Growthpoint Properties Australia released their results for the twelve months ended 30 June 2020.
FY20 financial Highlights
- Funds from operation (FFO) per security of 25.6 cps, 2.0% up on prior corresponding period (pcp)
- FY20 distribution of 21.8 cents per security (cps), 5.2% lower than pcp to retain a higher level of capital within the Group as a prudent measure due to the uncertainty caused by the COVID-19 pandemic
- Net tangible assets (NTA) per security of $3.65, 4.3% higher than pcp, driven by property valuation uplift in the first half of FY20
- Refinanced $400 million of debt, lowering the Group’s weighted average interest rate to 3.4% and extending its weighted average debt maturity to 4.7 years
- Gearing reduced by 210 bps to 32.2% from 30 June 2019, well below the Group’s target range, 35% – 45%
- Statutory profit after tax decreased to $272.1 million (FY19: $375.3 million) primarily due to a lower net gain in fair value of investments
FY20 operations overview:
- Net property income (NPI) up 5.1% to $242.1 million and like-for-like NPI up 2.2% on pcp
- Strong property valuation gain in first half of the year and no material change in the second half; portfolio valued at $4.2 billion, up 5.0% on pcp
- Weighted average capitalisation rate of 5.7%, down 22 basis points on pcp
- Weighted average lease expiry (WALE) of 6.2 years (30 June 2019: 5.0 years)
- Achieved practical completion on an A-grade office development (Botanicca 3) in Richmond, Victoria and expansion of a distribution centre, leased by Woolworths, in Gepps Cross, South Australia
- Portfolio occupancy decreased to 93% (30 June 2019: 98%), as Botanicca 3 was vacant on completion. Excluding Botanicca 3, portfolio occupancy was 97%
- Signed 25-year lease with the Group’s largest single tenant, the NSW Police Force
- High tenant retention rate of 85% (FY19: 66%)
- Average NABERS Energy rating of 4.9 stars (30 June 2019: 4.8 stars)
COVID-19 response:
- Implemented response to COVID-19 pandemic, prioritising safety of employees, tenants and broade community
- Provided assistance to severely impacted tenants, granting $0.8 million of rental abatements and deferring $2.0 million of rental payments
- Rent collection has remained strong with 97% of April 2020 to June 2020 total billings collected
Timothy Collyer, Managing Director of Growthpoint, said, “When we look back on FY20, it is difficult to look beyond the last four months of the financial year, when we, like individuals and organisations around the world, were forced to face a dramatically different operating environment dictated by the COVID-19 pandemic. As a result of this uncertainty, we withdrew all forward-looking statements,
including our guidance, in March.
"Our business entered this period on a strong footing and has demonstrated its resilience throughout this challenging period. To date, our earnings have not been materially impacted by the COVID-19 pandemic.
In FY20, the Group delivered FFO of 25.6 cps, which was ahead of earlier guidance. The Group has undrawn debt lines of $360 million and $43 million of cash on its balance sheet.
Growthpoint completed two development projects, both ahead of time and on budget with an A Grade office building, Botanicca, completed in February and an expansion of a distribution centre in Gepps Cross, SA was completed in June. Woolworths commenced a 15-year lease of the distribution centre, however leasing of Botanicca is slow with the building remaining fully vacant and unlikely to see leasing commitments in the short term.
Property portfolio valuation
Growthpoint engaged external valuers to value 31 properties or approximately 65% of its property portfolio by value as at 30 June 2020. Based on this analysis, the value of the portfolio as at 30 June 2020 was $4.2 billion, 5.0% higher than at 30 June 2019.
The value of the portfolio did not change materially in the second half of the year, as a decrease in the value of some of the properties with near term lease expiries was offset by an increase in the value of a number of long WALE properties, particularly the New South Wales Police Force’s headquarters in Paramatta and Woolworths’ distribution centre in Gepps Cross, where new leases commenced during the year.
Outlook
There still exists a great deal of uncertainty around the impact that the COVID-19 pandemic will have on Growthpoint’s operating environment, including the effect and duration of government measures taken to stop the spread of the virus and assistance to support businesses and individuals.
Growthpoint expect the overall impact of the pandemic on the broader Australian economy will be significant. As a result, the Group has not provided FFO guidance for FY21 but have provided FY21 distribution guidance of 20.0 cps.
Mr Collyer said: “While the outlook for FY21 is unclear, we are confident that we have put in place the right steps to ensure our business continues to meet the challenges presented by the COVID-19 pandemic.
Looking further ahead, undoubtedly, the COVID-19 pandemic is going to have far-reaching implications for our economy and society and the true impact of the virus will not be known for many years. However, Growthpoint is well positioned to deliver value to Securityholders over the long term. The fundamentals of our business remain robust, with a long WALE, high-quality tenants and manageable near-term lease expiries. We also have a strong balance sheet, appropriate liquidity and ongoing access to providers of future capital.”
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