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  • Staff Writer

Busy start for this JSE-listed company raises questions on share price growth



Growthpoint Properties, the largest South African primary REIT (Real Estate Investment Trust) listed on the JSE, has had a busy start to the year, most notably the issuance of a R1 billion senior unsecured bond maturing in 10 years.


The offering came after strong investor interest in long-term Growthpoint debt, which the sole arranger, Standard Bank, successfully executed as a private placement of R1 billion.


The 10-year note was placed at a margin of 185bps above three-month JIBAR, the most favourable pricing achieved in a number of years. The issue attracted multiple investors, the group said.


The company also successfully privately placed a R1 billion Green Bond for 10 (R650 million) and seven years (R350 million).


A portion of the proceeds of the Green Bond will be used to finance renewable energy projects for its property portfolio.


And it also recently signed a landmark Power Purchase Agreement (PPA) with Etana Energy for 195GWh of renewable energy a year, representing 32% of its total current annual electricity consumption (612GWhs in FY23) in addition to its long-standing investment in solar plants at its properties, furthering its climate commitment of being carbon neutral by 2050.


Recent data shows an uptick in activity in the various sectors in which Growthpoint is most prominent.


In a trading update for the first quarter of FY24 from 1 July 2023 to 30 September 2023, the group highlighted notable improvement across various metrics in key performance indicators (KPIs).


Lease renewal rates for the quarter surged to 78.2%, a significant leap from the 64.9% recorded in the previous fiscal year (FY23).


Vacancy rates also saw improvement, dropping from 9.4% to 9.1%, driven by a substantial uptake of new space totaling 132,956m². The total space leased during the period amounted to 349,640m², including 216,684m² of renewed space.


Additionally, there was a positive shift in lease lengths and escalation rates, with renewals averaging 4.9 years compared to the previous year's 3.5 years, and escalation rates on renewal climbing from 6.8% to 7.3%.


Growthpoint said it expected to see continued improvement in the industrial and retail sectors with gradual progress in the recovery of the office sector. Diesel costs, however, will continue to weigh amid the Eskom disaster.


The group's share price is up 1.72% in the year to date, to R11.86, having shed nearly 15% over the past year, and 52% over the past 5 years.


Read this article on the Growthpoint's investors..


Against this backdrop, stakeholders are eagerly awaiting Growthpoint's half-year results for the six months ending December 2023, set for Wednesday, 13 March 2024.



Growthpoint has both Fitch and Moody’s credit ratings. Its Fitch global scale rating is BB+ and national scale rating is AAA.za and its Moody’s global scale rating is Ba2 and national scale rating is Aa1.za


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