Growthpoint Properties has published its results for the six-month interim period ending 31st December 2024, reporting a 3.9% increase in its distributable income per share (DIPS) to 74 cents per share while maintaining its 82.5% payout ratio.
In line with its first-half performance, the REIT upgraded its DIPS guidance for the financial year ending 30th June 2025 from -2% to -5% to growth of between 1% to 3%, to be primarily driven by the continued improvement in its South African portfolio’s operational performance, better finance cost expectations, and the continued outperformance from the V&A Waterfront.
“Growthpoint has done well to deliver strong results while effectively executing our strategic priorities, streamlining international investments through the disposal of Capital & Regional and further strengthening our South African portfolio. This progress was reflected in the improved performance of the South African portfolio. Additionally, disciplined treasury management kept finance costs below expectations, stringent cost control enhanced efficiency, and again, the V&A Waterfront outperformed,” comments Norbert Sasse, Group CEO of Growthpoint Properties.
The total dividend per share (DPS) for HY2025 is 61 cents per share, a 3.7% increase from HY2024 with the Group’s total assets currently standing at R155.2 billion, reflecting a decline of 11.2% during the six months, mainly attributed to the strategic disposal of Capital & Regional with the Group SA REIT loan-to-value (LTV) ratio decreasing to 40.8% from 42.3% at FY2024 as a result of the disposal.
Growthpoint’s interest cover ratio (ICR) was unchanged at 2.4x with R0.8 billion in cash and R5.2 billion in unutilised committed debt facilities. Increased finance costs in South Africa, stemming from higher average borrowings compared to HY2024, were offset by a lower weighted average cost of debt in HY2025 of 9.2% (HY2024: 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.
In South Africa, Growthpoint owns and manages a R67.3 billion diversified core portfolio of retail, office, logistics and industrial, and trading and development assets which represent 50.8% of its total asset book value with the portfolio contributing 50.1% of DIPS.
The local business reported an improved contribution from all three asset classes including like-for-like rental growth, lower negative rent reversions, occupancy gains in the logistics and industrial portfolio, and improved expense efficiencies and recoveries.
Gross property income increased by R98 million while expenses declined by R68 million, driving a R166 million or 6.2% uplift in net property income (NPI). Growthpoint says that reduced load shedding lowered expenses, especially in its office portfolio, and together with ‘stringent cost management’, decreased the South African business’s total expense ratio to 35.4% (HY2024: 37.8%).
When comparing HY2025 to HY2024, the South African portfolio saw further occupancy gains, reducing vacancy rates from 9.2% to 8.3% while rental renewal growth moved from -7.1% to -1.8%. The combination of higher occupancy and improving rental renewal growth propelled like-for-like NPI growth from -0.1% to 6.8%.
The REIT says that the overall improvement in property metrics was positive for its South African property values, which increased 1.4% in the six months, driven by portfolio improvements and more favourable conditions. Its Cape Town and KwaZulu-Natal portfolios are outperforming across all three sectors.
Growthpoint’s logistics and industrial portfolio currently reflects a low vacancy rate of 3.5% (FY2024: 5.2%) with its latest speculative developments at Phase 1 of Arterial Industrial Estate and Centralpoint in Samrand where 9 541m2 was leased post reporting date, now both fully let. Portfolio improvements and better overall sector dynamics saw like-for-like NPI grow 3.5% during the six months with property valuations increasing by 1.5%. Renewal rental growth entered positive territory, lifting from -3.3% at FY2024 to 0.9% during the period.
Modern logistics assets make up around half of the portfolio’s gross lettable area (GLA) which will increase with new speculative developments such as the 21 831m2 Phase 2 of Arterial Industrial Estate. Two of the six units in this phase, where construction is nearing completion, are already let.
The local retail portfolio’s like-for-like NPI increased by 6.1% over the six months, reflecting improved overall portfolio quality, consistent letting, a higher renewal growth rate, and more effective recoveries for on-site solar electricity. The portfolio’s value increased by 1.4% during the period with its core vacancy at a low 4.4% (FY2024: 4%). The REIT’s shopping centres achieved strong trading density growth of 3.8% (FY2024: 4.1%) with increased shopper footfall.
The redevelopment of Bayside Mall was completed on time with the R113 million redevelopment and upgrade of Beacon Bay on track for completion in June 2025.
Its office portfolio in South Africa reported a 9.4% increase in like-for-like NPI, driven by consistent letting and an improved renewal growth rate which moved up from -14.8% to -6.9% during the half year. Stabilised portfolio vacancy levels stayed within the 15% range at 15.9% (FY2024: 15.1%) with Gauteng representing 72.1% of its office portfolio GLA which showed marginally deceased vacancies at 19.1% (FY2024: 19.3%). The office portfolio reported 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.
Its SA Trading & Development division earned R48.9 million (HY2024: R20.3 million) of trading profits and R5.4 million (HY2024: R4 million) of NPI, but no development fees (HY2024: R8 million). The REIT’s in-house division develops assets for its own balance sheet as well as for third parties and Growthpoint Investment Partners.
Growthpoint Investment Partners
Growthpoint’s alternative real estate co-investment platform, Growthpoint Investment Partners, 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 – Growthpoint Student Accommodation Holdings, operating under the Thrive Student Living brand, and Growthpoint Healthcare Property Holdings. Growthpoint closed the period with R8.4 billion of assets under management, split equally between South African healthcare and student accommodation.
The V&A Waterfront
Growthpoint’s 50% interest in the V&A Waterfront has a property value of R12.4 billion, making up 9.3% of the REIT’s total asset book value and contributing 15.8% to DIPS. Once again, the V&A Waterfront delivered great returns, benefiting from increased tourism and retail activity. Like-for-like NPI rose 16.6% during the reporting period with the precinct being fully let.
The repurposed Union Castle Building opened in December 2024 with major projects remaining 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 Wharf.
The V&A Waterfront’s hotel, residential and leisure NPI increased by 37%. With the addition of The Commodore Hotel and The Portswood Hotel, the V&A Waterfront now has three hotels (587 keys) operating under management agreements. Income from hospitality businesses, where the V&A Waterfront 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 HY2024.
Over the past decade, Growthpoint has trimmed its asset numbers by 28%, from 471 to 341, reducing GLA by 14.7%. In HY2025, the REIT disposed of a dozen properties for R589.4 million at a R7.4 million profit to book value and invested R945.4 million in development and capex.
As a result of its portfolio enhancement since FY2015, Growthpoint has strategically grown its logistics and industrial assets from 15% to 20% of the total South African 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
Growthpoint’s SA portfolio has stabilised, with key metrics improving across all three sectors with the aim of executing R2.8 billion in strategic non-core South African asset sales for the full financial year.
Growthpoint’s international investments
On the 31st of December 2024, 37.9% of property assets by book value were located offshore, and 30.50% of its DIPS was generated offshore with foreign currency income of R769 million remaining at a similar level to HY2024.
Growthpoint Australia (GOZ), which invests in high-quality industrial and office assets, accounts for 23.8% of Growthpoint’s total assets by book value and contributed 21.2% to its HY2025 DIPS. Despite increasing its payout ratio from 79.8% (HY2024) to 95.2%, GOZ’s distribution decreased from AU$9.65 cents per share (HY2024) to AU$9.1 cents per share. An additional AU$2.1 cents per share was distributed to compensate for the increased dividend withholding tax, which nearly doubled from 9.8% (HY2024) to 18.3%. Growthpoint received a R533.2 million net distribution from GOZ (HY2024: R551.2 million).
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% (FY2024: 95%) and a 6-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 AU$131.7 million and establishing the AU$198 million Growthpoint Australia Logistics Partnership (GALP) with TPG Angelo Gordon holding 80%.
GOZ also launched the Growthpoint Canberra Office Trust (GCOT), which acquired a AU$90 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.
Globalworth Real Estate Investment (GWI), which invests in offices and mixed-use precincts in Poland and 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 €7.5 cents per share (R129.1 million) for HY2025 was 31.8% down from 11 cents per share (HY2024: R146.1 million), 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%, with portfolio vacancies reducing to 13.3% (FY2024: 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 €2.6 billion. GWI continues to invest in its portfolio, including its current refurbishment of the 48 000m2 Renoma mixed-use property in Poland. It completed and leased 5 900m2 of the Craiova Logistics Hub in the period.
NewRiver REIT (NNR), which invests in retail properties in the UK, and which Growthpoint acquired as part of its Capital & Regional disposal, accounts for 0.9% of Growthpoint’s total assets by book value and with Capital & Regional contributed 3.8% to its HY2024 DIPS. NRR declared a dividend of 3 pence per share, translating to R38.8 million for Growthpoint for the six months ended September 2024. In addition, R57 million funds from operations from Capital & Regional 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 (excluding South Africa), accounts for 1.9% of Growthpoint’s total assets by book value and made a 0.4% contribution to DIPS. In HY2025, Lango finalised the acquisition of US$200 million of assets from Hyprop Investments Limited and Attacq Limited, and Growthpoint received R11 million dividend income from Lango.
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 Capital & Regional to NewRiver REIT, effective from the 10th of December 2024. The transaction proceeds of 62.5 pence per share, split between 31.25 pence per share (R1.16 billion) cash and 31.25 pence per share equivalent in NRR shares, resulted in Growthpoint taking a R1.22 billion 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 GWI where Growthpoint continues to support management at a shareholder level with value unlock initiatives.
Its 63.7% investment in GOZ remains a core investment for Growthpoint.
Growthpoint owns 37.5% of Lango Real Estate Management Limited valued at R341 million. Lango has however internalised its asset management function at an expense of US$60.3 million 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 GIP.
