Growthpoint Properties, South Africa’s largest primary REIT listed on the JSE, is continuing to sell offices in Gauteng suburbs such as Sandton and Sunninghill as part of a broader portfolio realignment, CEO Norbert Sasse said on Wednesday.
The international property group derived 55.7% of its distributable income from its South African portfolio in the year ended 30 June 2026. It increased its annual dividend by 7.4% to 133.5 cents a share, supported by improved performance in its South African sectors, stronger results from the V&A Waterfront and lower finance costs, Sasse said during an online presentation.
Distributable income per share (DIPS) from the group’s 453 properties, valued at R160.1 billion, increased by 4.3% to 152.6 cents. The value of the group’s portfolio rose by 2.8% during the year.
Distributable income increased by 4.4% to R5.2bn. Overall loan-to-value improved to 38.7%, from 40.1%. Leverage benefited from asset sales in the South African portfolio as the repositioning strategy gathered pace.
Growthpoint’s guidance for the new financial year is for distributable-income growth of between 1% and 3%. This takes into account expectations of slower growth from its offshore businesses and lower income from the South African portfolio because of disposals and the relatively slower uptake of new investments, Sasse said.
Revenue from the South African portfolio increased by 0.5% to R8.3bn. Like-for-like growth was 4.1%. The portfolio included the disposal of R3bn in office assets, R1.3bn in industrial assets and R568 million in retail assets.
Sasse said Growthpoint still owned too many office properties in Gauteng, including in areas such as Sandton, Parktown, Sunninghill and Melrose, which were once vibrant office nodes, but that was no longer the case in some locations.
He said the office sector was still being negatively affected by the work-from-home trend that emerged in the Covid-19 pandemic, as well as infrastructure problems in certain areas involving electricity, roads, water and other services. Slow overall economic growth was also a factor.
The fact that the V&A Waterfront’s office vacancy rate was below 1% illustrated the varying impact of the work-from-home trend across different markets, he said.
Consistent national economic growth of between 2% and 3% would be sufficient to begin making a material difference to unemployment and the broader economic outlook. This would, in turn, support renewed demand for office space, Sasse said.
Growthpoint’s strategy for its office sector is to dispose of assets in weakening business nodes, as well as B-grade properties with limited long-term competitiveness. Most of its C-grade assets have already been sold.
The group plans to concentrate its core office portfolio on modern, sustainable and energy-efficient properties in established precincts, while managing concentration risk and remaining aligned with its long-term portfolio objectives.
About 70% of Growthpoint’s 1 495 875m² of South African office exposure is located in Gauteng. The province’s office vacancy rate was 18.6%, compared with 18.5% in the previous financial year. Longer-standing vacancies were concentrated in areas such as Midrand, Parktown and selected parts of Sandton.
“We remain committed to Gauteng as South Africa’s principal corporate and economic market, while becoming increasingly selective in our exposure,” Sasse said.
Capital recycled from asset disposals, together with the proceeds from the sale of NewRiver REIT plc, helped reduce South African debt. The capacity created was intended to support the development pipeline, reinvestment in existing assets and balance-sheet flexibility.
Sasse said Growthpoint’s office portfolio was well positioned to benefit from an improvement in Gauteng’s economic environment and a broader recovery in the City of Johannesburg’s operating environment and infrastructure.
Office-sector like-for-like net property income grew by 3.1%, compared with 6.8% in the previous financial year. Growth in the logistics and industrial sector was 4.9%, compared with 5.5%, while retail-sector growth was 5.3%, unchanged from the previous year.
Office-sector operating-cost recoveries were negatively affected by hotel operations, which are included in the office portfolio for reporting purposes. This was particularly the case at the Longkloof Precinct Hotel, which is still progressing through its operational ramp-up phase.
The V&A Waterfront remained one of Growthpoint’s highest-quality income sources. Like-for-like net property income at the Waterfront increased by 10.6%, supported by a healthy tourism market, increased footfall and positive economic momentum in the Western Cape.
edward.west@nationalmg.co.za
THE NATIONAL