Growthpoint's interim results surge thanks to V&A Waterfront's performance

Tawanda Karombo

Growthpoint Properties, South Africa’s largest listed real estate investment trust (REIT), reported a better-than- expected 3.9% rise in distributable income per share (DIPS) to 74 cents for the six months to December, buoyed by robust rental growth and falling vacancies in its logistics and industrial portfolio.

The interim dividend climbed 3.7% to 61 cents per share, reflecting a 6.2% jump in South African net property income to R2.9 billion.

The standout performer was the V&A Waterfront, a flagship Cape Town asset co-owned with the Government Employees Pension Fund, where net property income surged 16.6% on a like-for-like basis.

“V&A delivered a 16.6% like-for-like increase in net property income, due to increased tourism and the positive impact this had on retail, hotels and attractions,” the company said.

In line with the first-half performance, Growthpoint upgraded its DIPS guidance for the financial year ending 30 June 2025 from -2% to -5% to positive growth of 1% to 3%, which will be driven mainly by the continued improvement in the operational performance of the South African portfolio, better finance cost expectations and continued outperformance from the V&A Waterfront. The stronger performance evident in the half-year results will moderate slightly for the full year.

Norbert Sasse, the Group CEO of Growthpoint, said, “Growthpoint has done well to deliver strong results while effectively executing our strategic priorities, streamlining international investments through the disposal of Capital & Regional pls C&R) and further strengthening our SA portfolio. This progress was reflected in the improved performance of the SA portfolio. Additionally, disciplined treasury management kept finance costs below expectations, stringent cost control enhanced efficiency, and again, the V&A Waterfront outperformed.”

Growthpoint’s 50% share of distributable income from the precinct rose 4.5% to R398.2 million, despite higher finance costs tied to its funding strategy.

The REIT has sharpened its focus on high-growth sectors, notably logistics and industrial space, while offloading non-core assets. It disposed of 12 properties, including two offices, for R589.4m – a modest R7.4m profit on book value – with four more, valued at R748m, earmarked for sale by December’s end. Since 2022, Growthpoint has shed 37 lower-grade office buildings and high-risk assets for R5.2bn, alongside R3.3bn in sub-optimal retail centres.

“The office sector still suffers from an imbalance of supply and demand,” the company noted, though it added: “The sector has, however, reached the bottom of the cycle and we have seen an improvement in the sector’s key performance indicators over the last two financial years.”

Retail redevelopment remains a priority for long-term holdings, while logistics and the Western Cape dominate investment plans. Capital expenditure hit R945.4m, including R134.1m on Bayside Mall in Table View and R182.6m on cutting-edge logistics warehouses.

“The successful implementation is evident in the performance of the logistics and industrial portfolio,” Growthpoint said.

Total revenue, excluding the disposed Capital & Regional stake, grew 5% to R6.9bn, lifting group operating profit 4.8% to R4.5bn. Headline earnings per share soared 62.8% to 92.11 cents, underscoring a solid half-year.

Looking ahead, Growthpoint sees tailwinds from South Africa’s improving political climate. “Improving perception of the SA political landscape is creating a more favourable environment,” the company said, citing lower inflation, potential interest rate cuts in FY25, and reduced power cuts.

“We continue to see positive momentum across the portfolio, underpinned by operational resilience and strategic execution. This is supported by the improved sentiment in the country under the Government of National Unity, along with the improving interest rate environment,” said Sasse

It said the office sector seems to have stabilised in Cape Town and Umhlanga Ridge, KwaZulu-Natal while logistics and industrial sectors, benefiting from a more balanced supply-demand dynamic, was expected to outperform other sectors.

Growthpoint also aims to execute R2.8bn in strategic non-core SA asset sales for the full financial year, further improving the quality and sustainability of its property income, albeit at a lower overall quantum. On the international front, elevated capital costs, both domestically and globally, continue to constrain investment growth.

“As interest rates ease and economic conditions improve, we remain well-positioned to drive long-term value for our stakeholders,” said Sasse.

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