Growthpoint’s most valuable property asset, its 50% stake in Cape Town’s Victoria & Alfred Waterfront, continues to deliver bigger dividends for the group even in the face of tough economic conditions in SA.
Its stake in the trophy mixed-use property, which it jointly owns with the Government Employees Pension Fund (managed by the Public Investment Corporation), is now valued at R9.6 billion.
Figures from Growthpoint’s latest full-year results to end June, published on Wednesday, show that the V&A Waterfront contributed 1.5% of the group’s 5.3% increase in distributable income growth for the year. The rest of the group’s 450-strong South African property portfolio, valued at R78.3 billion, negatively affected distributable growth by -0.2% for the year.
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“The V&A Waterfront is no doubt a top performer for the group in SA, with most of the balance of distributable income growth for the year coming from our offshore assets in Australia and the Central and Eastern Europe market,” notes Estienne De Klerk, CEO of Growthpoint Properties SA.
Growthpoint’s distributable income came in at R6.4 billion for its 2019 financial year. The 5.3% increase saw the group declare dividends per share (DPS) of 218.1 cents, up 4.6% on its 2018 full-year and marginally above its market guidance.
De Klerk says the V&A Waterfront contributed R678 million in investment income for the year, up 14.4% from the prior year. However, this included R35 million in residential sales. Distributable income from the property came in at R639 million, up 9.7%.
SA’s most visited tourist attraction
“This is a strong performance compared to the property market in the rest of SA, but the V&A Waterfront is a unique asset and is the most visited tourist attraction in SA,” he notes. “It boasts the highest retail trading densities [sales turnover per rentable square metre] in the country at around R5 200/m2. In fact, the V&A Waterfront had trading density growth of 4.5% in the six-month period to June compared to the same period last year.”
According to Growthpoint’s results presentation, the V&A Waterfront had solid demand for retail space with rental renewal growth of 3.7%. Footfall was stable at around 26 million visitors, while overall vacancies dropped from 1.8% to 1.2%.
Office vacancies at the waterfront came in at a low 1.8%, compared to benchmark vacancies in the Cape Town CBD at 11.3%.
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In Growthpoint’s overall SA portfolio office vacancies were up from 8.6% to 10.4%, while retail vacancies were marginally up to 3.9%. Industrial property vacancies were up from 4% to 6.2%.
De Klerk says current expansion projects underway at the V&A Waterfront include a 4 000m2 extension of the Woolworths store as well as a new 8 500m2 regional head office development for Deloitte.
The Woolworths expansion is along the lines of Pick n Pay’s and goes down into the basement, and will be complete ahead of the December festive season, he says.
Premium grade office space hot property
“We have strong demand for premium grade office space at the V&A Waterfront. Deloitte’s new offices will open in October 2020, while we are also the preferred bidder for the new 9 000m2 Investec Bank building that is being earmarked for the growing Canal District,” he adds.
He notes that hotel occupancies at the waterfront have returned to “pre-water-crisis levels”, while the Cape Town Cruise Terminal saw a 16% increase on last year and handled some 66 000 passengers.
The cruise terminal is set to get a major boost in the 2020/2021 summer season, when MSC Cruises will ‘homeport’ out of Cape Town for the first time and operate cruises up the West Coast.
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Moneyweb reported last month that MSC Cruises, which runs most of its local cruises out of the Port of Durban to Mozambique and up the East Coast, will have two cruise ships operating in SA waters for the 2020/2021 season. The bigger MSC Musica with a capacity to carry 3 200 guests will be homeported in Durban, while MSC Opera will be homeported in Cape Town and has a capacity for around 2 500 guests.