Growthpoint Properties (ASX:GOZ) share price rises on increased profits and buyback

The Growthpoint Properties Australia Ltd (ASX: GOZ) share price rose today off the back of increased profit and an announced share buyback.

| More on:
view looking up to tall office building

Image source: Getty Images

The Growthpoint Properties Australia Ltd (ASX: GOZ) share price is rising today off the back of increased half-yearly net profit after tax and an announced share buyback.

At the time of writing, the Growthpoint share price is up 2.45% to $3.14 per share.

What did Growthpoint report?

The real estate investment trust (REIT) announced a net profit after tax of $205.8 million for the six months ending 31 December 2020. In the previous corresponding period (pcp) net profits were $202 million – a 1.9% increase.

The company also announced funds from operation of 12.7 cents per share, which is a 0.8% increase on the pcp. Growthpoint’s net tangible assets per share rose 4.7% from 30 June 2020 to $3.82 

Growthpoint’s operations are divided across 2 property sectors: office and industrial. The group reported the value of its industrial portfolio increased by $50.2 million or 3.9% on a like-for-like basis. The value of its office portfolio also increased across the half — lifting by $82.6 million or 2.9% on a like-for-like basis. The total value of the company’s property portfolio is $4.3 billion, a 2.4% increase on 30 June 2020.

Within the office portfolio, Growthpoint signed 16 lease agreements during the half. These agreements included a 10-year lease with home improvement retailing behemoth Bunnings Group, which is wholly owned by Wesfarmers Ltd (ASX: WES).

The company’s weighted average lease expiry remained steady on 30 June 2020 numbers at 6.2 years.

The company also announced it would pay a dividend of 10 cents per share – down 15.3% on the pcp.

Words from the managing director

Timothy Collyer, managing director of Growthpoint, gave the following statements about today’s announcement:

Growthpoint has delivered strong results this half. While the COVID-19 pandemic continues to have a profound impact on individuals and businesses around the world, the direct impact on our business to date has been relatively immaterial.

The pandemic has highlighted the resilient nature of our property portfolio and strong tenant base. Since the Group’s inception, we have focused on constructing a portfolio of high-quality metropolitan office and industrial properties.

Collyer added:

We built upon our robust capital position during the half, extending two debt facilities and now have no debt maturing until December 2022. As the Group could deploy more than $400 million of undrawn debt capacity and still be at the bottom of our gearing range, we are well positioned to capitalise on opportunities in the near term.

COVID-19’s impact on the construction and office leasing industries

According to the Australian Bureau of Statistics, the value of non-residential work done in the September 2020 quarter fell 6.7% compared to the September 2019 quarter. Much of the fall is largely attributed to the COVID-19 pandemic and government restrictions, with Victoria’s stringent lockdown weighing especially hard on the construction industry.

While Growthpoint’s managing director stated COVID had a “relatively immaterial” impact on business, the company’s results announcement did highlight the pandemic’s impact on its office portfolio:

The COVID-19 pandemic has had a significant impact on the office sector. While the long-term impact of the pandemic is still unclear, many businesses have been reluctant to make significant decisions about headcount and office requirements. As a result, a relatively small number of leasing deals transacted in 1H21.

The company added, “Vacancy has risen in most markets, driven by an increase in available sub-lease space, reflecting a weaker operating environment for some businesses, as well as an increase in supply.”

Growthpoint share price snapshot

The construction company’s ability to increase profits during a difficult period has been well received by the market, with a share price jump of more than 2% in today’s trade.

Across the past year, the Growthpoint share price is down 26%, giving the company a current market capitalisation of $2.36 billion.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Marc Sidarous has no position in any of the shares mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News