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Excellent REIT just announces another distribution increase

Growthpoint Properties Australia Ltd (ASX: GOZ) has just announced its first-half result for the six months to 31 December 2019.

The real estate investment trust (REIT) owns a diversified portfolio of industrial and office properties across the country.

Growthpoint HY20 results

Growthpoint’s net property income increased by 9.1% to $121.4 million and like for like net property income rose by 2.7% to $110 million.

REIT operating earnings are called funds from operation (FFO). Growthpoint’s total FFO grew by 11.8% to $96.8 million and FFO per share rose by 0.8% to 12.6 cents.

Looking at the statutory numbers, which includes large items like increases in the valuation of properties, statutory profit rose by 7% to $202 million and statutory accounting profit per security fell by 4% to 26.2 cents due to the new units on issue after raising $173.6 million.

Growthpoint’s net tangible assets (NTA) per share rose by 4.6% to $3.66 over the half-year from 30 June 2019, which shows that the underlying value of the REIT went up, per share.

Pleasingly, gearing reduced from 34.3% to 31.4% over the six months to 31 December 2019. The REIT also refinanced $250 million of debt, lowering the REIT’s weighted average interest rate to 3.7% and extending its weighted average debt maturity to 4.7 years.

The weighted average lease expiry (WALE) increased to 6.4 years, up from 5 years at June 2019, after signing a 25-year lease with its largest single tenant which is NSW Police Force.

Growthpoint distribution

Growthpoint announced that its distribution per security increased by 3.5% to 11.8 cents.

Outlook

Growthpoint has reaffirmed its FY20 guidance of FFO per security of at least 25.4 cents and distribution per security of 23.8 cents, which would represent growth of 3.5% compared to FY19.

The REIT continues to focus on FFO and distribution growth over the medium term with its development pipeline and potential accretive property acquisitions. The REIT is also considering options to diversify its income stream.

Its FY20 distribution yield is currently 5.5% and it has increased its distribution each year since FY10.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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