Our opinion on the current state of GRT

Growthpoint (GRT) is South Africa's largest real estate investment trust (REIT) with a primary listing on the JSE. Prior to COVID-19, it consistently grew its dividends 3% above the inflation rate on average over the last 15 years. The company owns 434 properties in South Africa worth R71bn. In addition, it has a 62,2% interest in Growthpoint Properties Australia (GOZ) which is listed on the Australian Stock Exchange (ASX) and owns 57 properties worth R49,8bn and an 18,2% investment in ASX-listed Industria REIT. It also has 4 equity-accounted investments worth R16bn - including a 50% holding of the V&A Waterfront in Cape Town, a 29,4% stake in Global Real Estate Investments which is listed on the London Stock Exchange (LSE) and a 21,6% interest in Global Worth Poland Real Estate (GWRE) which is listed in Warsaw. Altogether, Growthpoint has 59,2% of its assets in South Africa and 40,8% elsewhere. The company has acquired a 60,8% stake in Capreg which is listed in London and on the JSE and owns 7 properties in the UK worth R14,8bn. We regard Growthpoint as a high-quality blue-chip property group and a solid long-term investment for private investors. On 20th July 2021 the company reported on damage to its properties following the unrest in Natal. It said that the Watercrest Mall (which it owns 50% of) and City View were looted and damaged (representing 4.64% of total retail GLA) as well as 5 industrial properties, representing 2,73% of the company’s industrial gross lettable area (GLA). The company is battling with an over-supply of office space following COVID19 and the work-from-home move. In its results for the year to 30th June 2023 the company reported distributable income up 1,3% and a 0,3% drop in its net asset value (NAV) to 2151c per share. The company's loan-to-value (LTV) ratio was 40,1% total revenue was up 5,3%. The company said, "...given the impact of high interest rates for the full year, coupled with the high level of uncertainty in the local and global macro-economic environment, we expect DIPS to decline 10% to 15% for FY24". Technically, the Growthpoint share fell heavily in March 2020 as the pandemic took effect and has been moving sideways and downwards since. The share is still trading well below its NAV. We see it as relatively cheap at current levels but it may fall further. On 12th November 2020, the company announced that it had raised R4,3bn through an accelerated book-build in which it sold 358,3m shares for R12 each.