Growthpoint Properties upgrades guidance and reports 2.2% gain in vals

Growthpoint Properties Australia announced its distribution for the six months ending 30 June 2022, and upgrades its FY22 earnings guidance by 8% and revealed draft external valuations of its property portfolio are up 2.2%.

Timothy Collyer, Managing Director of Growthpoint, said, “We are pleased to upgrade our FY22 FFO guidance today to at least 27.7 cps and announce our distribution of 10.4 cps for the six months to 30 June 2022, which reflects the continued strong performance of the Group over the year. The preliminary results of Growthpoint’s external valuations demonstrate the resilience of the Group’s growing property portfolio, with the uplift reflecting the ongoing strength of the industrial market and leasing success across both our office and industrial portfolios.

Ongoing market uncertainties caused by high inflation and the Reserve Bank of Australia’s increase to the official cash rate will mean a significant rise in interest rate expense for the A-REIT sector going into the next financial year.

Growthpoint will be subject to a higher interest expense on its floating debt, with circa 60% of its debt forecast to be fixed as at 30 June 2022. However, the Group has ample head room to debt covenants and no hedges expiring in FY23. The Group’s exposure to favoured industrial and metropolitan office property markets and secure income from predominantly large corporate and government tenants provide a resilient foundation for our business. Our goal remains to provide our securityholders with sustainable income returns and capital appreciation over the long term.”

In December 2021, Growthpoint provided upgraded FY22 FFO guidance of at least 27.0 cps. Since then, the Group has settled its acquisition of 2-6 Bowes Street, Phillip, ACT, purchased 141 Camberwell Road, Hawthorn East, VIC, has seen Woolworths exercise their five-year lease option for their Queensland distribution centre at Larapinta and received the rental determination, and has continued to see leasing successes across the portfolio. As a result, the Group has upgraded its FY22 guidance to at least 27.7 cps, which represents a minimum of 7.8% growth over FY21.

To date, Growthpoint has engaged independent external valuers to revalue 30 of its 58 properties, or 58% of the Group’s portfolio by value, at 30 June 2022. In line with the Group’s valuation policy, the remaining valuations will be undertaken as internal or Director’s valuations. The preliminary draft external valuations indicate a $64.5 million, or 2.2%, increase on a like-for-like basis in asset values to 31 December 2021 book values. This uplift is expected to add approximately 8 cps to the Group’s NTA, which was $4.55 per security at 31 December 2021.

Industrial

The Group has had 17 of its 31 industrial assets revalued by independent valuers, representing 61% of its industrial portfolio by value. The preliminary draft external valuations indicate the value of the Group’s industrial portfolio has increased by $69.8 million, 7.0% higher on a like-for-like basis than the 31 December 2021 book values. Rent growth being a significant driver of the uplift. On a like-for-like basis, the average market capitalisation rates of the industrial properties valued has reduced approximately 24 basis points to 4.7%.

Office

Growthpoint has also had 13 of its 27 office assets revalued by independent valuers, representing 56% of its office portfolio by value. The preliminary draft external valuations indicate the value of the Group’s office portfolio has marginally decreased, by $5.3 million, 0.3% lower on a like-for-like basis than the 31 December 2021 book values. On a like-for-like basis, the average market capitalisation rates of the office buildings valued has increased approximately 10 basis points to 5.0%.

The final audited valuations for individual properties will be available as part of Growthpoint’s FY22 results, which will be released to the market on Tuesday 16 August 2022.

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