Growthpoint provides operating update and upgrades guidance

Growthpoint Properties Australia (Growthpoint or the Group) provides the following operating update, upgrades its FY22 guidance and announces its distribution for the six months ending 31 December 2021. 

Key highlights 

• Preliminary draft external valuations indicate a significant valuation uplift of $256 million¹, which is expected to contribute an approximately $0.33 per security increase to the Group’s net tangible assets (NTA), to $4.50 per security pro forma, from $4.17 at 30 June 2021 
• Acquisition of an A-grade, modern office asset, leased to government tenants with a 9.2 year weighted average lease expiry (WALE), located in suburb of Phillip, Australian Capital Territory (ACT), for $84.6 million 
• Refinanced $715 million of debt and entered into two new debt facilities totalling $150 million at lowest pricing in Group’s history 
• FY22 funds from operations (FFO) guidance upgraded to at least 27.0 cents per security (cps) and FY22 distribution guidance upgraded to 20.8 cps, previously at least 26.3 cps and 20.6 cps, respectively 

Timothy Collyer, Managing Director of Growthpoint, said, “Growthpoint has had an active period across the business, during the first half of FY22. We are pleased to have exchanged contracts to acquire an A-grade office asset in the ACT, with high occupancy and a long WALE, increasing our investment in this market to $261 million². The property is located in the suburb of Phillip, regarded as ‘Australia’s Public Health Hub’, which will benefit from ongoing government investment in infrastructure and transportation links. 

“We have also taken advantage of record-low pricing to extend $715 million of existing debt facilities, reducing our re-financing risk and lowering our average cost of debt by 23 basis points and extending our weighted average debt maturity by 2.6 years. We have also entered into two new facilities of $75 million each to fund future property acquisitions. The attractive terms we have secured highlight the strength of our relationships with our banking partners and their continued support of our growth ambitions. 

“Both initiatives are expected to be accretive to FFO in FY22. We’re pleased to upgrade our FFO and distribution guidance today to at least 27.0 cps and 20.8 cps, respectively, supported by strong leasing success across the portfolio, our additional investment in Dexus Industria REIT, the acquisition of 11 Murray Rose Avenue, Sydney Olympic Park, NSW, and the active management of our debt book.” 

Commenting on the results of the Group’s preliminary draft valuations, Mr Collyer also said, “After the largest 12-month like-for-like valuation increase in the Group’s history over FY21, we are pleased to see that our preliminary draft external valuations indicate another substantial uplift in the first half of FY22. This uplift has been driven by leasing success across both our office and industrial portfolios, alongside favourable market conditions. There continues to be further yield compression across the industrial sector, with recent sales setting new benchmarks. Investor confidence in the office market is improving, as leasing markets appear to have stabilised, driving an increase in sales activity and yield compression for A-grade, well-leased assets.” 

Read the full ASX announcement

1. Gross increases, excluding capital expenditure incurred and net movement on incentives.

2. Including existing ACT Property values as at 30 June 2021.