Growthpoint Properties will dispose of South African assets worth R2.8 billion by June next year as it seeks to improve the quality of its local portfolio while it is also eyeing some significant investments.
Although it is disposing of assets, Growthpoint yesterday said it believed that there has been an improvement in sentiment towards the real estate sector in South Africa. This was in line with firming up business sentiment under the Government of National Unity (GNU).
The company has now targeted non-core retail, office and old industrial assets for disposal.
“Our strategy to optimise our South African portfolio focuses on improving its quality through targeted investments and disposals,” said Growthpoint yesterday.
“In line with this strategic intent, we are targeting R2.8bn of asset disposals for the year ending 30 June 2025 (FY25) to decrease our exposure to the office sector, disposing of older industrial assets and selling non-core retail assets in deteriorating central business districts (CBDs).”
Despite lining up these asset disposals, Growthpoint has also said that it will be investing R2.2bn in its core portfolio that excludes Growthpoint Investment Partners (GIP). The company was undertaking this investment “to protect and enhance” value through “active asset management” initiatives.
The initiatives include development of new high-quality assets such as modern logistics warehouses to serve the logistics and industrial portfolio and enhancing sustainability initiatives.
“We also intend to increase our investments in the logistics and retail sectors, particularly in the Western Cape. Sentiment toward the real estate sector has improved dramatically,” said the company.
South Africa has gone for more than 200 days with no electricity load shedding while the GNU and a favourable interest rate outlook are all “contributing to improved business” confidence.
However, with interest rates still elevated but projected to fall in the next few months, Growthpoint said its distributable income per share (DIPS) growth in the 2025 financial year was still expected to decline by between 2% and 5%.
Over the quarter to the end of September, vacancies for Growthpoint improved to 8.2% from 8.7% as at the end of its 2024 full year, driven by strong leasing activity.
The company had a total of 339 204m² of space under letting, including 209 374m² of renewals and 129 830m² of new lets.
“Renewal rental growth rates also showed noteworthy improvement across all sectors, with renewal rates improving from -6.0% at FY24 to -0.4%, approaching positive territory. However, our lease renewal success rate reduced from 76.3% at FY24 to 72.8%,” it explained.
The company’s core retail vacancies remained at 4.6%. With the retail trading environment stabilising and emerging from a significant negative cycle, Growthpoint anticipates positive renewal growth as going towards its June 2025 full year.
BUSINESS REPORT