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Pandemic sees Growthpoint’s distributable income plunge over 16%

Property giant defers final dividend payment to December 2020
Image: Moneyweb

JSE Top-40 Index company and South Africa’s largest Real Estate Investment Trust (Reit) Growthpoint Properties on Wednesday reported a 16.05% plunge in distributable income per share to 183.1 cents for its year ended 30 June 2020, compared to 218.1 cents per share for its prior year.

The Covid-19 pandemic, which battered the last quarter (April – June) of the group’s 2020 financial year, is largely to blame.

Read: Growthpoint warns of up to 20% decline in SA property values

Listed property sector languishing 40% lower this year

Growthpoint has opted to defer a decision on its final dividend payment to later this year.

The group’s declared dividend thus far for its 2020 financial year is 106 cents per share (which is linked to its half-year results).

Conspicuously it notes in a short-form results JSE Sens announcement on Wednesday morning that “dividend declared decreased by 51.4% to 106.0 cents per share compared to 218.1 cents per share for the comparative period”.

Growthpoint had predicted flat Dividend Per Share (DPS) growth before the pandemic hit in March, due to the country’s economy already being in recession. DPS has traditionally been one of the key financial metrics on which local Reits are measured.

“As a precautionary measure to provide the group with additional financial flexibility and bolster its liquidity in unprecedented market conditions as a result of the Covid-19 pandemic, the board of directors resolved to defer its decision on a final dividend payment for the year ended 30 June 2020 until December 2020 or an earlier date to be determined by the board,” Growthpoint said in a short-form JSE Sens announcement on Wednesday morning.

The group is set to host results presentations with listed property sector analysts and media later on Wednesday.

Highlighted below are other key metrics reported in Growthpoint’s short-form results statement:

  • Total revenue increased by 7% to R12.36 billion compared to R11.55 billion for the comparative period
  • Operating profit increased by 0.7% to R8.55 billion compared to R8.48 billion
  • Headline earnings per share decreased by 49.4% to 79.93 cents compared to 158.10 cents
  • Earnings per share decreased by 207.2% to -229.94 cents compared to 214.46 cents
  • Net asset value per share decreased by 7.6% to 2 307 cents compared to 2 498 cents.
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Growthpoint is going to get hammered on three fronts.
Defaults on rental (and closures), reduction of office space over the medium term (going to the office is so last year) and a reduction in commercial property value.
This is but the start only, rental renewals will show the real picture over the coming years.
They are a clever bunch though, so looking forward to the strategy.

End of comments.

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