Growthpoint half-year revenue up 4%
South Africa's largest landlord painted a gloomy outlook for its full year, saying distributions per share were expected to fall by between 10 to 12 per cent, higher than the 8.6 per cent decline reported in the first half. Growthpoint said the impact of higher interest rates locally and internationally would be greater in the second half, chipping away at earnings, although said it would try to stick to its current payout ratio. Joining CNBC Africa is Norbert Sasse, Group CEO, Growthpoint Properties.
Wed, 13 Mar 2024 16:09:49 GMT
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AI Generated Summary
- The impact of higher interest rates locally and internationally poses challenges for Growthpoint Properties in the second half of the financial year.
- Positive trends in key operating metrics indicate operational improvements in various markets despite challenges in South Africa.
- Anticipated interest rate cuts could provide relief and stabilize valuations across markets, driving long-term growth for the company.
South Africa's largest landlord, Growthpoint Properties, has painted a mixed outlook for its full year performance. Despite reporting a 4% increase in half-year revenue, the company's CEO, Norbert Sasse, expressed concerns about the impact of higher interest rates both locally and internationally. In an interview with CNBC Africa, Sasse highlighted the challenges facing the company in the second half of the financial year, with expectations of a 10 to 12% decline in distributions per share. The CEO pointed out that the anticipated interest rate cuts, while beneficial in the long term, would not immediately alleviate the financial pressures faced by Growthpoint Properties. Sasse emphasized the importance of a turning point in the interest rate cycle to drive improvement in the company's earnings. Despite the tough market conditions, Sasse remains optimistic about the operational performance of Growthpoint Properties across its various markets. He highlighted positive trends in key operating metrics such as vacancies, lease renewals, and rental reversions in South Africa and international investments. While challenges persist in the South African market due to factors like load shedding and inefficiencies in municipalities, Sasse noted improvements in operational metrics in other regions like Australia and Eastern Europe. The CEO attributed 80% of the company's earnings decline to high interest rates, impacting not just South Africa but also its international investments. Sasse expressed optimism that an anticipated reduction of 100 to 250 basis points in interest rates could provide much-needed relief and stabilize valuations across markets. He underscored the significance of normalized world economy for sustained growth in the long term. Sasse also addressed concerns about the impact of Paken Pay's restructuring on Growthpoint Properties, highlighting that the retailer accounts for approximately 6% of the company's gross revenues in the retail portfolio. While some Paken Pay stores are underperforming, Sasse expressed confidence in finding replacement tenants for potential closures. Looking ahead, Sasse acknowledged the challenges ahead but remains hopeful for a turnaround in market conditions and improved financial performance for Growthpoint Properties.
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