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GRT
GRT
GRT - Growthpoint Properties Limited - Results for the six months ended 31
December 2011
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT
ISIN: ZAE 000037669
RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011
HIGHLIGHTS
- 6.1% distribution growth to 67,8 cents per linked unit
- Additional R469 million investment in Australia
- Further R1,1 billion investment in Australia in January 2012
- R1,8 billion equity raised
- R2,0 billion repayment of CMBS notes
Statement of Comprehensive Income
Six months Six months 12 months
31 December 31 December 30 June
2011 2010 2011
Note Rm Rm Rm
Revenue, excluding 2 681 2 126 4 435
straight-line lease
income adjustment
Straight-line lease 8 102 205
income adjustment
Revenue 2 689 2 228 4 640
Property expenses (609) (488) (1 009)
Net property income 2 080 1 740 3 631
Other operating (77) (61) (135)
expenses
Operating profit 2 003 1 679 3 496
Fair value 1 (199) (174) (282)
adjustments
Finance costs (833) (584) (1 237)
Non-cash items 2 (57) (53) (111)
Capital items (17) (2) -
Finance income 74 39 90
Profit before 971 905 1 956
debenture interest
Debenture interest (1 152) (1 003) (2 070)
Loss before taxation (181) (98) (114)
Taxation (142) (68) (121)
- normal taxation - - (1)
- capital gains (4) - (7)
taxation (CGT)
- deferred taxation (152) (82) (141)
charge
- deferred taxation 14 14 28
credit
Loss for the period (323) (166) (235)
Loss attributable to:
Equity holders (406) (212) (323)
Non-controlling 83 46 88
interest
Other comprehensive
income:
Foreign currency 578 112 325
translation gain
Total comprehensive 255 (54) 90
income
Equity holders (53) (131) (97)
Non-controlling 308 77 187
interest
Calculation of
distributable
earnings
Operating profit 2 003 1 679 3 496
Less: Straight-line (8) (102) (205)
lease income
adjustment
Finance costs (833) (584) (1 237)
Finance income 74 39 90
Non-controlling (76) (28) (71)
interest share of
distribution from GOZ
(excluding fair value
adjustments)
Realised foreign (7) - -
exchange loss
Taxation (excluding - - (1)
deferred tax and CGT)
Distributable 1 153 1 004 2 072
earnings
Total distribution (1 153) (1 004) (2 072)
- Debenture interest (1 152) (1 003) (2 070)
- Ordinary dividend (1) (1) (2)
Linked Linked Linked
units units units
Linked units in issue 1 701 366 442 1 571 517 392 1 591 971 441
at end of the period
Weighted number of 1 701 366 442 1 571 517 392 1 591 971 441
linked units in issue
cents cents cents
Distribution per 67,80 63,90 131,00
linked unit
Six months ended 31 67,80 63,90 63,90
December
Six months ended 30 - - 67,10
June
Basic and diluted 3 (23,86) (13,49) (20,29)
loss per share
Headline earnings per 4 17,27 32,10 104,55
linked unit
Statement of Financial Position
31 December 31 December 30 June
2011 2010 2011
Note Rm Rm Rm
ASSETS
Non-current assets 51 725 40 185 47 442
Fair value of investment 48 256 36 616 43 653
property for accounting
purposes
Straight-line lease income 1 518 1 407 1 510
adjustment
Fair value of long-term 49 774 38 023 45 163
property assets
Intangible assets 1 491 1 585 1 535
Other long-term employee - 25 5
benefits
Equipment 18 2 17
Loan receivable 126 - 126
Long-term loans granted to 329 548 594
BEE consortia
Derivative assets - 2 2
Current assets 1 438 1 440 1 289
Investment property 418 571 539
reclassified as held for
sale
Trade and other receivables 642 347 411
Cash and cash equivalents 378 522 339
Total assets 53 176 41 625 48 731
EQUITY AND LIABILITIES
Shareholders` interest 1 363 1 399 1 421
Ordinary share capital 85 78 79
Foreign currency 546 70 192
translation reserve
Non-distributable reserve 732 1 251 1 150
Non-current liabilities - 5 26 079 22 639 23 463
debentures
Linked unitholders` 27 442 24 038 24 884
interest
Non-controlling interest 1 872 947 1 377
Total unitholders` interest 29 314 24 985 26 261
Other non-current 18 424 11 230 16 502
liabilities
Other non-current financial 17 767 10 756 15 983
liabilities
Deferred tax liability 657 474 519
Current liabilities 5 438 5 410 5 968
Trade and other payables 977 734 858
Liability for Australian 1 619 - -
acquisition
Current portion of other 1 585 3 636 3 969
non-current liabilities
Other long-term employee 13 - -
benefits
Taxation payable 11 1 9
Linked unitholders for 1 233 1 039 1 132
interest and dividends
Total equity and 53 176 41 625 48 731
liabilities
Net asset value per linked 1613 1530 1563
unit (cents)
Tangible net asset value 1564 1459 1499
per linked unit which
excludes intangible assets
and deferred tax (cents)
Statement of Cash Flows
Six months Six months 12 months
31 December 31 December 30 June
2011 2010 2011
Rm Rm Rm
Cash generated from operations 1 887 1 480 3 168
Finance income 51 59 46
Finance costs (832) (662) (1 233)
Taxation paid (2) (1) (7)
Capital items (17) (2) -
Distribution to unitholders (1 136) (949) (1 995)
Net cash outflow from operating (49) (75) (21)
activities
Net cash outflow from investing (1 718) (1 767) (7 458)
activities
Net cash inflow from financing 1 793 2 055 7 493
activities
Net increase in cash and cash 26 213 14
equivalents
Translation effects on cash and 13 (1) 15
cash equivalents of foreign
operation
Cash and cash equivalents at 339 310 310
beginning of the period
Cash and cash equivalents at end 378 522 339
of the period
Notes
Rm Rm Rm
1. Fair value adjustments (199) (174) (282)
Gross investment property fair 1 152 1 675 1 960
value adjustment
Less: Straight-line lease income (8) (102) (205)
adjustment
Net investment property 1 144 1 573 1 755
revaluation
Borrowings and derivatives - loss (508) (311) (128)
Foreign exchange gain/(loss) 3 (2) 2
Long-term loans granted to BEE (107) 36 59
consortia - (loss)/profit
Debentures (731) (1 470) (1 970)
Debentures are adjusted to fair
value which represents the net
asset value attributable to
Growthpoint`s debenture holders,
excluding the intangible assets.
The debentures fair value
adjustment consists of:
Fair value adjustments on other (532) (1 296) (1 688)
assets and liabilities excluding
fair value adjustment on
debentures
Straight-line lease income (8) (102) (205)
adjustment
Capital gains taxation 4 18 7
Deferred taxation - GOZ 151 82 141
Fair value adjustment on GOZ (372) (178) (254)
Foreign exchange (gain)/loss (6) - 3
Non-controlling interest`s 7 4 14
portion of fair value adjustments
Decrease in other long-term 8 2 12
employee benefits
Capital items 17 - -
Debenture fair value adjustment (731) (1 470) (1 970)
2. Non-cash charges (57) (53) (111)
Amortisation of intangible asset (49) (49) (99)
Decrease in other long-term (8) (4) (12)
employee benefits
3. The directors are of the view that the disclosure of earnings per share,
while obligatory in terms of IAS 33, Earnings per Share, and the JSE
Limited Listings Requirements, is not meaningful to investors as the shares
are traded as part of a linked unit and practically all the revenue
earnings are distributed in the form of debenture interest plus dividends
in the ratio of 1 000 to 1. In addition, headline earnings include fair
value adjustments for financial liabilities and accounting adjustments
required to account for lease income on a straight-line basis, as well as
other non-cash accounting adjustments that do not affect distributable
earnings. The calculation of distributable earnings and the distribution
per linked units as set out above is more meaningful.
4. In terms of Circular 3/2009, issued by SAICA, both the fair value
adjustment on investment property and debentures are added back in the
calculation of headline earnings per linked unit. The Circular does not
make provision for the fair value adjustment on other non-current financial
liabilities to be added back.
Rm Rm Rm
Basic loss is reconciled to
headline earnings as follows:
Loss after taxation - (406) (212) (323)
attributable to equity holders
Add back: Net fair value (978) (1 345) (1 501)
adjustment - investment property
- Fair value adjustment (1 144) (1 573) (1 755)
- Applicable taxation 166 228 254
Headline loss attributable to (1 384) (1 557) (1 824)
shareholders
Add back: Net fair value 526 1 058 1 418
adjustment - debentures
- Fair value adjustment 731 1 470 1 970
- Applicable taxation (205) (412) (552)
Add back: Debenture interest paid 1 152 1 003 2 070
Headline earnings attributable to 294 504 1 664
linked unitholders
5. Non-current liabilities -
debentures
Fair value at beginning of the 23 463 20 795 20 795
period
Issued during the period 1 885 374 698
Fair value adjustments (Note 1) 731 1 470 1 970
Fair value at end of the period 26 079 22 639 23 463
Segmental Analysis
South Africa
V&A
Retail Office Industrial Waterfront
Rm Rm Rm Rm
STATEMENT OF
COMPREHENSIVE INCOME
EXTRACTS
Six months ended 31
December 2011
Revenue, excluding 724 846 461 201
straight-line lease
income adjustment
Property expenses (203) (191) (102) (65)
Segment result 521 655 359 136
Fair value adjustment:
- investment property 392 334 238 -
- investment property - - - -
-non-controlling interest
Total fair value 392 334 238 -
adjustment on total
investment property
Australia Total
Rm Rm
STATEMENT OF
COMPREHENSIVE INCOME
EXTRACTS
Six months ended 31
December 2011
Revenue, excluding 449 2 681
straight-line lease
income adjustment
Property expenses (48) (609)
Segment result 401 2 072
Fair value adjustment:
- investment property 115 1 079
- investment property 73 73
-non-controlling interest
Total fair value 188 1 152
adjustment on total
investment property
South V&A
Africa Waterfront Australia Total
Rm Rm Rm Rm
Further extracts of
statement of
comprehensive income
Other operating expenses 56 2 19 77
Finance costs 643 1 189 833
South Africa
V&A
Retail Office Industrial Waterfront
Rm Rm Rm Rm
Six months ended31 December
2010
Revenue, excluding straight- 676 749 427 -
line lease income adjustment
Property expenses (192) (177) (95) -
Segment result 484 572 332 -
Fair value adjustment:
- investment property 691 620 356 -
- investment property - non- - - - -
controlling interest
Total fair value adjustment 691 620 356 -
on total investment property
Australia Total
Rm Rm
Six months ended31 December
2010
Revenue, excluding straight- 274 2 126
line lease income adjustment
Property expenses (24) (488)
Segment result 250 1 638
Fair value adjustment:
- investment property 6 1 673
- investment property - non- 2 2
controlling interest
Total fair value adjustment 8 1 675
on total investment property
South V&A
Africa Waterfront Australia Total
Rm Rm Rm Rm
Further extracts of statement
of comprehensive income
Other operating expenses 47 - 14 61
Finance costs 452 - 132 584
South Africa
V&A
Retail Office Industrial Waterfront
Rm Rm Rm Rm
STATEMENT OF FINANCIAL
POSITION EXTRACTS
At 31 December 2011
- Investment property
- Opening balance - 30 June 11 985 13 669 6 841 4 783
2011
- Acquisitions - 140 - -
- Developments and capital 69 159 212 59
expenditure
- Disposals (266) (20) (130) -
- Foreign exchange gain - - - -
- Fair value adjustments 392 334 238 -
Fair value of total property 12 180 14 282 7 161 4 842
assets - 31 December 2011
- Fair value of long-term 12 118 13 936 7 151 4 842
property assets
- Investment property 62 346 10 -
reclassified as held for sale
Australia Total
Rm Rm
STATEMENT OF FINANCIAL
POSITION EXTRACTS
At 31 December 2011
- Investment property
- Opening balance - 30 June 8 424 45 702
2011
- Acquisitions 1 823 1 963
- Developments and capital 160 659
expenditure
- Disposals (43) (459)
- Foreign exchange gain 1 175 1 175
- Fair value adjustments 188 1 152
Fair value of total property 11 727 50 192
assets - 31 December 2011
- Fair value of long-term 11 727 49 774
property assets
- Investment property - 418
reclassified as held for sale
South V&A
Africa Waterfront Australia Total
Rm Rm Rm Rm
Further extracts of statement
of financial position
Intangible assets 1 491 - - 1 491
Trade and other receivables 514 29 99 642
Cash and cash equivalents 181 42 155 378
Trade and other payables (819) (64) (94) (977)
Liability for Australian - - (1 619) (1 619)
acquisition
Total interest-bearing (14 063) - (5 289) (19 352)
liabilities
- Nominal value - interest- (12 953) - (4 044) (16 997)
bearing liabilities
- Fair value adjustments (1 110) - (245) (1 355)
- Foreign translation - - (1 000) (1 000)
differences
South Africa
V&A
Retail Office Industrial Waterfront
Rm Rm Rm Rm
At 30 June 2011
- Investment property
- Opening balance - 30 June 10 669 12 686 6 667 -
2010
- Acquisitions - income - - - 4 179
producing assets
- Acquisitions - Undeveloped - - - 600
bulk
- Acquisitions - other 253 122 82 -
- Developments and capital 166 264 143 7
expenditure
- Disposals (253) (90) (152) -
- Foreign exchange gain - - - -
- Fair value adjustments 1 150 687 101 (3)
Fair value of total property 11 985 13 669 6 841 4 783
assets - 30 June 2011
- Fair value of long-term 11 842 13 442 6 710 4 783
property assets
- Investment property 143 227 131 -
reclassified as held for sale
Australia Total
Rm Rm
At 30 June 2011
- Investment property
- Opening balance - 30 June 4 877 34 899
2010
- Acquisitions - income - 4 179
producing assets
- Acquisitions - Undeveloped - 600
bulk
- Acquisitions - other 2 881 3 338
- Developments and capital 20 600
expenditure
- Disposals (129) (624)
- Foreign exchange gain 750 750
- Fair value adjustments 25 1 960
Fair value of total property 8 424 45 702
assets - 30 June 2011
- Fair value of long-term 8 386 45 163
property assets
- Investment property 38 539
reclassified as held for sale
South V&A
Africa Waterfront Australia Total
Rm Rm Rm Rm
Further extracts of statement
of financial position
Intangible assets 1 535 - - 1 535
Trade and other receivables 358 22 31 411
Cash and cash equivalents 76 88 175 339
Trade and other payables (718) (56) (84) (858)
Interest-bearing liabilities (15 022) - (4 930) (19
952)
- Nominal value - interest- (14 249) - (4 465) (18
bearing liabilities 714)
- Fair value adjustments (773) - (75) (848)
- Foreign translation - - (390) (390)
differences
Statement of Changes in Equity
Foreign
Non- currency
Ordinary distributable translation Retained
share capital reserve (NDR) reserve (FCTR) earnings
Rm Rm Rm Rm
Balance at 30 77 1 479 (6) -
June 2010
Shares issued 1 - - -
Total - - 81 (212)
comprehensive
income
Transfer - (35) - 35
amortisation
net of deferred
taxation to NDR
Business - - (5) (15)
acquisition -
GOZ
Transfer NDR - (15) - 15
reserves with
NCI
Transfer fair - (178) - 178
value
adjustment on
GOZ to NDR
Dividends - - - -
declared - NCI
Dividends - - - (1)
declared
Balance at 31 78 1 251 70 -
December 2010
Shares issued 1 - - -
Total - - 145 (111)
comprehensive
income
Transfer - (36) - 36
amortisation
net of deferred
taxation to NDR
Business - - (23) 11
acquisition -
GOZ
Transfer to NDR - 11 - (11)
reserves with
NCI
Transfer fair - (76) - 76
value
adjustment on
GOZ to NDR
Business - - - -
acquisition -
V&A
Foreign - - - -
translation
difference on
NCI
Dividends - - - -
declared - NCI
Dividends - - - (1)
declared
Balance at 30 79 1 150 192 -
June 2011
Shares issued 6 - - -
Total - - 353 (406)
comprehensive
income
Transfer - (35) - 35
amortisation
net of deferred
taxation to NDR
Business - - 1 (11)
acquisition -
GOZ
Transfer to NDR - (11) - 11
reserves with
NCI
Transfer fair - (372) - 372
value
adjustment on
GOZ to NDR
Dividends - - - -
declared - NCI
Dividends - - - (1)
declared
Balance at 31 85 732 546 -
December 2011
Non-
controlling
Shareholders` interest Total
interest (NCI) equity
Rm Rm Rm
Balance at 30 1 550 496 2 046
June 2010
Shares issued 1 - 1
Total (131) 77 (54)
comprehensive
income
Transfer - - -
amortisation
net of deferred
taxation to NDR
Business (20) 402 382
acquisition -
GOZ
Transfer NDR - - -
reserves with
NCI
Transfer fair - - -
value
adjustment on
GOZ to NDR
Dividends - (28) (28)
declared - NCI
Dividends (1) - (1)
declared
Balance at 31 1 399 947 2 346
December 2010
Shares issued 1 - 1
Total 34 110 144
comprehensive
income
Transfer - - -
amortisation
net of deferred
taxation to NDR
Business (12) 354 342
acquisition -
GOZ
Transfer to NDR - - -
reserves with
NCI
Transfer fair - - -
value
adjustment on
GOZ to NDR
Business - 5 5
acquisition -
V&A
Foreign - 4 4
translation
difference on
NCI
Dividends - (43) (43)
declared - NCI
Dividends (1) - (1)
declared
Balance at 30 1 421 1 377 2 798
June 2011
Shares issued 6 - 6
Total (53) 308 255
comprehensive
income
Transfer - - -
amortisation
net of deferred
taxation to NDR
Business (10) 263 253
acquisition -
GOZ
Transfer to NDR - - -
reserves with
NCI
Transfer fair - - -
value
adjustment on
GOZ to NDR
Dividends - (76) (76)
declared - NCI
Dividends (1) - (1)
declared
Balance at 31 1 363 1 872 3 235
December 2011
Commentary
INTRODUCTION
Growthpoint is the largest South African listed property company with a
quality portfolio of 412 directly owned properties in South Africa valued
at R33,6 billion, a 61.0% interest in Growthpoint Properties Australia
(GOZ) which owns 40 properties in Australia valued at R11,7 billion and a
50% interest in the V&A Waterfront with properties valued at R9,7 billion.
The company`s objective is to grow and nurture a diversified portfolio of
quality investment properties, providing accommodation to a wide spectrum
of users and delivering sustainable income distributions and capital
appreciation, optimised by effective financial structures. Effectively, all
rental income received by the company, less operating costs and interest on
debt, is distributed to unitholders semi-annually, so that the company is
very similar to the Real Estate Investment Trust (REIT) models that are
well-established internationally. Growthpoint`s distributions are based on
sustainable income generated from rentals. The company does not distribute
capital profits.
Growthpoint is included in the JSE ALSI Top 40 Companies Index, with a
market capitalisation of R31,6 billion at 31 December 2011. Over the six
months, on average more than 72 million linked units traded per month (June
2011: 63 million). The monthly average value traded was R1,3 billion (June
2011: R1,1 billion).
The South African portfolio (excluding V&A Waterfront) represents 67% of
the total portfolio by value, and 80% by GLA, and is well-diversified in
the three major sectors of commercial property, being office, retail and
industrial. The bulk of the value of the South African properties is
situated in the major metropolitan areas in strong economic nodes.
Highlights for the period
ADDITIONAL INVESTMENTS BY GOZ
In July 2011, following the acquisition of six office properties held in
the Rabinov Property Trust, GOZ undertook a renounceable rights issue
underwritten by Growthpoint to raise AUD102,6 million at an issue price of
AUD1,90 per stapled security. The proceeds from the rights offer were
utilised to reduce bank debt and to provide additional capital for the
investment into the Energex office development in Nundah, Brisbane.
Growthpoint paid AUD62,1 million (R447 million) to follow its rights and an
additional AUD3,3 million (R22 million) to follow the rights that were not
taken up by security holders at the time.
Taking the additional R469 million investment into account, the total
amount invested at half-year by Growthpoint for its 61% interest amounts to
R2,0 billion. The market value of the investment at 31 December 2011 was
R2,8 billion.
In December 2011, GOZ announced the acquisition of three office properties
for a consideration of AUD207,5 million (R1,7 billion), as well as a 100%
pre-committed office development to the value of AUD82,0 million (R680,6
million). The acquisitions were partially funded by a rights offer to raise
AUD166,4 million (R1,4 billion) at an issue price of AUD1,90 per stapled
security and partially by debt. The rights offer was underwritten by
Growthpoint and was only concluded in January 2012, after the reporting
period. Growthpoint paid AUD101,6 million (R844 million) to follow its
rights and an additional AUD24,7 million (R206 million) to follow the
rights that were not taken up by security holders at the time. After the
rights issue, Growthpoint`s interest in GOZ increased to 64.5%.
The three office properties are included in the statement of financial
position at 31 December 2011, and a corresponding short-term liability is
reflected for R1,6 billion for the rights issue as well as the draw down
from the debt facility that would be required when final payment is due.
The new assets are fully let and together represent an initial property
income yield of 8.7% at a 4.6 year weighted average lease expiry. The
portfolio has also diversified from a purely industrial property fund in
2010 to a spread of 41% offices and 59% industrial properties, by value,
after the acquisition, prior to the completion of the developments.
EQUITY RAISED AND REPAYMENT OF CMBS NOTES
In July 2011, Growthpoint raised R1,8 billion by placing 100 million new
linked units with local and international institutional investors.
The equity raised was utilised to settle two Commercial Mortgage Backed
Securitisation (CMBS) notes of R969 million and R1,0 billion, respectively.
FINANCIAL RESULTS
Growthpoint has delivered growth in distributions per linked unit for the
period ended 31 December 2011 of 6.1%. The 6.1% growth is in the upper end
of the guidance previously given to the market.
The economic conditions during the period of review continued to improve,
albeit at a slow pace. This was evidenced by a decrease in vacancies in the
industrial and office sectors.
BASIS OF PREPARATION
These interim consolidated financial statements have not been reviewed or
audited by Growthpoint`s independent external auditors.
These condensed consolidated financial statements have been prepared in
accordance with the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), and the presentation
and disclosure requirements of IAS 34: Interim Financial Reporting, the AC
500 standards as issued by the Accounting Standards Board, the Companies
Act of South Africa, as amended, and the JSE Limited Listings Requirements.
The company`s accounting policies as set out in the audited financial
statements for the year ended 30 June 2011 have been consistently applied.
Investment property comprises land and buildings held to generate rental
income over the long term. Should any properties no longer meet the
company`s investment criteria and be sold, any profits or losses will be of
a capital nature and will be taxed at rates applicable to capital gains.
Deferred taxation on the revaluation of investment property is offset
against the deferred taxation asset that arises on the revaluation of the
company`s issued debentures (excluding deferred taxation on intangible
assets and deferred taxation on the investment in GOZ).
The investment in GOZ has been accounted for in terms of IAS 21 The Effects
of Changes in Foreign Exchange Rates. The consolidated statement of
financial position includes 100% of the assets and liabilities of GOZ,
converted at the closing exchange rate at 31 December 2011 of R8,24:AUD1
(June 2011: R7,24:AUD1). The consolidated statement of comprehensive income
also includes 100% of the revenue and expenses of GOZ, which was translated
at an average exchange rate of R7,84:AUD1 (December 2010: R6,72:AUD1) for
the six months ended 31 December 2011. The resulting foreign currency
translation difference is recognised in other comprehensive income. A non-
controlling interest was raised for the 39.0% (June 2011: 39.4%) not owned
by Growthpoint.
The 50% interest in the V&A Waterfront is accounted for in terms of IAS 31
Interest in Joint Ventures. Growthpoint proportionately consolidated its
50% interest of assets and liabilities, as well as income and expenses.
NET PROPERTY INCOME
The increase in revenue (26.1%) was largely due to the inclusion of revenue
from the V&A Waterfront of R201 million, higher revenue from GOZ (R175
million) due to acquisitions made, as well as contractual rental
escalations.
Earnings from the V&A Waterfront for the six months have been in line with
our expectations at the time of concluding the transaction. The ongoing
difficult economic conditions are impacting on the hotel and leisure
industries and this will have an impact on turnover rentals earned from the
V&A Waterfront, however this is not significant. Construction has commenced
on a state of the art new 4-Star Green Star design rated 18 100m2 head
office for Allan Gray with related retail and parking facilities.
The ratio of property expenses to revenue has improved from 23.0% to 22.7%,
whilst other operating expenses remained the same at 2.9%.
FAIR VALUE ADJUSTMENTS
The revaluation of properties resulted in an upward revision of R1 152
million (2,3%) to R50,2 billion for investment property (including
investment properties reclassified as held for sale). This was mainly due
to an increase in future contractual rentals. Interest-bearing borrowings
were fair valued upwards by R508 million (2,7%), using the yield curve at
31 December 2011. The trading market value of the investment in GOZ, based
on a stapled security price of AUD1,93 (June 2011: AUD1,89) and translated
at the closing rate at the end of the period, resulted in a positive fair
valuation adjustment of R372 million.
No revaluation has been done of the recently acquired V&A Waterfront.
FINANCE COSTS
Finance costs increased by 42.6% to R833 million (December 2010: R584
million). This was as a result of the acquisition of the 50% interest in
the V&A Waterfront of R4,9 billion in June 2011, as well as the higher debt
of GOZ as a result of acquisitions.
LONG-TERM LOANS GRANTED TO BEE CONSORTIA
In November 2011, Growthpoint`s first BEE transaction was refinanced and
Growthpoint received R306 million as a partial repayment of the loan.
Interest accrues at 15% per annum on the remaining balance of R200 million
and is payable semi-annually.
ARREARS
At the end of December 2011, arrears for the South African business
(excluding V&A Waterfront) amounted to R49,3 million (June 2011: R34,8
million) with a provision of R15,3 million (June 2011: R16,8 million)
having been raised for potential bad debts.
The bulk of this increase arose in Northgate shopping centre where a large
backdated assessment rates adjustment was charged to tenants in December
2011. Growthpoint`s 50% share amounted to R9,4 million.
For the period to December 2011, the total bad debts expensed amounted to
R3,9 million (December 2010: R3,3 million).
VACANCY LEVELS
At 31 December 2011 Growthpoint`s vacancy levels in South Africa (excluding
V&A Waterfront), as a percentage of gross lettable are (GLA) were:
Retail 3.6% (June 2011: 2.9%)
Office 6.7% (June 2011: 8.1%)
Industrial 2.7% (June 2011: 4.3%)
Total 4.0% (June 2011: 5.0%)
The Retail vacancy includes space in three shopping centres that is
currently under redevelopment. Excluding this space, the vacancy would be
2.7%.
ACQUISITIONS AND COMMITMENTS
Apart from the four properties acquired by GOZ, Growthpoint acquired
through a 50% partnership vacant land in Rosebank, with Growthpoint`s share
amounting to R43,3 million. This land is close to the Rosebank Gautrain
Station and a development for 35 000m2 is intended for office space.
GOZ has a capital commitment to the value of AUD115,7 million in respect of
the development of the Energex office at Nundah, Bisbane, as well as the
recently acquired 219-247 Pacific Highway in Sydney.
The development at the V&A Waterfront for Allan Gray commenced in the
current period. The commitment outstanding at 31 December 2011 amounts to
R518 million, of which Growthpoint`s effective share is 50%.
In addition, Growthpoint South Africa has commitments outstanding in
respect of developments amounting to R762 million and acquisitions
amounting to R710 million.
DISPOSALS
Thirteen properties were disposed of in the current period for R290,6
million, realising a profit of R73,5 million on cost. These properties were
previously valued at the anticipated selling price. In the prior year
Growthpoint swopped 18% of its interest in Brooklyn Mall for an 82%
interest in Design Square. During the current period an additional 7%
interest in Brooklyn Mall/Design Square was disposed of for R120,3 million,
realising a profit on cost of R54,9 million. Growthpoint`s interest is now
75%.
GOZ disposed of one property during the period for AUD5,2 million (R42,8
million).
BORROWINGS
At 31 December 2011, the consolidated loan to value ratio (LTV) measured by
dividing the nominal value of interest-bearing borrowings (net of cash) by
the fair value of property assets, including investment property held for
sale was 35.1% (30 June 2011: 41.1%).
The decrease in the gearing is mainly as a result of the Growthpoint and
GOZ rights issues in July 2011 of R1,8 billion and AUD102,6 million,
respectively. Growthpoint also managed to increase the percentage of
unsecured debt to total debt from 21.1% at June 2011 to 36.0% at 31
December 2011. The increase in unsecured debt was aided by two further
issues of R500 million (4,25 years) and R260 million (5 years),
respectively, into the bond market, as well as three commercial paper
issues of R300 million each.
SHARE AND DEBENTURE CAPITAL
The authorised share capital is R100 000 000, divided into two billion
ordinary shares of five cents each. Each ordinary share is linked to ten
variable rate debentures of 250 cents each.
The ordinary shares and debentures trade as linked units on the JSE Limited
(JSE). In terms of the debenture trust deed, the interest payable on the
debenture component of the linked unit is always 1 000 times greater than
the dividend payable per ordinary share.
Apart from the 100 million units issued in July as part of the R1,8 billion
equity raising, 9 395 000 units were issued to those linked unitholders who
elected to reinvest their 2011 final distribution. The linked units were
issued at R17,80 per unit.
PROSPECTS
It is expected that growth in distributions for the full year will be in
line with the growth rate achieved in the six months ended 31 December
2011.
This profit forecast has not been reviewed or reported on by Growthpoint`s
independent external auditors.
CASH DISTRIBUTION WITH THE ELECTION TO RE-INVEST THE CASH DISTRIBUTION IN
RETURN FOR GROWTHPOINT LINKED UNITS
Notice is hereby given of interim dividend declaration number 51 of 0,068
cents and debenture interest payment number 51 of 67,732 cents per linked
unit totaling 67,8 cents per linked unit for the six months ended 31
December 2011.
Linked unitholders will be entitled to elect to re-invest the Cash
Distribution in return for linked units (Linked Unit Alternative), failing
which they will receive the Cash Distribution in respect of all or part of
their linked unitholding.
Linked unitholders who have dematerialised their linked units are required
to notify their duly appointed Central Securities Depository Participant
(CSDP) or broker of their election in the manner and time stipulated in the
custody agreement governing the relationship between the linked unitholder
and their CSDP or broker.
Summary of the salient dates relating to the Cash Distribution and Linked
Unit Alternative are as follows:
2012
Circular and form of election posted to linked Thursday, 23 February
unitholders
Announcement of linked unit ratio and Friday, 2 March
finalisation information
Last day to trade in order to participate in the Friday, 9 March
Cash Distribution and Linked Unit Alternative
Linked units to trade ex-distribution Monday, 12 March
Listing of maximum number of Linked Unit Monday, 12 March
Alternative linked units commences on the JSE
Last day to elect to receive a Linked Unit Friday, 16 March
Alternative and/or to receive the Cash
Distribution
Record date Friday, 16 March
Announcement of results of Cash Distribution and Monday, 19 March
Linked Unit Alternative on SENS
Linked unit certificates posted and Cash Monday, 19 March
Distribution posted/paid to certificated linked
unitholders
Accounts credited by CSDP or broker to Monday, 19 March
dematerialised linked unitholders
Announcement of results of election of Cash Tuesday, 20 March
Distribution or Linked Unit Alternative in the
press
Adjustment to linked unit listed on or about Tuesday, 20 March
Linked units may not be dematerialised between Monday, 12 March 2012 and
Friday, 16 March 2012, both days inclusive. The above dates and times are
subject to amendment. Any such amendment will be released on SENS and
published in the press.
By order of the Board
Growthpoint Properties Limited
21 February 2012
Directors
JF Marais (Chairman)
HSP Mashaba (Deputy Chairman)
LN Sasse* (Chief Executive Officer)
EK de Klerk*
MG Diliza
PH Fechter
LA Finlay
JC Hayward
HS Herman
R Moonsamy
NBP Nkabinde
ZJ Sithole
SM Snowball*
CG Steyn
JHN Strydom
FJ Visser
* Executive
Registered office
The Place, 1 Sandton Drive, Sandton, 2196.
PO Box 78949, Sandton, 2146
Transfer secretary
Computershare Investor Services (Pty) Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
Investec Bank Limited
100 Grayston Drive, Sandown, Sandton, 2196
PO Box 78949, Sandton, 2146
Date: 22/02/2012 09:14:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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