Why the Growthpoint (ASX:GOZ) share price just smashed a 52-week record

The Real Estate Investment Trust declared a “significant” increase in the value of its properties.

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The Growthpoint Properties Australia Ltd (ASX: GOZ) share price is on the rise today. At the time of writing, shares in the real estate investment trust (REIT) are trading for $3.94 – up 1.03%. Earlier in the day, Growthpoint shares were trading as high as $4.11, smashing their 52-week record. For context, the S&P/ASX 200 Index is currently down 0.16%.

The company’s price rise comes as it declared “significant valuation gains” across its property portfolio.

Let’s take a closer look at today’s announcement.

Why the Growthpoint share price is up

In a statement to the ASX, Growthpoint Properties said that 44 of its 55 properties have been reappraised and are now worth an extra $251 million, or a 7.7% increase. The REIT estimates this will add 33 cents per security in its tangible assets.

Growthpoint claims external evaluators reassessed both its industrial and office properties and found both were more valuable than previously thought. It says its industrial properties are now worth 10.9% more to $1.5 billion and its offices are worth 5.4% more to $1.94 billion. The weighted average capitalisation rate of its industrial properties fell to 5.2%.

Growthpoint stressed the valuations are subject to “finalisation and audit” and could be further changed, either positively or negatively. The new valuations also assume no material changes to market conditions before the end of the financial year. Investors, however, still seem to be keen on the REIT regardless, judging by the Growthpoint share price action today.

Management commentary

Timothy Collyer, Growthpoint Managing Director, said:

The preliminary results of Growthpoint’s external valuations indicate the largest six-month increase on a like-for-like basis in the Group’s history.

The significant uplift reflects the substantial re-rating that has occurred across the industrial sector, driven by continued strong domestic and offshore investors’ demand for industrial assets, as well as leasing success across both our office and industrial portfolios.

We remain focused on actively managing our assets to ensure we maximise the portfolio’s value for our Securityholders.

Growthpoint share price snapshot

Over the past 12 months, the Growthpoint share price has increased by 19.8%. During the COVID-19 market sell-off of March 2020, the company’s value haemorrhaged 44.8% in the space of just 19 days! Despite today’s unambiguously good news, the REIT’s securities have still not returned to their pre-pandemic prices. Growthpoint Properties has a market capitalisation of approximately $3 billion.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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