The Growthpoint Properties Australia Ltd (ASX: GOZ) share price has risen by 1.4% in trading so far today, following the release of its full year financial results.
Growthpoint is a real estate investment trust (REIT) which owns and actively manages a portfolio of industrial and office properties across Australia.
Profit down for the full year
Growthpoint’s statutory profit after tax dropped to $272.1 million, down from $375.3 million in the prior financial year. This was mainly due to a lower net gain in the first half of FY 2020. Growthpoint revealed funds from operation (FFO) per security of 25.6 cents per security (cps). This was a slight 2% increase on the prior corresponding period (pcp).
However, the property group’s FY 2020 distribution came in at 21.8 cps, a decline of 5.2%. The group reduced the distribution as a precautionary measure due to the uncertainty about the wider industry impact of the coronavirus pandemic.
Growthpoint noted that it had a strong balance and its gearing was currently well below target range. It has also no debt on its books maturing until FY 2022. The company entered into a new $100 million debt facility back in May. This means that the group currently has on its balance sheet undrawn debt lines of $360 million and $43 million of cash.
Strategic achievements during FY 2020
During FY 2020, Growthpoint was able to complete 2 major projects. In February, the group reached completion on a new A grade office building, named Botanicca. During June, it completed the expansion of its distribution centre in Gepps Cross. Retail giant Woolworth has now started a 15-year lease extension on the property. Both projects were completed ahead of schedule and on budget.
Property portfolio re-evaluated
Growthpoint’s property portfolio was re-evaluated at the end of the financial year to total $4.2 billion. This was 5.0% higher than the valuation done 12 months prior. The group noted that the value of the portfolio did not significantly change during second half of the year.
Growthpoint managing director Timothy Collyer said the group’s earnings had not been materially impacted by the COVID-19 pandemic to date. In addition, Growthpoint delivered FFO of 25.6 cps in FY20, which was ahead of the group’s withdrawn guidance.
“This reflects our disciplined approach to portfolio construction over a number of years. We have invested in modern, high-quality office and industrial properties. We have also carefully selected our tenants, favouring large companies and government,” Mr Collyer said.
What’s ahead for the Growthpoint share price
At this stage it’s unclear what the future holds for the Growthpoint share price in FY 2021. The group acknowledged that a high level of uncertainty remains for FY 2021 with regards to its ongoing operations. This is due to the continuing impact of the coronavirus pandemic. Consequently, the group has decided not to provide FFO guidance for FY 2021.
However, it has revealed FY 2021 distribution guidance of 20.0 cps for FY 2021. The company anticipates that this distribution will be to be paid in equal half-yearly instalments.
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