Growthpoint: investor update (pre-close FY20)

Growthpoint has released its pre-close investor update for the nine-month period ending on the 31st of March 2020.

Despite the continuing weak macro economy during the first nine months of the 2020 financial year, the Company was on track to deliver the guidance provided to the market at their FY19 results.

The impact of the global pandemic and the lockdown restrictions on all of Growthpoint’s business operations, its subsidiaries, and investments (both locally and internationally) for the last quarter of FY20 has been varied. The South African retail business, the V&A Waterfront as well as Capital & Regional, which has close to 100% exposure to the retail sector have been most negatively impacted.

Despite the lockdown commencing the week following the Company’s release of its HY20 results, Growthpoint continued to progress all their strategic initiatives, notwithstanding their firm internal focus on managing business operations during these unprecedented times.

The Company is at advanced stages of concluding a private placement of R750 million of unsecured corporate paper in the bond market with R100 million for one year and R650 million for three years, at spreads of 180 basis points and 210 basis points over Jibar respectively.

While liquidity via the traditional banking market has been available, it has been for shorter terms and at higher margins.

Total nominal debt at the end of March 2020 was at R43.3 billion, including R2 billion of adverse foreign exchange movements on the Company’s foreign-denominated debt. Cash and unutilised facilities were R2 billion at the end of May 2020. At the beginning of April, Moody’s downgraded South Africa’s sovereign credit rating and, in tandem, also downgraded the rating of Growthpoint to Ba1 from Baa3, with a negative outlook.

Growthpoint’s national scale rating was confirmed at The weighted average term of the liabilities was 3.6 years at the 31st of March 2020. The Company’s weighted average interest rate was 8.9% (9.2% FY19) including cross-currency interest rate swaps (CCIRS) and foreign-denominated loans, it decreases to 6.1% (7.1% FY19). 81.3% of the interest rate book was hedged for a weighted average term of 3.4 years.

Dividends from Growthpoint’s offshore investments are well hedged, considering the quantum of dividends expected to receive is less than originally anticipated in light of Covid-19’s impact.

Read the full update here:

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