Growthpoint ups interim dividends

Despite reporting declines in half-year revenue and operating profit.
The group's share price traded just over 4% up on Wednesday, following the release of its interim results. Image: Moneyweb

Listed property giant Growthpoint declared an interim dividend per share (DPS) on Wednesday of 61.5 cents, at an 80% payout ratio, which represents a 5.1% increase for the first half of its 2022 financial year (versus 58.5c for HY2021).

The group declared the dividend out of income reserves, as it slowly recovers from the Covid-19 economic fallout which largely affected its 2021 financial year (July 2020 to end June 2021).

Read: Growthpoint declares interim dividend, despite Covid-19 pressure

Growthpoint’s increase in DPS — the key financial metric for evaluating the performance of SA real estate investment trusts (Reits) — comes despite the group reporting a 4.8% decline in half-year revenue and a 4.3% decline in operating profit.

The group’s share price traded just over 4% up on Wednesday afternoon, following the release of its interim results earlier in the morning and confirmation of the increase in half-year dividends.

Growthpoint share price

Its revenue came in at R6.38 billion for the six months ended December 31, 2021, compared to R6.7 billion for the corresponding half-year. Operating profit decreased to R4.24 billion, compared to R4.43 billion in the comparative period.

Earnings per share increased to 107.23c, compared to the 42.24c loss for the comparative period, highlighting the recovery.

Growthpoint and most of its Reit peers took a financial knock in 2020/2021 after the Covid-19 crunch saw property counters offering millions of rands in rent relief to hard-hit tenants affected by pandemic-related lockdowns and trade restrictions.

However, the group continued to pay out dividends while several other Reits opted to retain interim dividends and even not pay full-year dividends in order to boost balance sheets in the face of the pandemic.

Listen to Suren Naidoo’s interview with SA Reit Association CEO Joanne Solomon (or read the transcript here): 

 

Growthpoint reported in a “short form” interim results announcement on the JSE that headline earnings per share decreased by 23.4% to 56.55c for the half-year, compared to 73.84c for the comparative period.

The group’s net asset value (Nav) per share increased by 6.2% to 2 148c, compared to 2 023c at June 30, 2021, highlighting the recovery of Reit sector stocks. However, the stock is still trading at a significant discount to Nav.

Growthpoint said that its interest cover ratio increased to “3.0 times compared to 2.9 times at June 30, 2021”. The property counter’s loan-to-value ratio also improved during the period to 39.2%, from 40% previously.

Group executives, Nortbert Sasse (Growthpoint group CEO) and Estienne de Klerk (Growthpoint Properties SA CEO), are expected to give more details on the group’s interim results to analysts during an official results presentation on Thursday.

In a separate results media statement issued later on Wednesday, Sasse attributed the “solid performance” to increased contributions from the V&A Waterfront and ASX-listed Growthpoint Properties Australia (GOZ) and improved SA finance costs, mainly from Growthpoint’s November 2020 equity raise.

Read:
Growthpoint plunges over 16% after R4.3bn capital raise
Growthpoint expands into student accommodation, plans new R2bn specialist fund

“These pleasing half-year results show the stability of our business. We are seeing encouraging signs of improvement, although it is too early to say that we have turned a corner while the environment remains uncertain and SA property fundamentals weak,” said Sasse.

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