Growthpoint is an international property company that provides space to thrive with innovative and sustainable property solutions.
Growthpoint is the largest South African primary JSE-listed REIT with a quality portfolio of 541 (FY22: 555) properties across three major business units, South Africa (SA), Growthpoint Investment Partners (GIP), our funds management business, and our offshore investments.
The South African business is diversified across the retail, office, industrial and trading and development (T&D) sectors, as well as a mixed-use portfolio at the V&A Waterfront (V&A) in Cape Town. The T&D sector develops commercial property for our own balance sheet as well as for third parties.
GIP, our alternative real estate co-investment business, comprises Growthpoint Healthcare Property Holdings (RF) Limited (GHPH), Growthpoint Student Accommodation Holdings (RF) Limited (GSAH) and Lango Real Estate Limited (Lango). GIP has assets under management of R16.7bn (FY22: R15.6bn).
The offshore portfolio consists of:
The following table provides an overview of our investments into these businesses as well as the properties held by each at 31 December 2022 (HY23) and 30 June 2022 (FY22).
| Percentage held (%) |
Number of properties |
Carrying value of Growthpoint’s investment (Rbn) |
Value of properties (Rbn) |
|||||
| HY23 | FY22 | HY23 | FY22 | HY23 | FY22 | HY23 | FY22 | |
| South Africa (SA) | ||||||||
| Retail | 100 | 100 | 42 | 42 | 25.2 | 24.6 | ||
| Office | 100 | 100 | 154 | 158 | 26.2 | 26.0 | ||
| Industrial | 100 | 100 | 175 | 187 | 12.2 | 12.1 | ||
| Trading and development (T&D) | 100 | 100 | 5 | 5 | 0.4 | 0.4 | ||
| V&A Waterfront (V&A) | 50 | 50 | 1 | 1 | 5.9 | 5.8 | 9.2 | 9.0 |
| Total SA | 377 | 393 | 5.9 | 5.8 | 73.2 | 72.1 | ||
| Growthpoint Investment Partners (GIP)* | ||||||||
| Lango* | 18.4 | 16.3 | 11 | 11 | 1.3 | 0.9 | 10.4 | 10.0 |
| Healthcare (GHPH)* | 39.1 | 55.9 | 8 | 7 | 1.2 | 0.8 | 3.6 | 3.4 |
| Student accommodation (GSAH)* | 14.3 | 16.6 | 10 | 9 | 0.2 | 0.2 | 2.7 | 2.2 |
| Total GIP | 29 | 27 | 2.7 | 1.9 | 16.7 | 15.6 | ||
| Globalworth (GWI)^ | 29.4 | 29.4 | 71 | 71 | 8.9 | 8.8 | 16.5 | 15.8 |
| Australia (GOZ)# | 62.7 | 62.2 | 59 | 58 | 9.6 | 9.6 | 60.5 | 58.8 |
| Capital & Regional (C&R)@ | 61.5 | 60.8 | 5 | 6 | 3.9 | 3.8 | 7.2 | 8.5 |
| Total offshore | 135 | 135 | 22.4 | 22.2 | 84.2 | 83.1 | ||
| Total portfolio | 541 | 555 | 174.1 | 170.8 | ||||
* The value of the properties is disclosed at 100% as these are properties under the management of Growthpoint.
^ The fair value of the GWI listed investment is R4.9bn (FY22: R6.0bn).
# The fair value of the GOZ listed investment is R16.6bn (FY22: R18.4bn).
@ The fair value of the C&R listed investment is R1.3bn (FY22: R1.1bn).
Growthpoint is included in the FTSE/JSE Top 40 Index (J200) with a market capitalisation of R49.9bn at HY23 (FY22: R42.4bn). On average, 208.8m shares (FY22: 219.8m) with a value of R2.8bn (FY22: R3.1bn) were traded per month during the period. This makes Growthpoint a liquid and tradable way to own commercial property in SA and on the African continent. Growthpoint’s property portfolio comprises South African assets (inclusive of the V&A) (56.3%) and international (43.7%) assets. The majority of the portfolio is in economic nodes within major metropolitan areas.
For HY23, the SA REIT net asset value per share (SA REIT NAV) of the Group decreased by 2.2% to 2 110 (FY22: 2 158) cents per share.
In line with Growthpoint’s vision “to be a leading international property company providing space to thrive”, the company’s strategy incorporates:
We remain focused on liquidity and balance sheet strength to enable us to pursue our strategic initiatives:
The Board is satisfied with the progress made in managing liquidity and the capital structure in HY23 through various initiatives, including R756.3m of asset sales in SA (HY22: R1.0bn), R500m sale of convertible loan in GHPH, and R465.9m (before income tax) (HY22: R524.6m) cash retained as a result of the company’s conservative dividend payout ratio of 82.5% (FY22: 82.5%).
Group SA REIT FFO increased by R61.0m (2.3%) from R2 635m for HY22 to R2 696m for HY23. On a per-share basis it increased 2.1% from 77.4c to 79.0c. Group distributable income increased by R39.0m (1.5%) from R2 623m to R2 662m. DIPS increased by 1.3% from 76.9c to 77.9c.
The condensed unaudited consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and the requirements of the Companies Act of South Africa. The accounting policies applied in preparing these financial statements are in terms of IFRS and are consistent with those applied in the previous annual financial statements.
The condensed consolidated financial statements are unaudited.
The directors of Growthpoint Properties Limited take full responsibility for the preparation of this report.
Gerald Völkel (CA(SA)), Growthpoint’s Group Financial Director, was responsible for supervising the preparation of these condensed consolidated financial statements.
The investment in GOZ was accounted for in terms of IAS 21 The Effects of Changes in Foreign Exchange Rates. The statement of financial position includes 100% of the assets and liabilities of GOZ, converted at the closing exchange rate at HY23 of R11.60:AUD1 (FY22: R11.24:AUD1).
A deferred tax liability of R4.9bn (FY22: R5.1bn) is included in the statement of financial position. This relates to capital gains tax payable at a rate of 30% in Australia if Growthpoint were to sell its investment in GOZ.
The statement of profit or loss and other comprehensive income includes 100% of the revenue and expenses of GOZ, which were translated at an average exchange rate of R11.61:AUD1 for HY23 (HY22: R11.00:AUD1). The resulting foreign currency translation difference is recognised in other comprehensive income. A non-controlling interest was raised for the 37.3% (FY22: 37.8%) not owned by Growthpoint.
Included in the HY23 distributable income is a R512.3m (AUD10.7c per share) distribution accrued from GOZ, excluding a foreign exchange profit of R21.3m on AUD income hedges, compared to R520.0m (AUD10.4c per share), excluding a foreign exchange profit of R7.0m on AUD income hedges, for HY22.
Included in normal tax in the statement of profit or loss and other comprehensive income is R74.7m (HY22: R57.8m) which relates to 14.0% (HY22: 10.0%) withholding tax paid on the distributions from GOZ.
The investment in C&R was accounted for in terms of IAS 21 The Effects of Changes in Foreign Exchange Rates. The statement of financial position includes 100% of the assets and liabilities of C&R, converted at the closing exchange rate at HY23 of R20.59:GBP1 (FY22: R19.83:GBP1).
The statement of profit or loss and other comprehensive income includes 100% of the revenue and expenses of C&R, which were translated at an average exchange rate of R20.35:GBP1 for HY23 (HY22: R20.49:GBP1). The resulting foreign currency translation difference is recognised in other comprehensive income. A non-controlling interest was raised for the 38.5% (FY22: 39.2%) not owned by Growthpoint.
C&R offered a scrip dividend alternative following the dividend declared for FY22. We opted for the scrip dividend alternative which resulted in an additional investment by Growthpoint of R40.4m (GBP2.0m) and increased our shareholding from 60.8% to 61.5%.
Included in the HY23 distributable income is a R50.4m (GBP2.75p per share) dividend declared by C&R, compared to Rnil for HY22.
Included in normal tax in the statement of profit or loss and other comprehensive income is R8.5m (HY22: Rnil) which relates to 15% (FY22: 15%) withholding tax paid on the dividends from C&R.
The investments in the V&A, GWI, Ferguson Place (RF) Limited and Lango, were accounted for in terms of IFRS 11 Joint Arrangements and IAS 28 Investments in Associates. The equity-accounting method was used in terms of which the Group’s share of the profit or loss and other comprehensive income of these investments were accounted for.
The V&A has fully recovered from the pandemic and is now trading at 2% above December 2019 levels, resulting in 23.0% higher net property income for HY23.
Included in the HY23 distributable income is R334.7m from the V&A (HY22: R267.5m) and R166.6m from GWI (HY22: R149.8m).
Revenue increased by 7.4% for HY23 compared to HY22. SA revenue increased by 1.5% due to disposals of T&D assets, a full six months inclusion of GSAH compared to the one month in HY22 and an increase in rental income from lease escalations partially offset by vacancies in the retail sector, leases renewed at reduced rent and disposals in all three sectors. GOZ revenue increased by 34.0% predominantly due to FY22 acquisitions and one-off early surrender fees received for 5 Murray Rose Avenue, Sydney Olympic Park and 100 Skyring Terrace, Newstead, which have skewed the expected full-year revenue to the first half. C&R revenue decreased by 16.4% compared to HY22 mainly due to the disposal of The Mall, Blackburn and the deconsolidation of Luton in May 2022.
The SA REIT cost-to-income ratio for the Group increased to 41.7% for HY23 from 41.2% for HY22 mainly due to lower growth in revenue for SA compared to an increase in operating expenses. For SA the ratio increased to 46.1% from 44.2% for HY22 and GOZ increased to 25.9% from 24.0% for HY22. For C&R the ratio decreased to 57.6% from 59.3% for HY22.
The revaluation of properties in SA, GOZ and C&R resulted in an overall decrease of R1.6bn (1.2%) (FY22: increase of R2.0bn or 1.5%) to R137.7bn (FY22: R135.6bn) for investment property (including investment properties classified as held for sale). The revaluation of properties resulted in an increase in values in SA of R1.2bn (1.7%) (FY22: decrease of R1.2bn or 1.7%), a decrease of R2.4bn (3.7%) (FY22: increase of R3.4bn or 6.1%) for GOZ and a decrease of R420.2m (5.5%) (FY22: decrease of R175.1m or 2.0%) for C&R.
Property assets held for trading and development are reflected at the lower of cost or net realisable value. For HY23, no impairment loss was recognised on property assets held for trading and development (FY22: Rnil).
Interest-bearing borrowings and derivatives were fair valued using the SA or foreign-denominated swap curves at HY23, increasing the overall liability by R269.9m (HY22: decrease of R947.4m). These fair value adjustments and other non-distributable items, such as capital items, non-cash charges, deferred taxation and the net effect of the non-controlling interests’ portion of the non-distributable items were transferred to the non-distributable reserve.
Finance costs, including finance costs and income received on interest rate swaps, increased by 10.9% to R1 819m (HY22: R1 640m). This is mainly due to an increase in finance costs in SA from R1 154m in HY22 to R1 261m in HY23 (9.3%) due to a higher weighted average cost of debt in HY23, an increase in finance costs in GOZ from R272.4m in HY22 to R450.6m in HY23 (65.2%), driven by higher weighted average cost of debt in HY23 of 4.2% (HY22: 2.9%) and higher drawn debt to acquire GSO Dandenong and Fortius, and the share buyback programme. This is offset by a decrease in finance costs in C&R from R213.3m in HY22 to R106.6m in HY23 (49.8%), mainly due to the restructuring and reduction of debt.
The Group interest cover ratio remains strong at 2.9 times for HY23 (FY22: 3.1 times) and is well above debt covenants. The weighted average interest rate for SA borrowings was 8.9% (FY22: 8.1%) (6.4% including foreign-denominated loans and cross-currency interest rate swaps (CCIRS) (FY22: 6.1%)). The weighted average debt maturity for SA borrowings decreased to 2.7 years (FY22: 2.9 years), due to the USD425m-denominated Eurobond maturing in May 2023.
Finance and other investment income increased to R116.0m (HY22: R97.4m). This is mainly due to an increase in dividends received on investments, and increased interest received from banks due to the liquidity position.
Growthpoint acquired an industrial property, Maldapak, Hammarsdale, KwaZulu-Natal, for R135.7m, an industrial plot of land for R68.6m, a plot of land for the development of a purpose-built student accommodation property for GSAH, Twickenham Road, Auckland Park, Johannesburg, for R33.0m, and five telecommunications assets in SA for R7.4m.
The development and capital expenditure for SA of R897.2m (HY22: R480.5m) was for various projects in the period, including the development of two purpose-built student accommodation properties, Peak Studios, Observatory, Cape Town (R167.2m) and Apex Studios, Braamfontein, Johannesburg (R166.5m), developments at Paarl Mall, Paarl (R88.0m) and capital expenditure at Woodlands Office Park, Woodmead, Johannesburg (R60.8m) and The Place, Sandton, Johannesburg (R34.1m). The remainder was for various smaller projects across the different sectors. Growthpoint has commitments outstanding for SA developments totalling R541.1m at HY23 (FY22: R654.0m) of which the T&D projects (R135.8m), Twickenham Road, Auckland Park, Johannesburg (R192.8m) and Monteer, Isando, Johannesburg (R172.0m) are the largest.
GOZ acquired one office property for R2.0bn (AUD176.0m) during the period and incurred development and capital expenditure totalling R149.9m (AUD13.4m), its largest project being the refurbishment of 75 Dorcas Street, South Melbourne, for R66.4m (AUD5.9m). GOZ has commitments outstanding totalling R517.4m (AUD44.6m) at HY23 (FY22: R2.2bn (AUD195.8m)) for tenant installation costs at 1 Charles Street, Parramatta.
C&R incurred capital expenditure of R92.0m (GBP4.6m) in HY23 (HY22: R95.0m (GBP4.9m)) and has outstanding commitments of R306.8m (GBP14.9m) at HY23 (HY22: R81.6m (GBP3.8m)) relating to various capital projects at the retail centres.
Part of Growthpoint’s strategy is to build a co-investment, co-management business with diversified alternative real estate assets. To this end, we have achieved our initial goal by establishing three separately identifiable investments with total assets under management of R16.7bn (FY22: R15.6bn).
Lango, a joint venture with Ninety One Limited, invests in prime commercial real estate assets in key gateway cities across the African continent. It owns eight quality office and retail assets and three plots of land valued at USD612.3m (FY22: USD613.0m) and has an INREV NAV of USD432.6m at HY23 (FY22: USD323.7m). Growthpoint invested a further R513.8m (USD30.0m) into Lango and received a R3.2m (USD0.2m) dividend during the period (HY22: R16.6m (USD1.0m)).
GHPH invests exclusively in healthcare property assets in SA with a mandate to acquire and develop acute, day and specialist hospitals, as well as laboratories and biotechnology manufacturing and warehousing facilities. During the period, the Namibian Government Institutions Pension Fund (GIPF) invested R500.0m into GHPH, the proceeds of which were used to settle a portion of Growthpoint’s convertible loan in GHPH, resulting in a profit on the sale of shares of R26.3m for Growthpoint. GHPH has to date attracted R2.1bn in capital from third-party investors. In addition, Growthpoint’s interest in GHPH consists of R384.7m equity (FY22: R358.4m) and a convertible loan of R392.3m (FY22: R848.3m). Growthpoint received a R66.6m (HY22: R67.3m) dividend from GHPH during the period.
GSAH has to date attracted R1.5bn in capital from third-party investors. In addition, Growthpoint invested R240.0m into the fund. During the period, the GIPF invested R250.0m into GSAH, the proceeds of which are earmarked for developments. Growthpoint received a R9.2m (HY22: R11.3m) dividend from GSAH during the period. There is a significant pipeline of acquisitions and greenfield developments.
Adhering to the previously communicated limits, the value of projects pre-identified as opportunities for trading and development for third parties in SA will not exceed 3.0% of the value of the SA portfolio and assets developed for our own balance sheet will not exceed 5.0%.
Growthpoint SA disposed of 19 properties in the period (HY22: 19) for R756.3m (HY21: R1.0bn), including Paul Smit Anderbolt, Boksburg, Johannesburg for R50.0m, Eagle Freight, Meadowdale, Germiston, Johannesburg for R49.5m, Transfield, Alrode, Alberton, Johannesburg for R42.5m and one T&D property. GOZ did not dispose of any properties during the period. C&R completed the sale of land for residential development at its 17&Central community shopping centre in Walthamstow to Long Harbour for R439.0m (GBP21.7m). The first phase of the development is now underway which will see the creation of 495 build-to-rent apartments in two residential towers, thereby providing a new captive audience of shoppers for the centre. C&R also disposed of The Mall, Blackburn for R809.0m (GBP40.0m).
At HY23, two SA properties (FY22: five) valued at R113.0m (FY22: R72.5m) were held for sale. One Australian property (FY22: nil), 333 Ann Street, Brisbane, Queensland valued at R1.5bn (AUD130.4m) was classified as held for sale. No C&R properties were classified as held for sale (FY22: one at R793.0m (GBP40.0m)).
Total SA arrears improved over the current period and at HY23 were R179.5m (FY22: R195.3m) with a loss allowance of R105.8m (FY22: R114.1m). Total net SA bad debt write-offs, recoveries and provisions were R12.0m (FY22: R24.4m).
Total GOZ arrears at HY23 were R14.0m (FY22: R17.5m) with a loss allowance of R2.1m (FY22: R2.6m). Total C&R arrears at HY23 were R197.4m (FY22: R196.8m) with a loss allowance of R64.7m (FY22: R81.8m).
| GLA | Vacancy | |||
| HY23 m2 |
FY22 m2 |
HY23 % |
FY22 % |
|
| South Africa (SA) | ||||
| Retail | 1 286 736 | 1 283 698 | 6.0 | 5.5 |
| Office | 1 654 927 | 1 672 345 | 20.4 | 20.7 |
| Industrial | 1 996 701 | 2 093 262 | 4.3 | 5.7 |
| Trading and development | 9 172 | 37 512 | – | – |
| V&A | 229 773 | 232 041 | 0.7 | 1.6 |
| Total SA | 5 177 309 | 5 318 858 | 9.7 | 10.1 |
| GIP* | ||||
| GHPH | 118 790 | 107 562 | 0.1 | 0.1 |
| Lango# | 154 639 | 155 077 | 17.8 | 19.7 |
| Total GIP | 273 429 | 262 639 | 10.1 | 11.7 |
| Offshore | ||||
| GOZ | 1 066 578 | 1 061 454 | 3.3 | 1.6 |
| C&R | 185 806 | 239 690 | 7.7 | 7.4 |
| GWI# | 1 383 176 | 1 340 832 | 14.4 | 11.9 |
| Total offshore | 2 635 560 | 2 641 976 | 9.4 | 7.3 |
| Total portfolio | 8 086 298 | 8 223 473 | 9.6 | 9.3 |
| * | GSAH is valued per bed and not on GLA. GSAH had 6 443 beds with an average 6.0% vacancy for HY23 (FY22: 4 979 beds with 2.1% average vacancy). |
| # | Not previously included. The FY22 has therefore been re-presented to include Lango and GWI as well. |
Vacancies increased in the SA retail sector, but decreased in the office and industrial sectors. Vacancies at the V&A and Lango also decreased. Vacancies at the GOZ, C&R and GWI increased. Tenant retention remains a priority and we are managing it through various initiatives including UNdeposit, SmartMove, SmartStay, SmartFlex, SmartRefer, #Bringusaname and Growthpoint’s resource-efficient, sustainable Thrive portfolio.
The SA REIT loan-to-value ratio for the Group (SA REIT LTV) was 38.8% for HY23 (FY22: 37.9%). The South African SA REIT LTV decreased to 31.7% (FY22: 32.0%), the GOZ SA REIT LTV increased to 35.3% (FY22: 30.6%) and the C&R SA REIT LTV decreased to 36.3% (FY22: 45.3%).
Growthpoint has consistently applied its policy for measuring the fair value of interest-bearing borrowings and derivatives. The Group has unsecured interest-bearing borrowings of R22.2bn at HY23 (FY22: R21.4bn). All other interest-bearing borrowings across the Group are secured. Growthpoint has unused committed bank facilities of R10.3bn (FY22: R10.3bn) in SA and separately R2.8bn (AUD242.5m) (FY22: R4.0bn or AUD353.5m) in GOZ. There were no unused committed bank facilities at C&R for HY23 (FY22: R79.0m (GBP4.0m)).
Growthpoint also has cash of R1.6bn (FY22: R1.5bn) in SA, R597.9m (AUD51.5m) (FY22: R553.1m or AUD49.2m) in GOZ and R1.1bn (GBP55.5m) (FY22: R791.0m or GBP39.9m) in C&R at HY23. The bank facilities and cash balances assure Growthpoint’s ability to meet its short-term commitments.
Andile Sangqu was appointed as the Lead Independent Director on 1 July 2022.
Mpume Nkabinde and Patrick Mngconkola retired at the AGM on 29 November 2022 after serving 13 and 10 years on the Board, respectively.
We thank Mpume and Patrick for their contributions and dedicated service to Growthpoint.
The directors have assessed the Group’s ability to continue as a going concern. At HY23, the Group had a substantial positive net asset value and a robust liquidity position with access to R10.3bn (FY22: R10.3bn) in SA and separately R2.8bn (AUD242.5m) (FY22: R4.0bn or AUD353.5m) in GOZ. The following uncertainties were considered as part of the going-concern assessment:
Access to liquidity
Stressed market conditions may impact debt funders’ risk appetite and limit access to liquidity. The company continuously reviews its funding and maturity profile and monitors the debt capital markets to ensure that it is well positioned for any refinancing opportunities, including the USD-denominated Eurobond maturing in May 2023.
Funding covenants
The current Group SA REIT LTV of 38.8% (FY22: 37.9%) is well below the maximum loan-to-value covenants the Group is exposed to, of 55.0%. Decreasing property valuations and rental income due to the expected economic downturn related to the increase in interest rates and inflation will have a negative impact on loan-to-value and interest cover ratios.
Maturity of USD-denominated Eurobond
The USD425.0m Eurobond and USD425.0/EUR326.0m cross-currency interest rate swaps linked to the bond are maturing in May 2023. In preparation for the maturity, the Group has secured EUR200.0m in standby facilities and EUR60.0m revolving credit facility should the Group decide not to refinance the bond before the maturity date. These standby and revolving credit facilities are included in the total facilities available as disclosed.
Conclusion
After due consideration, the directors have concluded that the Group has adequate resources and debt facilities to continue operating for the foreseeable future and that it is appropriate to adopt the going-concern basis in preparing the financial statements.
Declaration of dividend after reporting period
In line with IAS10 Events after the Reporting Period, the declaration of the dividend occurred after the end of the reporting period, resulting in a non-adjusting event that is not recognised in the financial statements.
GHPH Manco
On 1 February 2023, Growthpoint sold 15% of the GHPH Manco to an external party for R41.6m.
GOZ disposals
On 17 January 2023, settlement occurred on the sale of 333 Ann Street, Brisbane, Queensland, a GOZ property held for sale, for AUD130.4m.
We expect FY23 to be another challenging year. We do however, have a resilient business with the great strengths of skilled people, diversification and astute financial management and a track record of delivering value to our stakeholders through volatile and tough markets.
Our performance in SA for the rest of FY23 will be linked to the country’s economic health where loadshedding is having a severe impact. Our business approach will reflect our priorities of managing liquidity, the capital structure, and our ESG initiatives. We shall continue to optimise our South African portfolio, specifically focusing on capital rotation, tenant retention, strategic repositioning, green building, solar energy and cost management.
The SA retail sector trading has improved to pre-Covid levels. Trading densities are also improving. However, consumers are experiencing increased financial pressure due to higher inflation and interest rates. The industrial sector has the most balanced supply and demand dynamics and is expected to perform better. Tenants in this sector, particularly those in manufacturing are, however, under enormous pressure with the ongoing electricity supply issues. The office sector remains oversupplied, and until the South African economy enters a growth phase, conditions will remain challenging for businesses and consequently the office sector. Renewal growth remains under pressure across all three sectors while in-force and renewal escalations appear to have stabilised.
The V&A has rebounded strongly with the recovery in tourism, and we anticipate continued improvement from this investment.
The growth of assets under the capital-light funds management strategy will continue to receive our attention locally and internationally. In SA and continental Africa, this focus will be executed by GIP, which has good growth potential.
International expansion continues to be a strategic priority with a focus on investment optimisation in the short term.
GOZ has a robust balance sheet and liquidity position and strong tenancies. It is a strong performer and has continued to invest further in high-quality assets and a funds management platform, Fortius. They are, however, not immune to the negative impacts from the prevailing global challenges, hence the guidance from GOZ for a decrease in FFO for FY23. This will be cushioned to some extent by our foreign income hedging strategies.
C&R has recapitalised, refocused and restructured and reinstated the payment of a modest dividend and we expect to see an improved contribution next year.
The current challenging global macro-economic conditions are expected to continue over the near to mid-term, resulting in an uncertain outlook for GWI, however, the primary focus is maintaining a solid and resilient operating performance and a prudent financial position with moderate leverage and high levels of liquidity. GWI has a high-quality portfolio with multinational tenancies.
We are committed to retaining our REIT status and intend to continue to pay dividends twice a year, of at least 75% of distributable income.
Our diversified portfolio, strong balance sheet and stable hard currency dividend income streams position us defensively for FY23. However, given the high level of uncertainty in the local and global macro-economic environment, coupled with rising interest rates and inflation, we expect muted DIPS growth for FY23.
Notice is hereby given of the declaration of the interim dividend number 74 of 64.3 cents per share for the period ended 31 December 2022.
Shareholders are advised that the dividend meets the requirements of a “qualifying distribution” for the purposes of section 25BB of the Income Tax Act, No 58 of 1962 (Income Tax Act). The dividends on the shares will be taxable dividends for South African tax purposes in terms of section 25BB of the Income Tax Act.
Tax implications for South African resident shareholders
Dividends received by or accrued to South African tax residents must be included in the gross income of such shareholders and will not be exempt from income tax in terms of the exclusion to the general dividend exemption contained in section 10(1)(k)(i)(aa) of the Income Tax Act because they are dividends distributed by a REIT. These dividends are, however, exempt from dividend withholding tax (dividend tax) in the hands of South African resident shareholders provided that the South African resident shareholders have provided to the Central Securities Depository Participant (CSDP) or broker, as the case may be, in respect of uncertificated shares, or the company, in respect of certificated shares, a DTD(EX) form (dividend tax: declaration and undertaking to be made by the beneficial owner of a share) to prove their status as South African residents. If resident shareholders have not submitted the above-mentioned documentation to confirm their status as South African residents, they are advised to contact their CSDP or broker, as the case may be, to arrange for the documents to be submitted before the dividend payment.
Tax implications for non-resident shareholders
Dividends received by non-resident shareholders from a REIT will not be taxable as income and instead will be treated as ordinary dividends which are exempt from income tax in terms of the general dividend exemption section 10(1)(k) of the Income Tax Act. Any dividend received by a non-resident from a REIT is subject to dividend tax at 20%, unless the rate is reduced in terms of any applicable agreement for the avoidance of double taxation (DTA) between SA and the country of residence of the non-resident shareholder. Assuming dividend tax will be withheld at a rate of 20%, the net amount due to non-resident shareholders is 51.44c per share. A reduced dividend withholding tax rate in terms of the applicable DTA may only be relied on if the non-resident shareholder has provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the company, in respect of certificated shares:
| 2023 | |
| Last day to trade (LDT) cum dividend | Tuesday, 11 April |
|---|---|
| Shares to trade ex dividend | Wednesday, 12 April |
| Record date | Friday, 14 April |
| Payment date | Monday, 17 April |
Notes
| 1. | Shares may not be dematerialised or rematerialised between the commencement of trade on Wednesday, 12 April 2023 and the close of trade on Friday, 14 April 2023, both days inclusive. |
| 2. | The above dates and times are subject to change. Any changes will be released on SENS. |
By order of the Board
Growthpoint Properties Limited
14 March 2023
Directors
R Gasant (Chairman), FM Berkeley, NO Chauke* (Human Resource Director), EK de Klerk* (Chief Executive Officer South Africa), M Hamman, KP Lebina, CD Raphiri, AH Sangqu (Lead Independent Director), LN Sasse* (Group Chief Executive Officer), JA van Wyk#, G Völkel* (Group Financial Director), EA Wilton
*Executive #British
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
A Real Estate Investment Trust, listed on the JSE
Share code: GRT ISIN: ZAE000179420
Registered office
The Place, 1 Sandton Drive
Sandown, Sandton, 2196
PO Box 78949, Sandton, 2146
Company Secretary
WJH de Koker
Transfer Secretary
JSE Investor Services (Pty) Limited
(Registration number 2000/007239/07)
13th Floor, 19 Ameshoff Street
Braamfontein, Johannesburg, 2000
PO Box 4844, Braamfontein, 2000
Sponsor
Investec Bank Limited
(Registration number 1969/004763/06)
100 Grayston Drive, Sandown
Sandton, 2196
PO Box 785700, Sandown, Sandton, 2146