Growthpoint Acquisitions and Enhancements add to Success
Growthpoint Properties released their results for the 6 months to 31 December 2018 this week showed further progress of Growthpoint’s strategy to own well-leased, well-located commercial real estate that contribute to growing income returns for Securityholders.
FFO up 5.0% to $86.5M due to acquisitions.
FFO per security remained at 12.5cps following capital raising process
$548.3 million acquisitions, developments and expansions committed
Successful completion of $135 million Rights Offer
Upgraded FY19 FFO Guidance to at least 24.8cps
NTA uplift of $0.17, or 5.3%, versus 30 June 2018
Gearing at bottom end of target range
Growthpoints' focus on acquisitions, portfolio repositioning and property enhancement helped deliver funds from operations of 12.5 cps, the same as the prior corresponding period, and a distribution to Securityholders of 11.4 cps, a 3.6% increase on the prior corresponding period.
Statutory profit for the period was $188.8 million, down 8.9% on the prior corresponding period, with property revaluation gains offset by the non-repeat of profits generated from asset sales in the prior corresponding period.
Growthpoint completed several transactions in the half year, including;
the acquisition of 100 Skyring Terrace, Newstead, QLD for $250 million in December 2018, funded in part by a $135 million Rights Offer. The property is a modern, highly green credentialed building, completed in 2014, fully leased with two major ASX-listed tenants.
Settlement of the acquisition of 836 Wellington Street, West Perth, WA occurred in October 2018.
The acquisition of West Perth was Growthpoint’s first office investment in Perth where they now hold strong conviction that the removal of substantial sub-leasing space from the market over the past 12-18 months along with subdued recent development activity provides for a more attractive entry point into the Perth office market.
Construction commenced at Botanicca Corporate Office Park in Richmond, VIC for a new office development comprising approximately 19,300 square metres (sqm) of A-grade office accommodation across two towers. The development is tracking ahead of schedule with completion expected in the first half of 2020.
Growthpoint recently entered agreements with Woolworths to expand their distribution centre at Gepps Cross, SA with Growthpoint funding the $57 million development and will receive a coupon for the project costs as they are incurred at a yield of 6.75% p.a. Upon practical completion the lease over the entire property will reset to 15 years. As part of the overall transaction, Growthpoint has also agreed with Woolworths to an early surrender of its lease at 120 Northcorp Boulevard, Broadmeadows, VIC.
The portfolio again achieved strong valuation gains of $163.4 million for the period equating to a 4.9% increase on a like for-like basis. The positive spread between long-term bond yields and property yields suggests healthy appetite for well-leased commercial property will remain in the near-term.
Growthpoint advises that they are on track to meet their upgraded FY19 FFO guidance of at least 24.8 cps and FY19 distributions of 23.0 cps.
GOZ Trading Chart vs ASX200 AREITs
Blue - GOZ
Purple - ASX200 AREITs