Growthpoint Properties is stepping up its disposal drive, selling properties for R4.9bn in the year to end-June as it sharpens its focus on stronger parts of the market.
That includes Cape Town, where office and broader property fundamentals continue to outperform Gauteng.
The largest commercial real estate investment trust (Reit) said its coastal portfolios continued to outperform Gauteng, where high vacancies and weak rental growth remain a drag, particularly in Midrand, Parktown and parts of Sandton.
“Gauteng remains South Africa’s principal corporate and economic market. We will reduce exposure to obsolete or challenged properties while investing in modern, sustainable and energy-secure offices in stronger nodes where we see durable tenant demand and recovery potential,” the group said in its results for the year to end-June.
The weakness is significant for the group, with more than half of its South African office exposure in Gauteng, where vacancies remain high at 18.6% and negative rental reversions persist, contrasting with positive reversions in the Western Cape.
HEPS fell nearly 25% to 119.4c. Distributable income per share rose 4.3% to 152.6c and the dividend increased 7.4% to 133.5c.
The performance of the group’s South African portfolio improved, with like-for-like net property income rising more than 4% led by logistics, industrial and retail assets.
Following the disposals, the group has reduced its exposure to offices while increasing its allocation to logistics and industrial property, which now accounts for a fifth of the portfolio.
The group plans to invest R1.4bn in logistics and industrial developments in the year ahead, compared with R300m for offices, it said.
The V&A Waterfront continued its upward trajectory, benefiting from strong tourism, retail and office demand. Growthpoint’s share of distributable income from the Cape Town precinct rose 19% to R964.7m, reinforcing the Waterfront’s role as one of the group’s strongest-performing assets.
“The precinct continues to benefit from strong tourism, retail and office demand, with negligible vacancies and further development opportunities as we capture the growth of Cape Town’s property market,” the group said.
The group’s healthcare investments are also gaining momentum, with its healthcare platform now worth R7.4bn. The group is expanding beyond traditional medical consulting rooms and hospitals through projects such as Epione Health Village in Rosebank and other healthcare developments, while also moving into areas such as aged living.
Its investment in student accommodation is helping push Growthpoint Investment Partners’ assets under management to R13.5bn. The group’s loan-to-value ratio improved to 38.7%.
Looking ahead, Growthpoint Properties expects distributable income per share and dividends to rise 1% to 3% in the 2027 financial year as it continues to recycle assets and shift capital towards higher-growth sectors.
The group has R5.7bn in unutilised committed funding facilities in South Africa, giving it a liquidity buffer to support its development pipeline and other investment plans.
“Strong South African fundamentals and coastal performance provide a solid foundation for the 2027 financial year, while we continue to address pressure in Gauteng and offshore markets through disciplined asset selection and capital recycling,” the group said.
Business Day
Noxolo Majavu
www.businessday.co.za
