Growthpoint has re-assured the market that its property portfolio is well positioned to withstand the immediate challenges of COVD19.
Timothy Collyer, Managing Director of Growthpoint, commented, “The COVID-19 pandemic has created unprecedented uncertainty in our operating environment and the broader Australian economy."
"Growthpoint entered this period on a solid footing, and we are focused on ensuring that our business withstands this challenging period. The Group’s income is derived primarily from rent of office and industrial properties and we have limited development risk, having finishing Botanicca 3 ahead of schedule."
Growthpoint has limited exposure to SME tenants with 96% of the Groups income derived from tenants with turnover above $50 million,
predominately large, listed companies and government bodies. The Group estimates that SME tenants, with revenue below $50 million, contribute approximately 4% of the Group’s portfolio income and that not all those groups been severely impacted by the COVID-19 pandemic.
Growthpoint has confirmed the receipt of rent-relief requests, which includes waivers, rental reductions and deferments, from tenants who are covered by the code of conduct, and some who are not.
Mr Collyer said, "we have granted a small number of rent relief requests, primarily to tenants who operate hospitality and other small retail businesses at our properties. We expect this number to increase as we work through our review process"
The Group has implemented a Board-approved process to ensure that rent relief is being distributed fairly to those tenants that have been most significantly and directly impacted by the virus and who most need our support. The process includes reviewing tenants’ financial information and use of their property.
Growthpoint note that they are working with tenants on a case by case basis to agree an appropriate way forward, which considers the impact of the COVID-19 pandemic on their business but is unlikely to be able to fully quantified the financial impact for the Group until all requests have been received and reviewed.
Growthpoint’s portfolio occupancy decreased from 98% in December to 94% as at 31st March. Growthpoint advises, that the COVID-19 pandemic has made leasing new property more challenging, as businesses’ decision-making processes appear to have become more prolonged in this environment.
The Group itself has cut back expenditure where possible, with non-essential capital projects delayed. This includes the development of 120 Northcorp Boulevard, Broadmeadows, Victoria which will be reconsidered once the longer-term impacts of the COVID-19 pandemic become clearer.
Growthpoint states that its balance sheet is robust and that it remains well within all its debt covenant limits with no debt maturing until 2022. The Group’s gearing is currently at 32.7%, below the bottom of its target range, 35% – 45% with undrawn debt lines of $235 million and $41 million of cash on its balance sheet.
Growthpoint are likely to whether the short term trading conditions in reasonable shape, however the mid to long term conditions are far from being resolved. Valuations are likely to fall from the lack of capital in the market and this may place some pressure on the groups balance sheet in 2022.
Related Articles
