Growthpoint Properties FY HEPS down 32%

Listed property group Growthpoint Properties has reported a decline in its full-year distributable income, attributing the decrease to high interest rates. The company anticipates that high interest rates globally will continue to pose a challenge in the coming financial year, impacting its distributable income per share. Norbert Sasse, CEO of Growthpoint Properties, spoke to CNBC Africa about the financial results and the factors influencing the company's performance. Sasse highlighted the impact of interest rates on the business, noting that 80% of the negative results were due to interest charges in various regions where the company operates, including South Africa, Australia, Eastern Europe, and the UK. Despite a robust operating performance at the property and portfolio levels, the company's bottom line was impacted by the effects of high interest rates. Looking ahead, Sasse mentioned that while they are hopeful for a decrease in interest rates in the second half of the financial year 2025, the company still faces challenges due to expiring interest rate hedges and cross-currency interest rate swaps, leading to an increase in interest expenses. In discussing the South African market dynamics, Sasse pointed out positive trends in the industrial, office, and retail sectors within the company's portfolio. Vacancies have decreased, although negative lease renewals persist, with improvements seen in retail and industrial sectors that may soon lead to positive reversions on lease renewals. The office sector, however, continues to lag behind, with vacancies improving but still requiring time before positive renewals occur. Sasse expressed optimism about the increasing confidence among clients and investors, reflected in the lease book. Addressing the uptick in vacancies in the industrial segment, Sasse clarified that it was a deliberate strategy linked to the company's efforts to upgrade its property portfolio. By selling older industrial buildings and investing in modern logistics and warehouse properties, Growthpoint had speculative developments that were ready for occupancy but not yet leased, contributing to the increase in vacancies. Sasse reassured that these vacancies were temporary and would likely be filled shortly after the year-end. In response to the question about the impact of reduced load shedding on the business, Sasse acknowledged the positive effects on sentiment and operational costs, especially at locations like the V&A waterfront where the company absorbed diesel costs during power outages. With load shedding no longer a significant issue, there were savings realized, particularly at the V&A waterfront, although the overall financial impact across the company's portfolio remained limited.