Allan Gray to relocate HQ to V&A Waterfront

Allan Gray to relocate HQ to V&A Waterfront

JSE-listed Growthpoint says it has committed R684m for a new development on the landmark V&A Waterfront with investment management firm, Allan Gray, as an anchor tenant.

In June 2011 the company took transfer of 50% of the Waterfront in Cape Town in a R4.9bn deal which has been described as one of the country’s largest property transactions yet. The Allan Gray headquarters will fall within the Clock Tower/Silo Square precinct and is expected to be ready for occupation in April 2013. A development blueprint is in the process of being put together with work scheduled to begin In September 2011. A retail component is on spec to cater for the Allan Gray staff.

CEO Nortbert Sasse says the property company’s long-term expectations for the V&A are for superior returns generated by completing all development opportunities. He also mentioned that the debt-funded Waterfront transaction took Growthpoint’s borrowings from R9.3bn to R14.3bn, increasing the company’s loan-to-value ratio from 29.9% to 37.8%. Growthpoint has a portfolio of 424 directly owned properties in South Africa valued at R32.5bn, it also owns 37 properties in Australia valued at R6.4bn and bought the V&A at a cost of R4.9bn.

In its annual results presentation, the property giant said it had posted an 8.1% rise in distributions to 131c per linked investment unit in the year ended June, compared with the previous financial year. Growthpoint Properties says given the global and economic uncertainties, higher interest margins on debt refinance and other pressures, it expects to show positive growth in distribution of between 3% and 7% in the next financial year.

CEO Norbert Sasse has attributed its performance to aggressive property management, vigilant control of arrears, fortified portfolio occupancy levels and the distribution enhancing performance of Growthpoint Properties Australia (GOZ) in which Growthpoint has a 61% holding.

With regards to its investment in Australia, Sasse says the venture continues to perform positively with the strong Australian dollar providing an additional boost to the company’s distributions. Its total return over the past year has amounted to 28.6% made up of an income return of 11.4% and a capital return of 17.2%. GOZ has acquired 15 properties during the year, bringing its total number of properties to 37 across Australia and increasing the value of the GOZ portfolio to just more than Aus$1bn. The portfolio there has gone from purely industrial properties to include a 28% spread of offices at year end.

Sasse says at a level of 7.4%, tenant arrears as a percentage of total monthly collectables have been successfully cut by Growthpoint to levels prior to the 2008/2009 global financial crisis. He added the company’s portfolio occupancy had strengthened during the year, with the overall vacancy level coming down from 6.4% to 5%. “The successful cutbacks in vacancies has been balanced against lacklustre demand, particularly for office space, in the context of a gruelling economic climate with low GDP growth and increasing unemployment figures,” Sasse said. He added that clients were generally seeking shorter leases, reflecting uncertainty on the outlook of the South African and global economies.

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Denny Crane

Denny Crane
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