Growthpoint Properties : interim results December 2019

Total revenue for the interim period increased to R5.717 billion (2018: R5.631 billion), operating profit decreased to R4.084 billion (2018: R4.102 billion), profit attributable to owners of the company came in at R3.372 billion (2018: R3.520 billion), while headline earnings per share grew to 89.69 cents per share (2018: 81.77 cents per share).

Dividend
Notice was given of the declaration of the interim dividend number 68 of 106.0 cents per share for the period ended 31 December 2019. Shareholders will be entitled to elect to reinvest the net cash dividend, in return for Growthpoint shares (share alternative), failing which, they will receive the net cash dividend in respect of all or part of their shareholdings.

Company prospects
Our internationalisation strategy has resulted in our offshore footprint increasing, however, the majority of the Group's assets remain in South Africa, both by EBIT (75.7%) and by market value of property assets (64.8%), where the macro-economic environment continues to weigh heavily on all property key performance indicators.

The V&A Waterfront, which benefits from local and international tourism, is positioned to deliver growth but is not immune to the erosion in the domestic economy. There is, however, still demand from corporates for offices at the V&A and this is positive for our investment returns. The V&A Waterfront continues to look for opportunities to enhance earnings, increase bulk, densify the precinct and grow its footprint.

Our international investments should contribute positively to FY20's distribution growth. Property fundamentals in Australia remain strong with capitalisation rates and interest rates at all-time lows. GOZ's balance sheet is in excellent shape with substantial debt headroom for accretive acquisitions and a development pipeline which is also expected to deliver above market returns. GOZ is well positioned with exposure to the two favoured commercial property sectors, being office and industrial. GOZ reaffirmed its expectation to grow its DPS by 3.5% to AUD23.8 cents for FY20.

Against a backdrop of strong macro-economic fundamentals in both Poland and Romania, coupled with a robust property market, GWI, our Eastern European investment, is also expected to perform well and contribute positively to the Group's DPS growth.

The acquisition of C&R has provided exposure to a needs-based defensive retail portfolio.

C&R is unlikely to have a meaningful impact in the short to medium term given the funding structure of the acquisition.

Unfortunately any growth from the Group's strategic initiatives to internationalise, and create new revenue streams through its funds management business and trading and development, will be eradicated by Growthpoint's significant exposure to the overall RSA economy where GDP growth is in decline, which continues to weaken property fundamentals. As such, the Growthpoint Board expects growth in dividends per share for the financial year ending 30 June 2020, if any, to be nominal.