Growthpoint raises R4.3bn equity capital through oversubscribed placement

Norbert Sasse, Group CEO of Growthpoint Properties.
Norbert Sasse, Group CEO of Growthpoint Properties.

Growthpoint Properties has announced its successful closure of its sizeable R4.3 billion equity raise, which opened during the afternoon of the 11th of November 2020. The placement was 2.74 times oversubscribed.

The listed REIT initially sought to raise R4 billion which it increased in response to the strong demand for new Growthpoint shares.

We are extremely pleased with the success of our accelerated bookbuild, which enjoyed robust demand particularly from offshore. Local support totalled 57% of the capital raise with the balance coming from noteworthy international interest. It is encouraging to receive strong support from so many local and global investment institutions” commented Norbert Sasse, Group CEO of Growthpoint Properties.

With the capital raised in this bookbuild, Growthpoint will reduce leverage and maintain balance sheet strength to support operating flexibility and to undertake certain development and investment activities. This balance sheet strength will position the company well for growth opportunities that may arise in the future.

Proceeds raised from the bookbuild will in part be used to repay the debt from Growthpoint’s subscription and partial cash offer for shares in Capital & Regional in December 2019.

The capital raise is part of Growthpoint’s larger capital plan which includes cost and capital expenditure savings, partial retention of earnings through the Dividend Reinvestment Plan (DRIP) and dividend pay-out ratio of at least 75% of distributable income, which is compliant with SA REIT legislation. It also includes a non-core asset disposal programme of R1bn to R1.5bn in the current financial year.

As a result of the R4.3 billion placement, Growthpoint’s loan to value (LTV) ratio, which was 43.9% on the 30th of June 2020, will decrease to approximately 41.5% on a pro-forma basis. Growthpoint continues to enjoy comfortable debt covenant headroom, with its strictest LTV covenant being 55%. At end-October, Growthpoint had R5.4 billion of liquidity available in committed undrawn facilities and cash prior to this capital raise.

The 358,333,333 new Growthpoint shares were priced at R12.00 per share, which represents a 6.3% premium to the pre-launch 30 business day volume weighted average share price, adjusted for any cum dividend portion, of R11.29 per share as at market close on the 11th of November 2020.