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Growthpoint Solid Income Growth with Significant Capacity


Growthpoint Properties released their results for FY19 this week with property income up 6%, profits after tax up 4.9%, but FFO per security up just 0.4%. Having raised capital, reduced debt and experienced solid valuation gains, Growthpoint has a market capitalisation of $3.3bn and $1.2bn of free float providing the group with a strong balance sheet to pursue opportunities.

Growthpoint seek to invest in office and industrial asset which can provide long term sustainable income returns and capital growth. As at 30th June, the $4.0bn Growthpiint portfolio comprises 69% Office assets and 31% Industrial assets with 82% of the portfolio in NSW, QLD and VIC.

Key Highlights

  • Statutory earnings of 52.9 cents per security (cps), reflecting a strong operating performance and significant property valuation gains over the year

  • Funds from Operations (FFO) of 25.1 cps, above original guidance and updated guidance of at least 24.6 and 25.0 cps, respectively

  • Annual distributions totaling 23.0 cps, 3.6% higher than FY18

  • Office and industrial portfolio value increased by 18.7% to circa $4.0 billion

  • Weighted average capitalisation rate for the portfolio of 5.9%, down 33 basis points since 30 June 2018

  • Acquired two modern A-Grade office buildings for $341.3 million, with quality tenants and long WALE

  • Internal development and expansion projects underway, with a combined end value of approximately $350.0 million

  • Successful and oversubscribed equity raisings, totaling $309 million, reducing gearing and providing capital for growth

  • FY19 Return on Equity of 16.9%

  • Total Securityholder Return of 21.0%, continuing the long-term outperformance of the ASX300 A-REIT Accumulation Index

  • Balance sheet gearing reduced by 380 basis points to 30.1%, from 33.9% at 30 June 2018

  • 10.3% increase in Net Tangible Assets (NTA) per security, up to $3.524

  • Maintained a long weighted average debt maturity of 4.6 years, with 10-year United States Private Placement (USPP) issuance of $161 million

Strategy

Growthpoint has a strong balance sheet with investment focused in the growth sectors of office and industrial markets. The business will continue to develop assets within the portfolio and deploy capital raised for accretive acquisitions. Growthpoint will continue to focus on its main goal of owning property attractive to tenants thereby providing high occupancy and allows GOZ to continue growing distributions over the long term in a sustainable way.

Guidance

FY20 guidance is reaffirmed at FFO per security of at least 25.4 cents and distribution per security of 23.8 cents.

GOZ Trading Chart vs ASX200 AREITs

Blue - GOZ

Purple - ASX200 AREITs

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