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Aug 27, 2007:
Growthpoint Properties Limited this week announced a distribution of 93,1c per linked unit (cplu) for its financial year ended 30 June 2007.
The results show a 14,5% increase on the distribution of 81,3cplu achieved by the fund in its 2006 results.
"The property expense ratio has decreased, the loan-to-value ratio has been strengthened, and vacancies are down," says Growthpoint Properties Limited CEO Norbert Sasse.
The growth in distributions for the first half of the year to December 2006 was 15% and reduced slightly to 14,5% in the second half of the year ending June 2007 as a result of a significant increase in the asset management fees paid by the company.
"The movement in distribution growth in the second half of the year is a direct consequence of those higher asset management fees, which are based on increasing market capitalisation and debt levels," Sasse says.
Critically, the results validate the fund's strategic decision earlier this year to internalise its asset and property management functions after a rising share price of R3,20 per unit in the second half of the year pushed management fees up by R8,5m.
Growthpoint unitholders approved the management "buy-in" and the establishment of a staff incentive scheme in a meeting held on Tuesday 21 August 2007 and the only remaining delaying condition for the transaction to be concluded is the approval by the Competition Tribunal which is expected by the end of August 2007.
Growthpoint's future plans include buying and developing more prime properties, leverage strong market fundamentals, and escalate international investor interest.
Vacancy levels are at an all-time low, he says. Rental increases are coming through strongly in the industrial sector, while the retail and office sectors are performing well. Renewals and new leases are forecast to achieve current escalations of 8%-9% being seen across the portfolio.
"These built-in escalations will substantially contribute to distribution growth going forward," he explains.
Another coup for Growthpoint is an increase in international investor interest, with foreign shareholding increasing from below 2% to 5% during the past year.
"This includes international pension funds and emerging market funds," adds Sasse.
