Growthpoint reports full-year revenue increase, but COVID-19 continues to weigh
Growthpoint, one of the biggest players in SA commercial property market, says it's still reeling from the impact of the pandemic. Growthpoint offered tenants rental relief totaling R230 million and vacancy levels rose slightly. Norbert Sasse, CEO, Growthpoint joins CNBC Africa for more.
Wed, 15 Sep 2021 15:45:42 GMT
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AI Generated Summary
- Growthpoint faces unprecedented challenges due to the impact of the pandemic on the commercial property sector, resulting in rising vacancies and operational hurdles.
- Despite the difficulties, Growthpoint maintains focus on balance sheet strength and liquidity, paying dividends at a reduced rate and securing access to debt facilities.
- The company emphasizes the importance of physical office spaces, highlighting the enduring value of in-person collaboration and culture amidst remote work trends, while also considering vaccination policies for a safe return to the workplace.
Growthpoint, one of the leading players in the South African commercial property market, is feeling the immense impact of the ongoing COVID-19 pandemic. The company has made efforts to provide rental relief to tenants totaling R230 million, while also grappling with an increase in vacancy levels. Norbert Sasse, CEO of Growthpoint, recently spoke with CNBC Africa to shed light on the challenges facing the company. Sasse mentioned that the current period is the toughest that the management team has experienced, emphasizing the unprecedented nature of the situation. The operational side of the business has presented numerous challenges, especially during the lockdown periods where restrictions and operational hurdles were prevalent. Despite efforts to normalize operations as restrictions eased, the company continues to face significant challenges. Vacancies have been on the rise, with a renewal success rate under threat and a renewal growth rate dipping to nearly negative 15%. In addition to the pandemic impact, the company also faced challenges due to civil unrest and looting in July, further adding to the turmoil in the property sector. Despite the adversity, Growthpoint managed to pay dividends, albeit at a reduced rate, showcasing the company's focus on maintaining a strong balance sheet and liquidity. Sasse highlighted the efforts to lower loan-to-valuation ratio and secure access to debt facilities to weather the storm without the immediate need for further shareholder support. Looking ahead, Sasse expressed cautious optimism, citing some positive economic indicators and vaccination progress as potential reasons for hope amidst the ongoing challenges. With office vacancies hovering around 20%, the company acknowledged the impact of remote work trends but remained confident in the enduring importance of physical office spaces. Sasse encouraged a return to offices to experience the benefits of in-person collaboration and culture, despite the evolving work dynamics. On the topic of vaccination policies at the workplace, Sasse explained that tenants were responsible for setting their own guidelines, while Growthpoint would likely follow a trend of requiring vaccinations for staff returning to the office. The CEO noted the importance of flexibility for individuals unable to receive the vaccine due to health or religious reasons, aiming to create a safe working environment for all employees. As Growthpoint navigates the challenges posed by the pandemic and shifting work dynamics, the company continues to prioritize sustainability and adaptability to ensure resilience in a volatile market environment.