Growthpoint to shed noncore assets

4 Oct 2016

Growthpoint Properties plans to dispose of a R1bn portfolio of 13 noncore office properties on an invited tender basis.

The group said the disposal would give small listed funds and private property companies access to high-quality assets in an undersupplied market.

Growthpoint had sold about R2.5bn worth of assets in the past few years, but this was the first time the real estate investment trust (Reit) had a portfolio of this size on the market simultaneously, Rudolf Pienaar, Growthpoint Properties' divisional director of offices, said.

The properties for sale are all in Gauteng and together span about 80,000m² of investment-grade office space occupied by tenants on leases that extend for as long as 2021. As the largest South African primary listed Reit, Growthpoint's assets are valued at R112.5bn.

"The properties for sale represent a potential deal value of over R1bn. However, this is small compared with Growthpoint's overall office portfolio value of R33bn, thanks to its significant growth over the past two years," said Pienaar.

Pienaar said Growthpoint's investment criteria had improved in the past few years and the assets earmarked for sale were no longer core to the overall portfolio. But Pienaar said these properties were of a high standard, which could make them attractive to smaller Reits and private groups.

Pienaar said Growthpoint was not set to acquire any large new office portfolios domestically this year and was "in a consolidation phase".

Growthpoint's CEO, Norbert Sasse, has said the group is looking for offshore opportunities that meet the group's investment criteria.

Commentators have said Growthpoint is struggling to locate a strong partner that would complement an offshore strategy in growing markets such as Eastern Europe and also the UK.

Grindrod Asset Management's chief investment officer, Ian Anderson, said Growthpoint's management team were cautious and would take a measured approach when acquiring new properties.

Source: Business Day

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