Growthpoint CEO expresses fears on ratings downgrade

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"The domestic economy is not growing and that affects our overall performance. We are pleased that we managed to keep our vacancies stable, at 5.7%, given a volatile and challenging market environment," he said.

"The possibility of a sovereign debt downgrade occurring in December is concerning. Tenants, especially multinationals, are less likely to sign long-term leases in a volatile and uncertain market environment," Sasse said.

He spoke at a media briefing on Thursday, 1 September, about the firm's June year-end financial results.

Growthpoint, which is the largest SA-based property firm on the JSE, posted dividend growth of 6% for the year, in line with its market guidance. Growing distributions from Growthpoint's 65.5% holding in Growthpoint Properties Australia (GOZ) improved the group's results, amplified by slightly improved exchange rates and effective currency hedging.

A significantly improved performance from the V&A Waterfront also had a positive effect, Sasse said. "Growthpoint has delivered a positive performance in a tough year. Volatile markets, an increasing interest rate environment, depressed local and global growth, and soft property demand dynamics created an extremely difficult operating environment. Against this backdrop, we're pleased to report results slightly ahead of budget that sustain our shareholder returns and represent significant strategic progress in our business," he said.

Growthpoint owns and manages a diversified portfolio of 526 property assets across 6.8-million square metres. This includes 467 properties in SA valued at R73.8bn, 58 properties in Australia valued at R30.9bn through GOZ and Growthpoint's 50% interest in the properties at V&A Waterfront in Cape Town, valued at R7.8bn.

Old Mutual's MacroSolutions listed property manager Evan Robins said Growthpoint was still managing to grow its dividend payouts at near inflation which was positive, even if some investors may say its full-year results were pedestrian.

Source: Business Day