JSE-listed Growthpoint Properties remained focused on liquidity and balance sheet strength to enable it to pursue its strategic initiatives, the group says in its unaudited interim results for the six months ended December 31.

Growthpoint group CEO Norbert Sasse attributes its “defensive performance” to “excellent results” from the V&A Waterfront and ASX-listed Growthpoint Properties Australia (GOZ), improved letting and reduced vacancy in the South African portfolio, and Growthpoint Investment Partners’ ongoing attraction of quality co-investors.

“Growthpoint’s results achieved during another exceedingly challenging period reflect the strength and diversification of our businesses and the quality of our earnings,” he says.

The group declared an interim dividend of 64.3c a share for the period, from income reserves.

Growthpoint recorded R756.3-million of investment property sales in South Africa in the six months under review, compared with R1-billion recorded for the six months ended December 31, 2021.

It has generated R10.5-billion of investment property sales since June 30, 2017.

The V&A Waterfront delivered a very good performance with 23% year-on-year growth in net property income, as the V&A fully rebounded from the effects of the pandemic.

The hard currency dividend income grew by 10.1% to R763-million compared with R693-million for the comparative six months.

Growthpoint’s offshore investments contributed 31% to earnings before interest and taxes and comprise 43.7% of group property assets.

GOZ delivered strong net property income growth of 19%. It has a defensive and well-positioned office and industrial portfolio, with 95% of the tenant base weighted to large corporates and the government, the group notes.

It adds that GOZ has a strong capital position with conservative gearing and significant liquidity. GOZ declared a dividend of A$0.11 apiece, compared with A$0.10 apiece for the comparative six months in 2021, translating into a dividend for Growthpoint of R533.6-million compared with R527-million in the comparative period of 2021.

Capital & Regional (C&R) remains focussed on needs-based retail shopping centres. Gearing has improved to 36.3% compared with 45.3% as at June 30, 2022. C&R declared a dividend of 2.75 apiece, translating into a dividend of R50.4-million for Growthpoint. No dividend was declared for the comparative period.

Further, Globalworth Real Estate Investments (GWI) has a diversified office and industrial portfolio with multinational tenants. It has a prudent capital position with significant liquidity, the group outlines.

GWI declared a dividend of €0.15 apiece compared with €0.13 apiece for the comparative period translating into a dividend for Growthpoint of R166.6-million, compared to R149.8-million in the comparative period.

Growthpoint has undertaken to elect the scrip dividend alternative for both C&R and GWI.

Meanwhile, Growthpoint Investment Partners (GIP) grew its assets under management by 7.1% to R16.7-billion from R15.6-billion as at June 30, 2022 and more than doubled management fees received to R48.1-million compared with R21.5-million for the comparative period.

The group notes that R750-million was raised from new investors supporting both Growthpoint Healthcare Property Holdings and Growthpoint Student Accommodation Holdings, which it says demonstrates appetite for these niche asset classes.

Over 700 000 m² of space was let in South Africa during the six months under review. Vacancies reduced to 9.9% from 10.3% as at June 30, 2022.

Some fundamentals have started to improve for the industrial and retail sectors, while the office sector appears to have stabilised, Growthpoint states. It warns, however, that until the South African economy enters a growth phase, conditions will remain challenging.

As such, renewal success declined to 61.2% for the period from 75.1% as at June 30, 2022, and renewal growth remains under pressure at negative 16% for the period compared with negative 12.8% as at June 30, 2022.

Total revenue increased by 7.4% to R6.85-billion compared with R6.38-billion for the comparative period.

Operating profit increased by 4.8% to R4.45-billion compared with R4.24-billion for the comparative period.

Net asset value per share based on the South Africa real estate investment trust net asset value definition decreased by 2.2% to R21.10 compared with R21.58 as at June 30, 2022.

The interest cover ratio is indicated to have remained strong at 2.9 times compared with 3 times for the comparative period.

Group vacancies increased to 9.6% compared with 9.3% as at June 30, 2022.

Basic earnings a share decreased by 49% to 54.73c, compared with 107.23c for the comparative period, while headline earnings a share increased by 52% to 85.99c compared with 56.57 for the comparative period.

Growthpoint’s diversified portfolio, strong balance sheet and stable hard currency dividend income streams position the company defensively for full year 2023, it says.

However, given the high level of uncertainty in the local and global macroeconomic environment, coupled with rising interest rates and inflation, distributable income per share growth for full-year 2023 is expected to be muted.