Growthpoint - Integrated Annual Report 2022

GROWTHPOINT INTEGRATED

ANNUAL REPORT 2022

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Group salient features

REVENUE

R13.0bn

0.6% decrease from R13.1bn at FY21

TOTAL PROPERTY ASSETS

R160.8bn

5.2% increase from R152.8bn at FY21

DISTRIBUTABLE INCOME

R5.3bn

5.0% increase from R5.1bn at FY21

DIVIDEND PER SHARE

128.4 cents

8.4% increase based on an 82.5% payout ratio from 118.5 cents at FY21

DISTRIBUTABLE INCOME PER SHARE

155.6 cents

5.1% increase from 148.1 cents at FY21

SA REIT NAV CENTS PER SHARE

2 158cps

6.7% increase from 2 023 cents in FY21

GROUP INTEREST COVER RATIO

3.1 times

Increase from 2.9 times at FY21

GROUP LOAN-TO-VALUE

37.9%

improved from 40.0% at FY21

OUR INVESTMENT CASE

What differentiates us

ESG focus

R3.1bn/220m

The largest and most liquid South African, Johannesburg Stock Exchange, primary listed REIT with an average monthly value and volume traded of R3.1bn and 220m shares, respectively
A FTSE/JSE Top 40 company with a R42.4bn market capitalisation
Underpinned by high-quality, physical property assets, diversified across sectors (retail, office, industrial, student residential accommodation and healthcare) and income streams (property income, funds management fees, distributions from investments, trading profits and third-party development fees)
Fast-growing diversified funds management business (Growthpoint Investment Partners)
Dynamic and proven management track record
Experienced in-house development capability.

Solid financial metrics

28.4%

REIT committed to paying out a minimum of 75% of distributable earnings annually to shareholders
Sustainable quality of earnings that can be predicted with a high level of accuracy
Uninterrupted track record of paying dividends
Attractive dividend yield
Interest cover ratio of 3.1 times for FY22
Strong balance sheet with a South African REIT SA LTV ratio of 37.9%
Policy to hedge a minimum of 75% of our interest rate exposure
Fitch global scale rating of BB+ and national scale rating of AAA.za.
Moody’s global scale rating of Ba2 and national scale rating of Aa1.za.

ESG focus

Alignment of ESG and business strategy
Best practice corporate governance
Majority of the Non-executive Directors are independent
Transparent reporting
Recipient of multiple reporting awards
Commitment to be carbon neutral by 2050
71 Green Star rated buildings in South Africa
Included in the FTSE/JSE Responsible Investment Index, FTSE4Good Emerging Index and a member of GRESB
Level 1 Broad-based Black Economic Empowerment (B-BBEE) contributor
Active contribution to job creation via Property Point
Enhanced community stakeholder engagement reducing social risk.

STRATEGY

Our strategy, which we regularly review with our Board of Directors to evaluate opportunities and risks for our business, remains rooted in our commitment to serving our stakeholders over the long term.

With integrity, ethics and our values guiding our governance, we provide space to thrive in environmentally sustainable buildings, while improving the social and material wellbeing of individuals and communities in line with our vision to be a leading international property company providing space to thrive.

To preserve our leadership in sustainable property investment

Successful execution of our strategy will enable us to generate value for all of our stakeholders over the long term.

Optimising the SA portfolio

Our business is rooted in South Africa and our sectorally and geographically diverse SA portfolio is the foundation from which we grow and execute our other strategic focuses and deliver our environmental initiatives including our carbon neutral 2050 commitment and social commitments using our increasingly diverse workforce.

This is a strategic priority because:

Refining our domestic portfolio rotates capital out of non-core assets and into strategic investments, including our co-investment and international expansion strategies. It rebalances our SA portfolio away from risk and towards outperformance while improving our positive effects on society and the environment.

Growthpoint will:

Keep optimising the domestic portfolio’s size, quality, composition, independent green certifications and water security and continue to substitute more of the fossil-fuelled energy it consumes with power from renewable resources, ensuring that it can perform sustainably for the long term. Keep investing in educational initiatives and local economic development. Continue developing our people and attracting talent.

Growing income streams from Growthpoint Investment Partners (GIP)

We identify, create and grow co-investment and comanagement opportunities in scalable alternative property classes that enable us to create positive socio-economic and environmental impacts through Growthpoint Investment Partners.

This is a strategic priority because:

This defensive, capital-light growth strategy protects our balance sheet while enabling growth in the low-growth, capital-constrained South African real estate market and adds depth to that market for the broader investment community, specifically impacting investors and development finance institutions (DFIs). It leverages the skills, resources, capacity and experience of Growthpoint’s core business and diversifies our risk across more property subsectors.

Growthpoint will:

Continue to be a leading investment partner in alternative real estate markets by scaling the opportunities we have already created and harnessing new ones in order to generate shared value for our investors and our partners, deepen real estate investment markets in South Africa and produce positive socio-economic and environmental impacts.

International expansion

We are internationally diversified with investments in Australia, Poland, Romania and the UK. We support the responsible growth of these investments while remaining open to new offshore investment opportunities.

Our strategic international expansion responds to opportunities to recycle capital into more resilient lower risk and higher return economies and markets. It addresses the risks of the weak economic growth outlook for South Africa through increased international diversification in businesses that share our commitment to good governance and positive social and environmental action.

Growthpoint will:

Stay supportive of the growth, good governance and positive impacts of our current international investments and remain open to considering appropriate new opportunities for responsible international expansion, while prioritising a strong balance sheet that supports offshore growth.