JSE-listed real estate investment trust Growthpoint Properties reported a 4.3% year-on-year increase in distributable income per share (DIPS) to 152.6c and a 3.8% increase in net asset value to R21.31 for the financial year ended June 30.

It also reported an increase in total dividend per share of 133.5c, up by 7.4% from 124.3c in the prior financial year. The payout ratio was 87.5% for the full financial year, up from 85% in the 2025 financial year.

Performance was led by continued improvement in Growthpoint’s South African portfolio that was achieved through strategic capital recycling and proactive cost containment, as well as a reduction in debt and finance costs in South Africa and another good performance from the V&A Waterfront.

The stronger rand and high interest rates were the main factors constraining the contribution of Growthpoint’s offshore investments, the company says.

“Growthpoint has delivered solid earnings growth through effective strategic execution and disciplined capital management. The balance sheet is robust with low gearing, strong liquidity and significant available funding. Growthpoint is well positioned for its next phase of growth,” says outgoing Growthpoint Properties Group CEO Norbert Sasse.

The company's total property assets increased by 2.8% to R160.1-billion, backed by an increase in property valuations of 1.6%. The group loan-to-value (LTV) ratio improved to a conservative 38.7%, down from 40.1% in the preceding financial year, and the South African business' LTV stands at 30.2%, down from 34.5% in the prior financial year.

Further, it reported R323.6-million in cash and R5.7-billion in unused committed debt facilities for its South Africa business.

It also reported that its South Africa finance costs continued to decrease, supported by lower nominal debt of R33.4-billion at financial year-end, down from R39.1-billion in the 2025 financial year, and by a lower weighted average cost of debt of 8.6%.

“During the period under review, proceeds from South African asset disposals were used in part to reduce South African debt, thereby strengthening liquidity and creating balance sheet capacity to fund the development pipeline and pursue strategic initiatives,” says Growthpoint CFO José Snyders.

Meanwhile, in its directly held South Africa portfolio of logistics and industrial, office and retail properties, Growthpoint is improving asset quality through modern and sustainable, energy-secure developments and refurbishments in established precincts, as well as strategic disposals and targeted investment.

Over the past decade, it has pared back the number of its properties to 302 from 471 and reduced gross lettable area by 26%.

This deliberate shift towards a higher-quality, more precinct-focused portfolio strengthens the resilience of income streams.

Increasingly, particularly in the office and logistics and industrial sectors, Growthpoint is clustering assets in secure, well-managed precincts with strong amenities for tenants to support stronger asset performance, says Sasse.

“We are assessing all sectors through a precinct-led lens, using scale and focused asset management to generate sustainable returns while helping to mitigate municipal governance and infrastructure constraints,” he says.

Over the past decade, Growthpoint has increased logistics and industrial assets to 20% by value of the total South African portfolio from 15%. It has increased its exposure to modern logistics warehouses, which now account for more than half of the logistics and industrial portfolio, and to stronger-performing nodes.

It also sold mainly older industrial and manufacturing facilities in declining areas.

Office exposure has decreased to 39% of portfolio value from 46%, with Growthpoint reducing its exposure to B-grade assets and noncore business nodes, while divesting from the majority of C-grade offices.

Retail assets account for a steady 40% of total portfolio value. Growthpoint has exited declining central business districts and smaller assets, while recent and ongoing redevelopments are creating a more focused, higher-performing retail portfolio, the company says.

Internationally, Growthpoint continues to optimise its international investment. At year end, 35.6% of property assets by book value were located offshore and 22.1% of DIPS was generated offshore.

Growthpoint Properties Australia invests in high-quality industrial and office properties in Australia and remains a core investment. It accounts for 22.8% of Growthpoint's total assets by book value and 18.3% of its DIPS.

Globalworth Real Estate Investments (GWI), which invests in offices and mixed-use precincts in Poland and Romania, represents 11% of Growthpoint's total assets by book value and 3.8% of its DIPS.

The company is evaluating options to maximise value from its 29.6% interest in GWI and shareholders continue constructive discussions on its future structure and its minority position.

The company also holds an 18.9% interest in Lango Real Estate. Lango, which invests in prime commercial real estate assets in key gateway cities across the African continent, excluding South Africa, accounts for 1.8% of Growthpoint's total assets by book value.

Further, Growthpoint's R65.6-billion diversified core portfolio in South Africa of retail, office, logistics and industrial, and trading and development properties contributed 55.7% of DIPS.

Like-for-like net property income from its South African assets grew at 4.4%, driven by further cost savings and recovery improvements, which also drove the 5.9% growth achieved in its prior financial year. The lease renewal success rate improved considerably to 80.7% from 68.2%, it says.

“The South Africa balance sheet remains robust, providing Growthpoint with capacity to pursue new growth. Disciplined capital recycling used proceeds from asset sales to reduce debt and redeploy capital to fund targeted developments that improve portfolio quality,” Snyders says.

Additionally, the company's South African LTV ratio decreased to 30.2% from 34.5% in the 2025 financial year. Like-for-like property values in the South African portfolio increased by 3.3%, with valuations for all three portfolios increasing for a second consecutive year.

Strategic disposals also exceeded development capital expenditure for the second consecutive year.

Growthpoint's now derisked and transformed logistics and industrial portfolio includes a focused, higher-performing selection of assets, anchored by modern, secure logistics park properties.

Its South Africa portfolio of 125 logistics and industrial properties of 1.5-million square metres continued to deliver excellent performance, driven by strong active leasing and improved recoveries, underpinned by supportive sector fundamentals, the company says.

Meanwhile, sustainability is integrated into Growthpoint's business with the goal of carbon neutrality across the portfolio by 2050.

The company now wheels electricity to 25 properties in South Africa, nine of which are buildings where tenants get a cost-saving fixed tariff for electricity that does not produce CO₂ emissions.

Growthpoint has spent more than R1-billion on solar installations in its portfolio, with 98 plants and a PV capacity of 69.31 MW, which exceeded its goal of reaching 68 MW during the financial year under review.

“Our renewable-energy penetration nearly tripled this year, increasing to 19% from 7.9% in the 2025 financial year,” says Sasse.

The company also earned 13 net-zero carbon certifications during the year, adding to its 120 green building certifications and three net-zero waste certifications.

Further, the company is driving water resilience through targeted programmes designed to cut intensity across the portfolio, with it projecting savings of 89.4 megalitres of water over three years, while continuing to invest in water resilience infrastructure.

Growthpoint has achieved a 51.3% waste diversion rate, which it plans to grow to 55% in its 2028 financial year.

YEAR AHEAD
“Strategic momentum is firmly in place across the South Africa portfolio. Key metrics are improving across all three South African sectors, supported by Growthpoint's capital recycling into higher-quality assets,” says Sasse.

Disciplined capital recycling is an ongoing priority, with a target of R2-billion to R3-billion of suitable asset disposals a year. While disposals may dilute earnings in the short term, the proceeds will reduce debt, fund investment in higher-growth sectors and regions, and support the development pipeline, strengthening long-term earnings quality and resilience.

Further, the total South Africa development pipeline is estimated at between R2-billion to R3-billion a year for the next five years, with logistics and industrial sector developments comprising around R1.4-billion, offices R300-million and retail R500-million for the current financial year to end June 30, 2027.

The company's logistics footprint continues to expand in the Western Cape, anchored by the strategic investment in the Cape Winelands Airport and Indlovu Logistics Park, in Cape Town’s Montague Gardens, which is progressing towards completion in May 2027.

It is also developing the first building within the Grade-A Noka Park secure industrial estate in Gauteng’s Riverfields logistics hub, which will be ready for occupation in October 2027, and the new multitenant Tecoma Park logistics property, in KwaZulu-Natal’s emerging Cornubia Town economic hub, with completion expected in October 2027.

Overall, improving operating fundamentals in South Africa, strong property performance in coastal metros, the V&A Waterfront’s high-quality income, and lower funding margins provide a solid foundation, Growthpoint says.

Gauteng office conditions, negative rental reversions, cost pressures and weaker offshore distributions remain headwinds, but are being addressed through sharper asset selection, precinct-led investment, active asset management, capital recycling and continued balance sheet discipline, it adds.

New Group CEO Estienne de Klerk has stepped in and is being supported by Snyders and the management team.

Growthpoint provides guidance of 1% to 3% DIPS and dividend per share growth, with a payout ratio of 87.5%.

“Growthpoint is in great shape with a stronger diversified portfolio, resilient income streams, a robust balance sheet and sustainability firmly embedded in the business. The positive momentum across the portfolio reflects disciplined execution and an extremely capable team, and I am proud to leave Growthpoint well positioned to build on this foundation and pursue its next phase of growth with confidence,” says Sasse.