zero waste status and diverted 544 tonnes of organic waste from landfills.

The Group’s total contribution towards CSI projects in the six-month period was R7.7 million.

Outlook

Wilken said, “Hyprop’s management team will pursue its five strategic initiatives: pursuing new and organic growth opportunities; repositioning in South Africa and Eastern Europe to maintain the centres’ dominance and grow market share; annually review and, if appropriate, recycle assets; implement sustainable solutions to offset infrastructure challenges in South Africa; and protect the robustness of the balance sheet.”

Hyprop expects to meet the higher end of its guidance communicated in September 2024 of a 4% to 7% increase in distributable income per share for the full year to 30 June 2025.

The Group’s board has decided to increase its dividend payout ratio to a payment of an interim dividend equivalent to 95% (previously 90%) of the distributable income from the SA portfolio and payment of a final dividend on finalisation of the Group’s annual audited results, so that the total distribution for the financial year (including the interim dividend) is equivalent to 80% (previously 75%) of the Group’s distributable income from the SA and EE portfolios.

“As a business, we are confident in our ability to continue our growth trajectory, supported by the strength of our retail centres in South Africa and Eastern Europe. We are optimistic about the exciting projects in our pipeline, which align with our strategic priorities and will drive sustainable value for all our stakeholders,” concludes Morné Wilken.

Vukile acquires flagship Spanish mall in EUR305 million deal

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Vukile Property Fund (JSE: VKE), the leading specialist retail real estate investment trust (REIT), through its 99.5% held Spanish subsidiary Castellana Properties, has acquired the largest shopping centre in Spain’s Valencia province, the iconic Bonaire Shopping Centre, from multinational retail REIT Unibail-Rodamco-Westfield. The purchase consideration of EUR305 million represents an attractive entry yield of approximately 7%.

 The acquisition of the centre, considered a Top 10 shopping centre asset in Spain, was initially delayed due to torrential flash flooding in the Valencia Region in October 2024. As part of the centre’s reinstatement, Unibail-Rodamco-Westfield fully refurbished the ground floor’s common areas and retail units, with many retailers simultaneously taking the opportunity to upgrade their stores and introduce new concepts.

Bonaire Shopping Centre reopened to record footfalls on 13 February 2025, further confirming its position as the leading shopping centre in its region.

Laurence Rapp, CEO of Vukile Property Fund, comments: “We are thrilled to have secured this exceptional asset from Unibail-Rodamco-Westfield further cementing Castellana’s position as a leading player in the Iberian retail property market. This accretive deal is our biggest by value to date and furthers our growth in Spain with a market-leading institutional grade asset.”

 The acquisition is being funded with the EUR200 million proceeds from the sale of Castellana’s stake in Lar España.

Rapp adds, “We made a tremendous profit of around EUR80 million on the Lar España trade and to redeploy the proceeds so quickly into such a high-quality asset and ensure no cash leakage is testament to our team’s deal making expertise.”

Further emphasising the transformational year of growth for Vukile, Rapp highlights Castellana’s strategic expansion into Portugal, where it has acquired four shopping centres since September 2024, funded with proceeds from the R1.5 billion raised by Vukile in September 2024.

These transactions are testament to Vukile’s and Castellana’s entrepreneurial and agile edge in the Iberian retail market, where local market knowledge, speed and creative deal-making are critical to success.

As part of the acquisition of Bonaire, Castellana has received an 18-month net operating income (NOI) guarantee. The centre currently has ample parking readily available, and its underground car park is expected to be reinstated and reopen by mid-2025 at no additional cost to Castellana.

Bonaire Shopping Centre is in Valencia, the third largest city, fourth most popular tourist region and third most populous residential area in Spain, boasting consumers with incomes well above the national average. Valencia has attracted the third highest level of investment in Spain over the past five years. It enjoys exceptional links to local and international markets, with the second largest port in Spain and the fifth largest in Europe. It connects to all major cities in Spain via Spanish high-speed AVE trains, which operate on the longest high-speed network in Europe. Furthermore, the Valencia Airport is located very close to the centre.

As the leading and top-performing shopping and leisure destination in Valencian province, the open-air centre has a proven trading track record with market-leading, above-market sales density and footfall averages. It boasts an impressive 99% long-term occupancy rate with a diversified mix of highly attractive brands, appealing to customers from across the entire region. Tenants include six Inditex fashion brands including Zara, as well as Primark, JD Sports, Cinesa, Mango, H&M and Fnac, to name a few. Bonaire also features a top-floor leisure, food and beverage area that was refurbished in 2016. The 138-store, 55,800sqm gross lettable area (GLA) centre acquired by Castellana is linked to an Alcampo hypermarket, which takes the total property to 78,000sqm. Further, Bonaire is part of a powerful retail node of 135,200sqm and 151 stores, including Leroy Merlin, Decathlon and leasing Scandinavian furniture retailer JYSK.

For Castellana, the transaction further strengthens its already strong portfolio of dominant shopping centres in Iberian regional cities and expands its footprint on Spain’s east coast. Vukile and Castellana excel at consistently adding value to high-quality retail assets, and the 10,000sqm of immediate expansion potential at Bonaire creates ideal strategic alignment with Castellana’s on-the-ground asset management and development expertise. Bonaire also aligns with its ESG goals, having earned an “outstanding” BREEAM score for management and an A-grade EPC certificate.

For Vukile, the deal scales up its Spanish investment. From a zero base in July 2017, following the Bonaire Shopping Centre acquisition approximately two-thirds of Vukile’s assets will be offshore in the Iberian Peninsula, in the high-growth, attractive markets of Portugal and Spain.

Growthpoint delivers half-year results ahead of expectations

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Growthpoint delivers half-year results ahead of expectations and upgrades outlook to positive growth for full year

Growthpoint Properties Limited (JSE: GRT) delivered stronger-than-expected results for its six-month interim period ending 31 December 2024, reporting distributable income per share (DIPS) of 74.0cps, up 3.9% from HY24, while maintaining its distribution payout ratio at 82.5%.

In line with the first-half performance, Growthpoint upgraded its DIPS guidance for the financial year ending 30 June 2025 from -2% to -5% to positive growth of 1% to 3%, which will be driven mainly by the continued improvement in the operational performance of the South African (SA) portfolio, better finance cost expectations and continued outperformance from the V&A Waterfront. The stronger performance evident in the half-year results will moderate slightly for the full year.

Norbert Sasse, Group CEO of Growthpoint Properties, comments, “Growthpoint has done well to deliver strong results while effectively executing our strategic priorities, streamlining international investments through the disposal of Capital & Regional pls C&R) and further strengthening our SA portfolio. This progress was reflected in the improved performance of the SA portfolio. Additionally, disciplined treasury management kept finance costs below expectations, stringent cost control enhanced efficiency, and again, the V&A Waterfront outperformed.”

Financial Performance

Growthpoint delivered solid results despite ongoing macroeconomic pressures. The total dividend per share (DPS) for HY25 is 61.0cps, a 3.7% increase from HY24. Total property assets stand at R155.2bn, reflecting a decline of 11.2% during the six months, mainly due to the strategic disposal of C&R to optimise the international investment portfolio.

The Group SA REIT loan-to-value (LTV) ratio decreased to 40.8% from 42.3% at FY24, mainly due to the disposal of C&R. The interest cover ratio (ICR) was unchanged at 2.4x. Growthpoint retains strong liquidity, with R0.8bn in cash and R5.2bn in unutilised committed debt facilities and enjoys excellent access to funding at attractive margins. Increased finance costs in SA, stemming from higher average borrowings compared to HY24, were offset by a lower weighted average cost of debt in HY25 of 9.2% (HY24: 9.6%).

“Interest rate pressures have started to ease, although the pace of future reductions is still unclear. Growthpoint remains committed to balance sheet resilience for the long term, underpinning our ongoing access to competitive funding and maintaining financial flexibility,” notes Sasse.

Strategic Priorities

Growthpoint has a diversified portfolio and defensive income streams. It successfully advanced the company’s strategic initiatives during the period aimed at improving the quality of its SA portfolio, including enhancing sustainability initiatives across its core assets toward the goal of carbon neutrality by 2050, and optimising its international investments.

Improving the quality of its directly held SA portfolio of logistics and industrial, office and retail properties, Growthpoint is focused on disposals, developments and targeted investments. Over the past decade, it has trimmed asset numbers in the portfolio by 28%, from 471 to 341, reducing gross lettable area by 14.7%, thereby improving the quality of its portfolio and income streams. In HY25, Growthpoint disposed of a dozen properties for R589.4m at a R7.4m profit to book value and invested R945.4m in development and capital expenditure.

As a result of its portfolio enhancement since FY15, Growthpoint has strategically grown its logistics and industrial assets from 15% to 20% of the total SA portfolio value while increasing its exposure to modern logistics warehouses and better performing nodes. It also reduced its office exposure to 40% from 46% of portfolio value, enhancing quality by selling B- and C-grade assets. Retail property assets stayed stable at 39% of the total portfolio value, even while disposing of assets that are below Growthpoint’s optimum size or in deteriorating central business districts. Growthpoint has invested in extensive redevelopments and upgrades at all its long-hold shopping centres.

Optimising its international investments, Growthpoint’s group-wide strategic and capital allocation review to simplify its business and focus on core assets resulted in it disposing of its entire shareholding in C&R to NewRiver REIT (NRR), effective 10 December 2024. The transaction proceeds of 62.5pps, split between 31.25pps (R1.16bn) cash and 31.25pps equivalent in NRR shares, resulted in Growthpoint taking a R1.22bn or 14.2% investment in NRR. Growthpoint used the cash proceeds to settle debt.

Growthpoint continues to evaluate all options to maximise the value of its investment in NRR as well as for its 29.6% investment in Globalworth Real Estate Investments (GWI), where Growthpoint continues to support management at a shareholder level with value unlock initiatives.

Its 63.7% investment in Growthpoint Properties Australia (GOZ) remains a core investment for Growthpoint.

Growthpoint owns 37.5% of Lango Real Estate Management Limited valued at R341.0m. Lango has however internalised its asset management function at an expense of USD60.3m and Growthpoint will receive preference shares equivalent to the value of its investment. In addition, Lango has been redomiciled to the UK. Growthpoint’s 15.8% investment in Lango UK is now classified as an international investment, and it is no longer included in Growthpoint Investment Partners (GIP).

South African Portfolio

In SA, Growthpoint owns and manages a R67.3bn diversified core portfolio of retail, office, logistics and industrial, and trading and development properties, representing 50.8% of Growthpoint’s total asset book value. This portfolio contributed 50.1% of DIPS.

The SA business enjoyed an improved contribution from all three sectors, including like-for-like rental growth, lower negative rent reversions, occupancy gains in the logistics and industrial portfolio and improved expense efficiencies and recoveries.

For the three sectors, gross property income increased by R98.0m, while expenses declined by R68.0m, driving a R166.0m or 6.2% uplift in net property income (NPI). Reduced loadshedding lowered expenses, especially in the office portfolio, and together with stringent cost management, decreased the SA business’s total expense ratio to 35.4% (HY24: 37.8%).

Comparing HY25 to HY24, the SA portfolio saw further occupancy gains, reducing vacancy rates from 9.2% to 8.3%, while rental renewal growth continued an encouraging trend, moving from -7.1% to -1.8%. The combination of higher occupancy and improving rental renewal growth propelled like-for-like NPI growth from negative 0.1% to an impressive positive 6.8%.

The overall improvement in property metrics was positive for SA property values, which increased 1.4% in the six months, driven by Growthpoint’s portfolio improvements and more favourable market conditions. Growthpoint’s Cape Town and KwaZulu-Natal portfolios are outperforming across all three sectors.

The SA logistics and industrial portfolio is well let, with a low vacancy rate of 3.5% (FY24: 5.2%). Its latest speculative developments at Phase 1 of Arterial Industrial Estate and Centralpoint in Samrand, where 9,541sqm was leased post reporting date, are now both fully let. Portfolio improvements and better overall sector dynamics saw like-for-like NPI grow 3.5% during the six months. Property valuations increased 1.5%. Renewal rental growth entered positive territory, lifting from -3.3% at FY24 to 0.9% over the six months.

Modern logistics properties make up around half of this portfolio’s gross lettable area, and this is increasing with new speculative developments such as the 21,831sqm Phase 2 of Arterial Industrial Estate. Two of the six units in this phase, where construction is nearing completion, are already let.

The SA retail property portfolio like-for-like NPI increased by 6.1% over the six months, reflecting improved overall portfolio quality, constant letting, a higher renewal growth rate and more effective recoveries for on-site solar electricity. The portfolio value increased by 1.4% during the period. Its core vacancy is a low 4.4% (FY24: 4.0%). Growthpoint’s shopping centres achieved strong trading density growth of 3.8% (FY24: 4.1%) and increasing shopper footfalls.

The key redevelopment of Bayside Mall was completed as planned. Growthpoint installed solar photovoltaic panels at seven shopping centres in the six months. Additionally, the R113m redevelopment and upgrade of Beacon Bay is on track for completion in June 2025. At Watercrest Mall, the introduction of a new Shoprite and relocation of Checkers is in progress. Growthpoint is actively exploring and finding solutions for stubborn retail vacancies, and, during the period, it agreed to sell Golden Acre and pivoted the retail mix at Northgate by introducing Shoprite as a new anchor to open in April 2025 and identified a portion of the mall for subdivision and sale. It successfully reduced vacancies at Brooklyn Mall and is contemplating various solutions for the remaining 9,300sqm of vacancy, which is mainly in the offices and two deep stores.

The SA office property portfolio continued to benefit from the sector’s recovery. Like-for-like NPI increased 9.4%, driven by consistent letting and an improved renewal growth rate, which moved up from -14.8% to -6.9% during the half year. Less loadshedding, efficient management of expenses and good recoveries were also positive factors. Stabilised portfolio vacancy levels stayed within the 15% range at 15.9% (FY24: 15.1%). Gauteng represents 72.1% of office portfolio GLA, which showed marginally decreased vacancies at 19.1% (FY24: 19.3%). The office portfolio printed a 1.3% increase in value.

Growthpoint completed the 154-room Canopy by Hilton hotel in its Longkloof mixed-use precinct in Cape Town, where it is also progressing the net-zero carbon redevelopment at 36 Hans Strydom for Ninety One under a 15-year lease for completion in July 2025.

Sustainability highlights achievedduring the period include Growthpoint’s Meadowbrook Estate facility for Serra becoming SA’s first industrial property to earn a prestigious 6-Star Green Star Existing Building Performance (EBP) rating from the Green Building Council South Africa (GBCSA), setting a new benchmark for logistics and industrial properties. The company’s installed solar capacity reached 52.46MWp (HY24: 40.7MWp), already exceeding its FY25 target of 50MWp, and its milestone Power Purchase Agreement (PPA) for 195GWh of renewable, green electricity will begin powering its revolutionary e-co2 solution at 10 Sandton office buildings in FY26, after nearly two years of innovation and preparation. The e-co2 scheme provides Growthpoint tenants access to wheeled renewable hydro, wind and solar electricity at cost-saving fixed escalations while reducing carbon emissions and generating tradeable carbon credits.

SA Trading & Development earned R48.9m (HY24: R20.3m) of trading profits and R5.4m (HY24: R4.0m) of NPI, but no development fees (HY24: R8.0m). Growthpoint’s in-house Trading & Development division develops assets for its own balance sheet as well as for third parties and GIP.

The V&A Waterfront

Growthpoint’s 50% interest in the V&A Waterfront in Cape Town has a property value of R12.4bn, which makes up 9.3% of Growthpoint’s total asset book value and contributed 15.8% to DIPS. Once again, the V&A delivered stellar returns, benefiting from increased tourism and retail activity. Like-for-like NPI rose 16.6% for the six months, with the precinct being fully let. It successfully opened the repurposed Union Castle Building in December 2024. Major projects remain on track, including the Table Bay Hotel’s conversion to the Intercontinental Table Bay Cape Town and the fully let luxury retail wing at Victoria Warf.

The V&A’s hotel, residential and leisure NPI increased by 37%. With the addition of The Commodore Hotel and The Portswood Hotel, the V&A now has three hotels (587 keys) operating under management agreements. Income from hospitality businesses, where the V&A enjoys both the rewards and risks of the operating business as opposed to pure rental, increased to 17% of operating profit earned, up from 10% in HY24.

Growthpoint Investment Partners

Growthpoint’s alternative real estate co-investment platform, GIP, is 1.9% of Growthpoint’s total asset book value and contributed 3.6% to DIPS. It now includes two funds distinct from Growthpoint’s core assets. They are Growthpoint Student Accommodation Holdings, operating under the Thrive Student Living brand, and Growthpoint Healthcare Property Holdings. GIP closed the period with R8.4bn of assets under management, split equally between SA healthcare and student accommodation.

International Investments

Growthpoint continues to optimise its international investment. On 31 December 2024, 37.9% of property assets by book value were located offshore, and 30.5% of its DIPS was generated offshore. Foreign currency income of R769.0m remained at a similar level toHY24.

GOZ, which invests in high-quality industrial and office properties in Australia, accounts for 23.8% of Growthpoint’s total assets by book value and contributed 21.2% to its HY25 DIPS. Despite increasing its payout ratio from 79.8% (HY24) to 95.2%, GOZ’s distribution decreased from AUD9.65cps (HY24) to AUD9.1cps. An additional AUD2.1cps was distributed to compensate for the increased dividend withholding tax, which nearly doubled from 9.8% (HY24) to 18.3%. Growthpoint received a R533.2m net distribution from GOZ (HY24: R551.2m).

GOZ maintained its strong balance sheet and reduced its gearing from 40.7% to 39.7%. The directly owned GOZ portfolio performed well, with occupancy remaining high at 94% (FY24: 95%) and a 6.0-year weighted average lease expiry. The period marked numerous strategic capital highlights for GOZ, including divesting its non-core holding in Dexus Industria REIT for AUD131.7m and establishing the AUD198 million Growthpoint Australia Logistics Partnership (GALP) with TPG Angelo Gordon holding 80%. GOZ also launched the Growthpoint Canberra Office Trust (GCOT), which acquired a AUD90 million high-yielding, primarily government-leased, A-Grade office building in Canberra’s CBD. As a result, GOZ’s funds management business enjoyed strong momentum over the six months.

GWI, which invests in offices and mixed-use precincts in Poland and in Romania where it also develops logistics parks, represents 11.3% of Growthpoint’s total assets by book value and a 5.1% contribution to DIPS. GWI’s dividend of EUR7.5cps (R129.1m) for HY25 was 31.8% down from 11.0cps (HY24: R146.1m), negatively impacted by higher interest rates on its Eurobond refinance, which is also expected to soften Growthpoint’s dividend income from this investment for the full year. GWI maintained a strong balance sheet with gearing at 38.1%.

GWI achieved like-for-like NPI growth of 7.0%, with portfolio vacancies reducing to 13.3% (FY24: 13.8%). Disposing its 50% share in the joint venture industrial portfolio was the main factor contributing to the 5.4% portfolio value decrease to EUR2.6bn. GWI continues to invest in its portfolio, including its current refurbishment of the 48,000sqm Renoma mixed-use property in Poland. It completed and leased 5,900sqm of the Craiova Logistics Hub in the period.

NRR, which invests in retail properties in the UK and which Growthpoint acquired as part of its C&R disposal, accounts for 0.9% of Growthpoint’s total assets by book value and with C&R contributed 3.8% to its HY24 DIPS. NRR declared a dividend of 3.0pps, translating to R38.8m for Growthpoint for the six months ended September 2024. In addition, R57.0m funds from operations from C&R to 10 December 2024 are included in the distributable income.

Lango, which invests in prime commercial real estate assets in key gateway cities across the African continent (excl. SA), accounts for 1.9% of Growthpoint’s total assets by book value and made a 0.4% contribution to DIPS. In HY25, Lango finalised the acquisition of USD200m of assets from Hyprop Investments Limited and Attacq Limited, and Growthpoint received R11.0m dividend income from Lango.

Looking Ahead

Growthpoint’s SA portfolio has stabilised, with key metrics improving across all three sectors.

“We continue to see positive momentum across the portfolio, underpinned by operational resilience and strategic execution. This is supported by the improved sentiment in the country under the Government of National Unity, along with the improving interest rate environment,” says Sasse.

Growthpoint aims to execute R2.8bn in strategic non-core SA asset sales for the full financial year, further improving the quality and sustainability of its property income, albeit at a lower overall quantum. Despite temporary closures in some areas due to major projects underway, the V&A Waterfront is on track for mid-single-digit growth for the full year. The reduction in finance costs will continue to benefit the business going forward.

On the international front, elevated capital costs, both domestically and globally, continue to constrain investment growth.

“As interest rates ease and economic conditions improve, we remain well-positioned to drive long-term value for our stakeholders,” concludes Sasse.

Stor-Age success story goes passed half a Million customers

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Stor-Age – The South African Real Estate Success Story Goes Passed Half a Million Customers

Stor-Age Property REIT Limited, South Africa’s leading and largest self storage property fund, has now passed the 500 000 customer mark since inception, a significant milestone for the business and the sector. Stor-Age, the only self storage REIT listed on any emerging market exchange, now trades from a portfolio of more than 100 properties spread across South Africa and the UK.

 Now in its 19th year of trading, Stor-Age has grown from its first property in Edgemead, Cape Town, to a total of 107¹ properties across South Africa and the UK. During this time, the company grew to become the largest operator in the region, listed on the JSE, strategically entered the UK market in 2017 and has successfully grown it’s UK brand, Storage King, to become the fifth largest operator in the country.

With a total investment property value of more than R17.0 billion¹, the company now offers over 600 000m2 of space to the public and looks after more than 52 000 customer’s goods across both markets. While the company has achieved remarkable growth, it has also successfully increased the occupancy in its owned portfolio to more than 91.0%.

While Stor-Age, one of only 11 publicly traded self storage Real Estate Investment Trusts (REITs) globally, has outperformed the listed property index (SAPY) by 150% since listing in 20152, the company has also performed well against its international peers. Data released by Blue Gem Research3 in their February 2025 valuation update note shows that Stor-Age’s five-year total return ranks in fourth place globally against other self storage REITs. This is ahead of National Storage, Australasia’s largest self-storage owner-operator, Shurgard, which operates across seven European markets, and the two largest operators in the UK, Big Yellow and Safestore.

Comments Carlo Bondesio, Stor-Age Head of Operations in South Africa, “Stor-Age is a wonderful South African success story, growing from humble beginnings as a family business in 2006 into one of the leading self storage operators globally and also being one of the standout performers amongst JSE listed REITs over the last decade. Looking back on our listing on the JSE nearly ten years ago, we’ve grown the business from around 130 000m2 to approximately 610 000m2 today and expanded our portfolio from 24 properties at listing to 107 across two markets. While successfully servicing over 500 000 customers is a significant milestone for us, we are still deeply rooted in our values and vision to become the best self storage business in the world.”

With deep product understanding and experience in both an emerging and first-world market, Stor-Age has bold growth ambitions to further expand the portfolio. The company currently has a pipeline comprising 48 000m2, with 11 projects at various stages of completion. Now entering their next five-year strategic growth cycle, Stor-Age plans to continue growing in both markets through new developments, the expansion of existing properties, strategic joint ventures and its highly specialised third-party management offering.

​The key to Stor-Age’s success since its inception lies in its strategic focus on prime property locations, a deep product understanding, a customer-centric approach, operational excellence and the integration of technology and digital marketing capabilities. Added to that, the self storage sector is a growth sector globally and has also continued to demonstrate remarkable resilience – as evidenced during the Global Financial Crisis and the COVID-19 pandemic.

As Stor-Age looks to the future, the company remains confident in its growth prospects with an excellent opportunity to further expand its presence in both markets.The share closed yesterday at R14.31.

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