Growthpoint Properties continues to grow internationally with an additional R908-million investment in Australia.
The JSE-listed REIT is following its full rights in the funding call from ASX-listed Growthpoint Properties Australia (GOZ), in which Growthpoint has a 66% shareholding, for the acquisition of the Bank of Queensland headquarters in Brisbane.
GOZ acquired the 24 665m² A-grade office building, fully occupied by the Bank of Queensland and Collection House, with a weighted average lease expiry of 7.5 years and a weighted average rent review of 3.9% a year. The building is new, completed in 2014, and is certified with excellent green and energy efficiency credentials.
GOZ will partially fund the AUD250-million acquisition, which has an initial yield of 6.1%, through an equity raising of up to some AUD135-million. Growthpoint confirms that it will take up its full entitlement of around AUD89-million or R908-million.
Norbert Sasse, group CEO of Growthpoint, comments, “The growth of our offshore holdings is the key driver for Growthpoint. Australia remains an attractive market for us relative to South Africa and supporting GOZ’s major acquisition further diversifies Growthpoint offshore.”
He adds, “The accretive acquisition is a coup for GOZ in light of the wall of international money competing for direct property assets in the Australian market right now. This deal is remarkable because it adds an extremely high-quality modern asset with excellent covenants in a prime market to the Australian portfolio.”
Growthpoint intends to issue a R1-billion bond on the local debt capital markets, which it will use mainly to finance the transaction.
Sasse confirms that GOZ is expected to perform well and make a good contribution to Growthpoint’s distribution to shareholders this financial year. GOZ has given growth guidance of AUD23 cents per share for financial year 2019. Also, Growthpoint has taken advantage of the weaker rand in recent months to ensure its distributions are well hedged. The contribution that GOZ makes to Growthpoint’s distributions is now rebased to include maximum withholding tax.
Growthpoint first invested in GOZ in 2009 at the same time as the Australian listed property bottomed-out after the financial crisis. Since then, GOZ’s market capitalisation has since grown 50-fold, from AUD50-million to some AUD2.5-billion, with the support of Growthpoint.