Growthpoint has expanded its international footprint with a further R908 million investment in Australia.
The group is following its full rights in the funding call from ASX-listed Growthpoint Properties Australia, in which Growthpoint has a 66% shareholding for the acquisition of the Bank of Queensland headquarters in Brisbane.
Growthpoint Australia acquired the 24 665 square meter A-grade office building which is fully occupied by the Bank of Queensland and Collection House. The property has a weighted average lease expiry of 7.5 years and a weighted average rent review of 3.9% per year. The building was completed in 2014 and it is certified with impressive green and energy efficiency credentials.
Growthpoint Australia will partially fund the AUD 250 million acquisition which has an initial yield of 6.1% through an equity raising of up to some AUD 135 million. Growthpoint has confirmed that it will be taking up its full entitlement of around AUD 89 million or, R908 million.
Norbert Sasse, Group CEO of Growthpoint, comments:
“The growth of our offshore holdings is the key driver for Growthpoint. Australia remains an attractive market for us relative to South Africa and supporting Growthpoint Australia’s major acquisition further diversifies Growthpoint offshore.”
“The accretive acquisition is a coup for GOZ in light of the wall of international money competing for direct property assets in the Australian market right now. This deal is remarkable because it adds an extremely high-quality modern asset with excellent covenants in a prime market to the Australian portfolio.”
Growthpoint intends to issue a R1 billion bond on the local debt capital markets, which it will use, in the main, to finance the transaction.
Sasse confirms that Growthpoint Australia is expected to perform well and make a good contribution to Growthpoint’s distribution to shareholders this financial year. Growthpoint Australia has given growth guidance of AUD23.0 cents per share for 2019’s financial year. Also, Growthpoint has taken advantage of the weaker Rand in recent months to ensure its distributions are well hedged. The contribution that Growthpoint Australia makes to Growthpoint’s distributions has now been rebased to include maximum withholding tax.
Growthpoint first invested in Growthpoint Australia in 2009, at the same time as the Australian listed property bottomed-out after the financial crisis. Since then, Growthpoint Australia’s market capitalisation has since grown 50-fold, from AUD50m to some AUD2.5bn, with the support of Growthpoint.