Growthpoint declares interim dividend, despite Covid-19 pressure

Blue-chip listed real estate investment trust (Reit) Growthpoint Properties declared an interim dividend of 58.50 cents per share on Wednesday, for its half-year results to December 31, 2020.

The move is likely to be well received by most investors, despite a fall in the value of the dividend payouts. Many of its JSE peers have opted to withhold paying out interim dividends or defer the pay-out decision to each company’s respective financial year-ends.

Other listed property counters, such as Redefine Properties, Capital & Regional (UK) and Rebosis Property Fund, have even decided not to pay out full-year dividends in their latest results. These counters have faced ballooning loan-to-value (LTV) or gearing ratios, which is largely behind the decision not to pay dividends.

Read: No Capital & Regional dividends for Growthpoint in 2020

Listen: Garreth Elston of Reitway Global on Redefine not paying a dividend

Most Reits are choosing to withhold part of dividend pay-outs in order to retain cash amid the Covid-19 economic crunch, which has not only impacted rental income due to lockdowns but has seen devaluation of property assets.

Growthpoint’s latest interim dividend is based on an 80% pay-out ratio, so the group has also opted to retain some earnings to bolster its balance sheet and weather ongoing Covid-19 pandemic pressure.

The group’s interim distribution per share (DPS) is 47.5 cents lower than its comparative half-year period.

“Shareholders and noteholders are… advised that the DPS for the six months ended December 31, 2020 amounted to 58.50 cents per share, resulting in a 44.8% decrease when compared to the DPS for the six months ended December 31, 2019 [106 cents],” Growthpoint notes in its interim results statement.

“Shareholders and noteholders are also advised that the distributable income per share [DIPS] for the six months ended December 31, 2020 amounted to 73.1 cents per share, resulting in a 31% decrease when compared to the DIPS for the six months ended December 31, 2019 (106 cents),” it adds.

This means that Growthpoint is retaining 14.6 cents worth of interim distribution for each share.

“The decrease in DPS and DIPS is due to the 21.6% decrease in distributable income, the successful equity raise and dividend reinvestment plan in November 2020 which resulted in 408 290 684 additional shares issued and the reduction in the pay-out ratio from 100% of distributable income for the six months ended December 31, 2019 to 80% for the six months ended December 31, 2020,” the group points out in its Sens.

Read: Growthpoint plunges over 16% after R4.3bn capital raise

DPS is the key financial metric for evaluating the performance of SA Reits.

Meanwhile, Growthpoint’s net asset value (Nav) per share decreased by 7.6% to R21.32 for its half-year to the end of December, compared with R23.07 cents for its full-year period ended June 30, 2020.

This means that its share price is still trading at a significant discount to Nav.

Growthpoint’s share price weakened around 1.7% (to R13.85 at 10am) in early morning trade, following the release of its latest results. However, the market is yet to fully digest the results, with the group’s presentation to media and analysts taking place midday on Wednesday and Thursday.