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SA’s largest JSE-listed property fund declares full-year dividend

At an 80% payout ratio, despite a 7.8% decrease in distributable income in another Covid-hit financial year.
Image: Suren Naidoo, Moneyweb

Growthpoint Properties – South Africa’s largest JSE-listed real estate income trust (Reit) with investments locally, as well as in Australia and Europe – is continuing to pay out dividends to shareholders even in the face of the continued impact of the Covid-19 pandemic.

The group on Wednesday declared a final dividend of 60 cents per share (cps) for its full-year ended June 30, 2021.

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This equates to a payout ratio of 80%, well within Reit tax rules which state that at least 75% of distributable income needs to be paid out to shareholders.

It also comes as several of Growthpoint’s JSE-listed peers — including the likes of Attacq, Rebosis and Redefine – opted not to pay out dividends in full-year results over the past year due to the financial fallout from the pandemic.

Read: Mall of Africa owner Attacq declares no dividend, but will retain Reit status
Listen: Is Redefine’s Reit status under threat?

Attacq, which operates on the same financial year reporting period as Growthpoint, on Tuesday announced its no-dividend move to bolster its balance sheet and retain cash for investing into its Waterfall City mega development.

Redefine’s financial year-end is the end of February and it did not pay out a dividend for its last full-year. Market watchers will be keen to see if the group opts to pay a dividend for this financial year.

Growthpoint’s latest results show that its distribution per share (DPS) for the year amounted to 118.5 cents, which represents an 18.8% plunge when compared with its financial year ended June 30, 2020 (146.0 cents).

DPS is the key financial measure of performance for Reits.

The group, which owns a 50% share in Cape Town’s V&A Waterfront as well as stakes in landmark buildings such as Discovery’s Sandton head office, also advised shareholders that distributable income per share (Dips) for the year ended June 30, 2021 amounted to 148.1 cents per share.

This represents a slide of over 19% when compared with the Dips for its prior financial year (183.1 cents).

“The decrease in DPS and Dips is due to the 7.8% decrease in distributable income, the successful equity raise in November 2020 and dividend reinvestment plan in December 2020 which resulted in 408 290 684 additional shares issued and the reduction in the payout ratio,” Growthpoint said.

Read: Growthpoint plunges over 16% after R4.3bn capital raise

Despite the sharp drop in DPS and Dips, the group reported a 6.2% increase in overall revenue to R13.13 billion, compared with R12.36 billion for the prior comparative period.

Operating profit increased by 6.2% to R9.08 billion, while its headline earnings per share increased by 112.7% to 169.98 cents compared with 79.93 cents for the comparative period.

The group only distributes earnings related to rental income.

“Growthpoint’s diversification by geography, sector and income stream has buffered performance in an unprecedented environment, supported by our deliberate prioritisation of liquidity, balance sheet strength and quality of earnings,” commented Group CEO Norbert Sasse on the latest financial performance.

“These results show a very healthy and stable business with lower gearing and R6 billion-plus of new liquidity, enabling us to pursue our strategic initiatives and declare a dividend of 80% of distributable income. We are committed to retaining our Reit status and paying dividends twice a year of at least 75% of distributable income,” he added.

Listen: Growthpoint SA CEO Estienne de Klerk tracks company sector performances across the different geographies and rationalises the year-end bonuses paid (read the transcript here).

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Top management doesn’t want to loose money on the free shares they were all given – hence keep that share price up at all costs – even if throwing money to shareholders will more than likely have a very negative effect on keeping the company afloat long term.
U don’t hand out bonuses and dessert when u have a 19% decrease in incoming cash flow – unless u in government or u have yr eye on other things…

So what are you saying… Pay nothing again? REITs are all about the dividends – shareholders don’t buy them for much else.

The inclusion of Rebosis as one of “Growthpoint’s JSE-listed peers” is rather comical. I doubt whether they appreciate the comparison !

I hate to be that guy, but there is good news and bad news.

The JSE Listed Property Sector underperformed the US SP500 by 90% since 2011. The investor is only one of the parties who benefit from that property. The law forces him to share the income of his property with the municipality through redistributive taxes, and with Eskom employees and BEE projects through loaded tenders and escalating electricity costs. The value of the property is syphoned off for the benefit of socialist projects.

The good news is that it is all for a good cause.

There is no other asset class more local than property. It has become investable yet we all keep,on buying and then hope for the best.

We should understand this undeniable fact – in a socialist country like South Africa, the biggest benefits of property ownership goes to those who do not own property.

End of comments.

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