Growthpoint Properties (GRT) Q1 2025 TU earnings summary

Executive summary

• Positive operational momentum across all property sectors, supported by improved business confidence post-elections and the formation of the Government of National Unity in South Africa.

• Focused on optimizing the South African portfolio via targeted investments and disposals, aiming to reduce office exposure and enhance logistics and retail assets, especially in the Western Cape.

• Property KPIs improved: overall vacancies down to 8.2% from 8.7% at FY24, with strong leasing activity and improved renewal rental growth rates across all sectors.

• V&A Waterfront EBIT grew 20% year-over-year, driven by new developments, strong office demand, and increased tourism.

• ESG initiatives advanced, including renewable energy projects and maintaining a level 1 B-BBEE rating.

Financial highlights

• Five non-core properties sold and transferred for R404.8m, with additional R2.5bn in signed sale agreements awaiting transfer.

• R528.6m invested in developments and capital projects during the quarter.

• Distributable earnings guidance for FY2025 remains at 2%-5% growth, unchanged from year-end.

• Funding costs are expected to rise slightly due to refinancing of maturing hedges, especially AUD cross currency swaps.

• GIP contributed approximately R200m per annum to distributable income.

Outlook and guidance

• Distributable income per share (DIPS) for FY25 expected to decline by 2% to 5% due to high interest rates.

• Positive DIPS growth anticipated to resume in FY26, supported by improving interest rate outlooks.

• Operational momentum is expected to continue, especially in coastal regions, with positive trends in letting and transactional activity.

• V&A Waterfront is performing ahead of budget, with expectations for slightly better than mid-single-digit growth.

• Valuations across all three sectors are expected to increase modestly, supported by lower interest rates and improved NPI.