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GRT - Growthpoint Properties Limited - Results for the six months ended 31

Release Date: 22/02/2012 09:14
Code(s): GRT
Wrap Text

GRT - Growthpoint Properties Limited - Results for the six months ended 31 December 2011 Growthpoint Properties Limited (Incorporated in the Republic of South Africa) (Registration number 1987/004988/06) Share code: GRT ISIN: ZAE 000037669 RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 HIGHLIGHTS - 6.1% distribution growth to 67,8 cents per linked unit - Additional R469 million investment in Australia - Further R1,1 billion investment in Australia in January 2012 - R1,8 billion equity raised - R2,0 billion repayment of CMBS notes Statement of Comprehensive Income Six months Six months 12 months
31 December 31 December 30 June 2011 2010 2011 Note Rm Rm Rm Revenue, excluding 2 681 2 126 4 435 straight-line lease income adjustment Straight-line lease 8 102 205 income adjustment Revenue 2 689 2 228 4 640 Property expenses (609) (488) (1 009) Net property income 2 080 1 740 3 631 Other operating (77) (61) (135) expenses Operating profit 2 003 1 679 3 496 Fair value 1 (199) (174) (282) adjustments Finance costs (833) (584) (1 237) Non-cash items 2 (57) (53) (111) Capital items (17) (2) - Finance income 74 39 90 Profit before 971 905 1 956 debenture interest Debenture interest (1 152) (1 003) (2 070) Loss before taxation (181) (98) (114) Taxation (142) (68) (121) - normal taxation - - (1) - capital gains (4) - (7) taxation (CGT) - deferred taxation (152) (82) (141) charge - deferred taxation 14 14 28 credit Loss for the period (323) (166) (235) Loss attributable to: Equity holders (406) (212) (323) Non-controlling 83 46 88 interest Other comprehensive income: Foreign currency 578 112 325 translation gain Total comprehensive 255 (54) 90 income Equity holders (53) (131) (97) Non-controlling 308 77 187 interest Calculation of distributable earnings Operating profit 2 003 1 679 3 496 Less: Straight-line (8) (102) (205) lease income adjustment Finance costs (833) (584) (1 237) Finance income 74 39 90 Non-controlling (76) (28) (71) interest share of distribution from GOZ (excluding fair value adjustments) Realised foreign (7) - - exchange loss Taxation (excluding - - (1) deferred tax and CGT) Distributable 1 153 1 004 2 072 earnings Total distribution (1 153) (1 004) (2 072) - Debenture interest (1 152) (1 003) (2 070) - Ordinary dividend (1) (1) (2) Linked Linked Linked units units units Linked units in issue 1 701 366 442 1 571 517 392 1 591 971 441 at end of the period Weighted number of 1 701 366 442 1 571 517 392 1 591 971 441 linked units in issue cents cents cents
Distribution per 67,80 63,90 131,00 linked unit Six months ended 31 67,80 63,90 63,90 December Six months ended 30 - - 67,10 June Basic and diluted 3 (23,86) (13,49) (20,29) loss per share Headline earnings per 4 17,27 32,10 104,55 linked unit Statement of Financial Position 31 December 31 December 30 June
2011 2010 2011 Note Rm Rm Rm ASSETS Non-current assets 51 725 40 185 47 442 Fair value of investment 48 256 36 616 43 653 property for accounting purposes Straight-line lease income 1 518 1 407 1 510 adjustment Fair value of long-term 49 774 38 023 45 163 property assets Intangible assets 1 491 1 585 1 535 Other long-term employee - 25 5 benefits Equipment 18 2 17 Loan receivable 126 - 126 Long-term loans granted to 329 548 594 BEE consortia Derivative assets - 2 2 Current assets 1 438 1 440 1 289 Investment property 418 571 539 reclassified as held for sale Trade and other receivables 642 347 411 Cash and cash equivalents 378 522 339 Total assets 53 176 41 625 48 731 EQUITY AND LIABILITIES Shareholders` interest 1 363 1 399 1 421 Ordinary share capital 85 78 79 Foreign currency 546 70 192 translation reserve Non-distributable reserve 732 1 251 1 150 Non-current liabilities - 5 26 079 22 639 23 463 debentures Linked unitholders` 27 442 24 038 24 884 interest Non-controlling interest 1 872 947 1 377 Total unitholders` interest 29 314 24 985 26 261 Other non-current 18 424 11 230 16 502 liabilities Other non-current financial 17 767 10 756 15 983 liabilities Deferred tax liability 657 474 519 Current liabilities 5 438 5 410 5 968 Trade and other payables 977 734 858 Liability for Australian 1 619 - - acquisition Current portion of other 1 585 3 636 3 969 non-current liabilities Other long-term employee 13 - - benefits Taxation payable 11 1 9 Linked unitholders for 1 233 1 039 1 132 interest and dividends Total equity and 53 176 41 625 48 731 liabilities Net asset value per linked 1613 1530 1563 unit (cents) Tangible net asset value 1564 1459 1499 per linked unit which excludes intangible assets and deferred tax (cents) Statement of Cash Flows Six months Six months 12 months
31 December 31 December 30 June 2011 2010 2011 Rm Rm Rm Cash generated from operations 1 887 1 480 3 168 Finance income 51 59 46 Finance costs (832) (662) (1 233) Taxation paid (2) (1) (7) Capital items (17) (2) - Distribution to unitholders (1 136) (949) (1 995) Net cash outflow from operating (49) (75) (21) activities Net cash outflow from investing (1 718) (1 767) (7 458) activities Net cash inflow from financing 1 793 2 055 7 493 activities Net increase in cash and cash 26 213 14 equivalents Translation effects on cash and 13 (1) 15 cash equivalents of foreign operation Cash and cash equivalents at 339 310 310 beginning of the period Cash and cash equivalents at end 378 522 339 of the period Notes Rm Rm Rm 1. Fair value adjustments (199) (174) (282) Gross investment property fair 1 152 1 675 1 960 value adjustment Less: Straight-line lease income (8) (102) (205) adjustment Net investment property 1 144 1 573 1 755 revaluation Borrowings and derivatives - loss (508) (311) (128) Foreign exchange gain/(loss) 3 (2) 2 Long-term loans granted to BEE (107) 36 59 consortia - (loss)/profit Debentures (731) (1 470) (1 970) Debentures are adjusted to fair value which represents the net asset value attributable to Growthpoint`s debenture holders, excluding the intangible assets.
The debentures fair value adjustment consists of: Fair value adjustments on other (532) (1 296) (1 688) assets and liabilities excluding fair value adjustment on debentures Straight-line lease income (8) (102) (205) adjustment Capital gains taxation 4 18 7 Deferred taxation - GOZ 151 82 141 Fair value adjustment on GOZ (372) (178) (254) Foreign exchange (gain)/loss (6) - 3 Non-controlling interest`s 7 4 14 portion of fair value adjustments Decrease in other long-term 8 2 12 employee benefits Capital items 17 - - Debenture fair value adjustment (731) (1 470) (1 970) 2. Non-cash charges (57) (53) (111) Amortisation of intangible asset (49) (49) (99) Decrease in other long-term (8) (4) (12) employee benefits 3. The directors are of the view that the disclosure of earnings per share, while obligatory in terms of IAS 33, Earnings per Share, and the JSE Limited Listings Requirements, is not meaningful to investors as the shares are traded as part of a linked unit and practically all the revenue earnings are distributed in the form of debenture interest plus dividends in the ratio of 1 000 to 1. In addition, headline earnings include fair value adjustments for financial liabilities and accounting adjustments required to account for lease income on a straight-line basis, as well as other non-cash accounting adjustments that do not affect distributable earnings. The calculation of distributable earnings and the distribution per linked units as set out above is more meaningful. 4. In terms of Circular 3/2009, issued by SAICA, both the fair value adjustment on investment property and debentures are added back in the calculation of headline earnings per linked unit. The Circular does not make provision for the fair value adjustment on other non-current financial liabilities to be added back. Rm Rm Rm Basic loss is reconciled to headline earnings as follows: Loss after taxation - (406) (212) (323) attributable to equity holders Add back: Net fair value (978) (1 345) (1 501) adjustment - investment property - Fair value adjustment (1 144) (1 573) (1 755) - Applicable taxation 166 228 254 Headline loss attributable to (1 384) (1 557) (1 824) shareholders Add back: Net fair value 526 1 058 1 418 adjustment - debentures - Fair value adjustment 731 1 470 1 970 - Applicable taxation (205) (412) (552) Add back: Debenture interest paid 1 152 1 003 2 070 Headline earnings attributable to 294 504 1 664 linked unitholders 5. Non-current liabilities - debentures Fair value at beginning of the 23 463 20 795 20 795 period Issued during the period 1 885 374 698 Fair value adjustments (Note 1) 731 1 470 1 970 Fair value at end of the period 26 079 22 639 23 463 Segmental Analysis South Africa V&A Retail Office Industrial Waterfront
Rm Rm Rm Rm STATEMENT OF COMPREHENSIVE INCOME EXTRACTS Six months ended 31 December 2011 Revenue, excluding 724 846 461 201 straight-line lease income adjustment Property expenses (203) (191) (102) (65) Segment result 521 655 359 136 Fair value adjustment: - investment property 392 334 238 - - investment property - - - - -non-controlling interest Total fair value 392 334 238 - adjustment on total investment property Australia Total
Rm Rm STATEMENT OF COMPREHENSIVE INCOME EXTRACTS Six months ended 31 December 2011 Revenue, excluding 449 2 681 straight-line lease income adjustment Property expenses (48) (609) Segment result 401 2 072 Fair value adjustment: - investment property 115 1 079 - investment property 73 73 -non-controlling interest Total fair value 188 1 152 adjustment on total investment property South V&A
Africa Waterfront Australia Total Rm Rm Rm Rm Further extracts of statement of comprehensive income Other operating expenses 56 2 19 77 Finance costs 643 1 189 833 South Africa
V&A Retail Office Industrial Waterfront Rm Rm Rm Rm Six months ended31 December 2010 Revenue, excluding straight- 676 749 427 - line lease income adjustment Property expenses (192) (177) (95) - Segment result 484 572 332 - Fair value adjustment: - investment property 691 620 356 - - investment property - non- - - - - controlling interest Total fair value adjustment 691 620 356 - on total investment property Australia Total
Rm Rm Six months ended31 December 2010 Revenue, excluding straight- 274 2 126 line lease income adjustment Property expenses (24) (488) Segment result 250 1 638 Fair value adjustment: - investment property 6 1 673 - investment property - non- 2 2 controlling interest Total fair value adjustment 8 1 675 on total investment property South V&A
Africa Waterfront Australia Total Rm Rm Rm Rm Further extracts of statement of comprehensive income Other operating expenses 47 - 14 61 Finance costs 452 - 132 584 South Africa V&A
Retail Office Industrial Waterfront Rm Rm Rm Rm STATEMENT OF FINANCIAL POSITION EXTRACTS At 31 December 2011 - Investment property - Opening balance - 30 June 11 985 13 669 6 841 4 783 2011 - Acquisitions - 140 - - - Developments and capital 69 159 212 59 expenditure - Disposals (266) (20) (130) - - Foreign exchange gain - - - - - Fair value adjustments 392 334 238 - Fair value of total property 12 180 14 282 7 161 4 842 assets - 31 December 2011 - Fair value of long-term 12 118 13 936 7 151 4 842 property assets - Investment property 62 346 10 - reclassified as held for sale Australia Total Rm Rm
STATEMENT OF FINANCIAL POSITION EXTRACTS At 31 December 2011 - Investment property - Opening balance - 30 June 8 424 45 702 2011 - Acquisitions 1 823 1 963 - Developments and capital 160 659 expenditure - Disposals (43) (459) - Foreign exchange gain 1 175 1 175 - Fair value adjustments 188 1 152 Fair value of total property 11 727 50 192 assets - 31 December 2011 - Fair value of long-term 11 727 49 774 property assets - Investment property - 418 reclassified as held for sale South V&A Africa Waterfront Australia Total
Rm Rm Rm Rm Further extracts of statement of financial position Intangible assets 1 491 - - 1 491 Trade and other receivables 514 29 99 642 Cash and cash equivalents 181 42 155 378 Trade and other payables (819) (64) (94) (977) Liability for Australian - - (1 619) (1 619) acquisition Total interest-bearing (14 063) - (5 289) (19 352) liabilities - Nominal value - interest- (12 953) - (4 044) (16 997) bearing liabilities - Fair value adjustments (1 110) - (245) (1 355) - Foreign translation - - (1 000) (1 000) differences South Africa V&A Retail Office Industrial Waterfront
Rm Rm Rm Rm At 30 June 2011 - Investment property - Opening balance - 30 June 10 669 12 686 6 667 - 2010 - Acquisitions - income - - - 4 179 producing assets - Acquisitions - Undeveloped - - - 600 bulk - Acquisitions - other 253 122 82 - - Developments and capital 166 264 143 7 expenditure - Disposals (253) (90) (152) - - Foreign exchange gain - - - - - Fair value adjustments 1 150 687 101 (3) Fair value of total property 11 985 13 669 6 841 4 783 assets - 30 June 2011 - Fair value of long-term 11 842 13 442 6 710 4 783 property assets - Investment property 143 227 131 - reclassified as held for sale Australia Total
Rm Rm At 30 June 2011 - Investment property - Opening balance - 30 June 4 877 34 899 2010 - Acquisitions - income - 4 179 producing assets - Acquisitions - Undeveloped - 600 bulk - Acquisitions - other 2 881 3 338 - Developments and capital 20 600 expenditure - Disposals (129) (624) - Foreign exchange gain 750 750 - Fair value adjustments 25 1 960 Fair value of total property 8 424 45 702 assets - 30 June 2011 - Fair value of long-term 8 386 45 163 property assets - Investment property 38 539 reclassified as held for sale South V&A Africa Waterfront Australia Total Rm Rm Rm Rm
Further extracts of statement of financial position Intangible assets 1 535 - - 1 535 Trade and other receivables 358 22 31 411 Cash and cash equivalents 76 88 175 339 Trade and other payables (718) (56) (84) (858) Interest-bearing liabilities (15 022) - (4 930) (19 952)
- Nominal value - interest- (14 249) - (4 465) (18 bearing liabilities 714) - Fair value adjustments (773) - (75) (848) - Foreign translation - - (390) (390) differences Statement of Changes in Equity Foreign Non- currency
Ordinary distributable translation Retained share capital reserve (NDR) reserve (FCTR) earnings Rm Rm Rm Rm Balance at 30 77 1 479 (6) - June 2010 Shares issued 1 - - - Total - - 81 (212) comprehensive income Transfer - (35) - 35 amortisation net of deferred taxation to NDR Business - - (5) (15) acquisition - GOZ Transfer NDR - (15) - 15 reserves with NCI Transfer fair - (178) - 178 value adjustment on GOZ to NDR Dividends - - - - declared - NCI Dividends - - - (1) declared Balance at 31 78 1 251 70 - December 2010 Shares issued 1 - - - Total - - 145 (111) comprehensive income Transfer - (36) - 36 amortisation net of deferred taxation to NDR Business - - (23) 11 acquisition - GOZ Transfer to NDR - 11 - (11) reserves with NCI Transfer fair - (76) - 76 value adjustment on GOZ to NDR Business - - - - acquisition - V&A Foreign - - - - translation difference on NCI Dividends - - - - declared - NCI Dividends - - - (1) declared Balance at 30 79 1 150 192 - June 2011 Shares issued 6 - - - Total - - 353 (406) comprehensive income Transfer - (35) - 35 amortisation net of deferred taxation to NDR Business - - 1 (11) acquisition - GOZ Transfer to NDR - (11) - 11 reserves with NCI Transfer fair - (372) - 372 value adjustment on GOZ to NDR Dividends - - - - declared - NCI Dividends - - - (1) declared Balance at 31 85 732 546 - December 2011 Non- controlling Shareholders` interest Total interest (NCI) equity
Rm Rm Rm Balance at 30 1 550 496 2 046 June 2010 Shares issued 1 - 1 Total (131) 77 (54) comprehensive income Transfer - - - amortisation net of deferred taxation to NDR Business (20) 402 382 acquisition - GOZ Transfer NDR - - - reserves with NCI Transfer fair - - - value adjustment on GOZ to NDR Dividends - (28) (28) declared - NCI Dividends (1) - (1) declared Balance at 31 1 399 947 2 346 December 2010 Shares issued 1 - 1 Total 34 110 144 comprehensive income Transfer - - - amortisation net of deferred taxation to NDR Business (12) 354 342 acquisition - GOZ Transfer to NDR - - - reserves with NCI Transfer fair - - - value adjustment on GOZ to NDR Business - 5 5 acquisition - V&A Foreign - 4 4 translation difference on NCI Dividends - (43) (43) declared - NCI Dividends (1) - (1) declared Balance at 30 1 421 1 377 2 798 June 2011 Shares issued 6 - 6 Total (53) 308 255 comprehensive income Transfer - - - amortisation net of deferred taxation to NDR Business (10) 263 253 acquisition - GOZ Transfer to NDR - - - reserves with NCI Transfer fair - - - value adjustment on GOZ to NDR Dividends - (76) (76) declared - NCI Dividends (1) - (1) declared Balance at 31 1 363 1 872 3 235 December 2011 Commentary INTRODUCTION Growthpoint is the largest South African listed property company with a quality portfolio of 412 directly owned properties in South Africa valued at R33,6 billion, a 61.0% interest in Growthpoint Properties Australia (GOZ) which owns 40 properties in Australia valued at R11,7 billion and a 50% interest in the V&A Waterfront with properties valued at R9,7 billion. The company`s objective is to grow and nurture a diversified portfolio of quality investment properties, providing accommodation to a wide spectrum of users and delivering sustainable income distributions and capital appreciation, optimised by effective financial structures. Effectively, all rental income received by the company, less operating costs and interest on debt, is distributed to unitholders semi-annually, so that the company is very similar to the Real Estate Investment Trust (REIT) models that are well-established internationally. Growthpoint`s distributions are based on sustainable income generated from rentals. The company does not distribute capital profits. Growthpoint is included in the JSE ALSI Top 40 Companies Index, with a market capitalisation of R31,6 billion at 31 December 2011. Over the six months, on average more than 72 million linked units traded per month (June 2011: 63 million). The monthly average value traded was R1,3 billion (June 2011: R1,1 billion). The South African portfolio (excluding V&A Waterfront) represents 67% of the total portfolio by value, and 80% by GLA, and is well-diversified in the three major sectors of commercial property, being office, retail and industrial. The bulk of the value of the South African properties is situated in the major metropolitan areas in strong economic nodes. Highlights for the period ADDITIONAL INVESTMENTS BY GOZ In July 2011, following the acquisition of six office properties held in the Rabinov Property Trust, GOZ undertook a renounceable rights issue underwritten by Growthpoint to raise AUD102,6 million at an issue price of AUD1,90 per stapled security. The proceeds from the rights offer were utilised to reduce bank debt and to provide additional capital for the investment into the Energex office development in Nundah, Brisbane. Growthpoint paid AUD62,1 million (R447 million) to follow its rights and an additional AUD3,3 million (R22 million) to follow the rights that were not taken up by security holders at the time. Taking the additional R469 million investment into account, the total amount invested at half-year by Growthpoint for its 61% interest amounts to R2,0 billion. The market value of the investment at 31 December 2011 was R2,8 billion. In December 2011, GOZ announced the acquisition of three office properties for a consideration of AUD207,5 million (R1,7 billion), as well as a 100% pre-committed office development to the value of AUD82,0 million (R680,6 million). The acquisitions were partially funded by a rights offer to raise AUD166,4 million (R1,4 billion) at an issue price of AUD1,90 per stapled security and partially by debt. The rights offer was underwritten by Growthpoint and was only concluded in January 2012, after the reporting period. Growthpoint paid AUD101,6 million (R844 million) to follow its rights and an additional AUD24,7 million (R206 million) to follow the rights that were not taken up by security holders at the time. After the rights issue, Growthpoint`s interest in GOZ increased to 64.5%. The three office properties are included in the statement of financial position at 31 December 2011, and a corresponding short-term liability is reflected for R1,6 billion for the rights issue as well as the draw down from the debt facility that would be required when final payment is due. The new assets are fully let and together represent an initial property income yield of 8.7% at a 4.6 year weighted average lease expiry. The portfolio has also diversified from a purely industrial property fund in 2010 to a spread of 41% offices and 59% industrial properties, by value, after the acquisition, prior to the completion of the developments. EQUITY RAISED AND REPAYMENT OF CMBS NOTES In July 2011, Growthpoint raised R1,8 billion by placing 100 million new linked units with local and international institutional investors. The equity raised was utilised to settle two Commercial Mortgage Backed Securitisation (CMBS) notes of R969 million and R1,0 billion, respectively. FINANCIAL RESULTS Growthpoint has delivered growth in distributions per linked unit for the period ended 31 December 2011 of 6.1%. The 6.1% growth is in the upper end of the guidance previously given to the market. The economic conditions during the period of review continued to improve, albeit at a slow pace. This was evidenced by a decrease in vacancies in the industrial and office sectors. BASIS OF PREPARATION These interim consolidated financial statements have not been reviewed or audited by Growthpoint`s independent external auditors. These condensed consolidated financial statements have been prepared in accordance with the measurement and recognition requirements of International Financial Reporting Standards (IFRS), and the presentation and disclosure requirements of IAS 34: Interim Financial Reporting, the AC 500 standards as issued by the Accounting Standards Board, the Companies Act of South Africa, as amended, and the JSE Limited Listings Requirements. The company`s accounting policies as set out in the audited financial statements for the year ended 30 June 2011 have been consistently applied. Investment property comprises land and buildings held to generate rental income over the long term. Should any properties no longer meet the company`s investment criteria and be sold, any profits or losses will be of a capital nature and will be taxed at rates applicable to capital gains. Deferred taxation on the revaluation of investment property is offset against the deferred taxation asset that arises on the revaluation of the company`s issued debentures (excluding deferred taxation on intangible assets and deferred taxation on the investment in GOZ). The investment in GOZ has been accounted for in terms of IAS 21 The Effects of Changes in Foreign Exchange Rates. The consolidated statement of financial position includes 100% of the assets and liabilities of GOZ, converted at the closing exchange rate at 31 December 2011 of R8,24:AUD1 (June 2011: R7,24:AUD1). The consolidated statement of comprehensive income also includes 100% of the revenue and expenses of GOZ, which was translated at an average exchange rate of R7,84:AUD1 (December 2010: R6,72:AUD1) for the six months ended 31 December 2011. The resulting foreign currency translation difference is recognised in other comprehensive income. A non- controlling interest was raised for the 39.0% (June 2011: 39.4%) not owned by Growthpoint. The 50% interest in the V&A Waterfront is accounted for in terms of IAS 31 Interest in Joint Ventures. Growthpoint proportionately consolidated its 50% interest of assets and liabilities, as well as income and expenses. NET PROPERTY INCOME The increase in revenue (26.1%) was largely due to the inclusion of revenue from the V&A Waterfront of R201 million, higher revenue from GOZ (R175 million) due to acquisitions made, as well as contractual rental escalations. Earnings from the V&A Waterfront for the six months have been in line with our expectations at the time of concluding the transaction. The ongoing difficult economic conditions are impacting on the hotel and leisure industries and this will have an impact on turnover rentals earned from the V&A Waterfront, however this is not significant. Construction has commenced on a state of the art new 4-Star Green Star design rated 18 100m2 head office for Allan Gray with related retail and parking facilities. The ratio of property expenses to revenue has improved from 23.0% to 22.7%, whilst other operating expenses remained the same at 2.9%. FAIR VALUE ADJUSTMENTS The revaluation of properties resulted in an upward revision of R1 152 million (2,3%) to R50,2 billion for investment property (including investment properties reclassified as held for sale). This was mainly due to an increase in future contractual rentals. Interest-bearing borrowings were fair valued upwards by R508 million (2,7%), using the yield curve at 31 December 2011. The trading market value of the investment in GOZ, based on a stapled security price of AUD1,93 (June 2011: AUD1,89) and translated at the closing rate at the end of the period, resulted in a positive fair valuation adjustment of R372 million. No revaluation has been done of the recently acquired V&A Waterfront. FINANCE COSTS Finance costs increased by 42.6% to R833 million (December 2010: R584 million). This was as a result of the acquisition of the 50% interest in the V&A Waterfront of R4,9 billion in June 2011, as well as the higher debt of GOZ as a result of acquisitions. LONG-TERM LOANS GRANTED TO BEE CONSORTIA In November 2011, Growthpoint`s first BEE transaction was refinanced and Growthpoint received R306 million as a partial repayment of the loan. Interest accrues at 15% per annum on the remaining balance of R200 million and is payable semi-annually. ARREARS At the end of December 2011, arrears for the South African business (excluding V&A Waterfront) amounted to R49,3 million (June 2011: R34,8 million) with a provision of R15,3 million (June 2011: R16,8 million) having been raised for potential bad debts. The bulk of this increase arose in Northgate shopping centre where a large backdated assessment rates adjustment was charged to tenants in December 2011. Growthpoint`s 50% share amounted to R9,4 million. For the period to December 2011, the total bad debts expensed amounted to R3,9 million (December 2010: R3,3 million). VACANCY LEVELS At 31 December 2011 Growthpoint`s vacancy levels in South Africa (excluding V&A Waterfront), as a percentage of gross lettable are (GLA) were: Retail 3.6% (June 2011: 2.9%) Office 6.7% (June 2011: 8.1%) Industrial 2.7% (June 2011: 4.3%) Total 4.0% (June 2011: 5.0%) The Retail vacancy includes space in three shopping centres that is currently under redevelopment. Excluding this space, the vacancy would be 2.7%. ACQUISITIONS AND COMMITMENTS Apart from the four properties acquired by GOZ, Growthpoint acquired through a 50% partnership vacant land in Rosebank, with Growthpoint`s share amounting to R43,3 million. This land is close to the Rosebank Gautrain Station and a development for 35 000m2 is intended for office space. GOZ has a capital commitment to the value of AUD115,7 million in respect of the development of the Energex office at Nundah, Bisbane, as well as the recently acquired 219-247 Pacific Highway in Sydney. The development at the V&A Waterfront for Allan Gray commenced in the current period. The commitment outstanding at 31 December 2011 amounts to R518 million, of which Growthpoint`s effective share is 50%. In addition, Growthpoint South Africa has commitments outstanding in respect of developments amounting to R762 million and acquisitions amounting to R710 million. DISPOSALS Thirteen properties were disposed of in the current period for R290,6 million, realising a profit of R73,5 million on cost. These properties were previously valued at the anticipated selling price. In the prior year Growthpoint swopped 18% of its interest in Brooklyn Mall for an 82% interest in Design Square. During the current period an additional 7% interest in Brooklyn Mall/Design Square was disposed of for R120,3 million, realising a profit on cost of R54,9 million. Growthpoint`s interest is now 75%. GOZ disposed of one property during the period for AUD5,2 million (R42,8 million). BORROWINGS At 31 December 2011, the consolidated loan to value ratio (LTV) measured by dividing the nominal value of interest-bearing borrowings (net of cash) by the fair value of property assets, including investment property held for sale was 35.1% (30 June 2011: 41.1%). The decrease in the gearing is mainly as a result of the Growthpoint and GOZ rights issues in July 2011 of R1,8 billion and AUD102,6 million, respectively. Growthpoint also managed to increase the percentage of unsecured debt to total debt from 21.1% at June 2011 to 36.0% at 31 December 2011. The increase in unsecured debt was aided by two further issues of R500 million (4,25 years) and R260 million (5 years), respectively, into the bond market, as well as three commercial paper issues of R300 million each. SHARE AND DEBENTURE CAPITAL The authorised share capital is R100 000 000, divided into two billion ordinary shares of five cents each. Each ordinary share is linked to ten variable rate debentures of 250 cents each. The ordinary shares and debentures trade as linked units on the JSE Limited (JSE). In terms of the debenture trust deed, the interest payable on the debenture component of the linked unit is always 1 000 times greater than the dividend payable per ordinary share. Apart from the 100 million units issued in July as part of the R1,8 billion equity raising, 9 395 000 units were issued to those linked unitholders who elected to reinvest their 2011 final distribution. The linked units were issued at R17,80 per unit. PROSPECTS It is expected that growth in distributions for the full year will be in line with the growth rate achieved in the six months ended 31 December 2011. This profit forecast has not been reviewed or reported on by Growthpoint`s independent external auditors. CASH DISTRIBUTION WITH THE ELECTION TO RE-INVEST THE CASH DISTRIBUTION IN RETURN FOR GROWTHPOINT LINKED UNITS Notice is hereby given of interim dividend declaration number 51 of 0,068 cents and debenture interest payment number 51 of 67,732 cents per linked unit totaling 67,8 cents per linked unit for the six months ended 31 December 2011. Linked unitholders will be entitled to elect to re-invest the Cash Distribution in return for linked units (Linked Unit Alternative), failing which they will receive the Cash Distribution in respect of all or part of their linked unitholding. Linked unitholders who have dematerialised their linked units are required to notify their duly appointed Central Securities Depository Participant (CSDP) or broker of their election in the manner and time stipulated in the custody agreement governing the relationship between the linked unitholder and their CSDP or broker. Summary of the salient dates relating to the Cash Distribution and Linked Unit Alternative are as follows: 2012 Circular and form of election posted to linked Thursday, 23 February unitholders Announcement of linked unit ratio and Friday, 2 March finalisation information Last day to trade in order to participate in the Friday, 9 March Cash Distribution and Linked Unit Alternative Linked units to trade ex-distribution Monday, 12 March Listing of maximum number of Linked Unit Monday, 12 March Alternative linked units commences on the JSE Last day to elect to receive a Linked Unit Friday, 16 March Alternative and/or to receive the Cash Distribution Record date Friday, 16 March Announcement of results of Cash Distribution and Monday, 19 March Linked Unit Alternative on SENS Linked unit certificates posted and Cash Monday, 19 March Distribution posted/paid to certificated linked unitholders Accounts credited by CSDP or broker to Monday, 19 March dematerialised linked unitholders Announcement of results of election of Cash Tuesday, 20 March Distribution or Linked Unit Alternative in the press Adjustment to linked unit listed on or about Tuesday, 20 March Linked units may not be dematerialised between Monday, 12 March 2012 and Friday, 16 March 2012, both days inclusive. The above dates and times are subject to amendment. Any such amendment will be released on SENS and published in the press. By order of the Board Growthpoint Properties Limited 21 February 2012 Directors JF Marais (Chairman) HSP Mashaba (Deputy Chairman) LN Sasse* (Chief Executive Officer) EK de Klerk* MG Diliza PH Fechter LA Finlay JC Hayward HS Herman R Moonsamy NBP Nkabinde ZJ Sithole SM Snowball* CG Steyn JHN Strydom FJ Visser * Executive Registered office The Place, 1 Sandton Drive, Sandton, 2196. PO Box 78949, Sandton, 2146 Transfer secretary Computershare Investor Services (Pty) Limited (Registration number 2004/003647/07) Ground Floor, 70 Marshall Street, Johannesburg, 2001 PO Box 61051, Marshalltown, 2107 Sponsor Investec Bank Limited 100 Grayston Drive, Sandown, Sandton, 2196 PO Box 78949, Sandton, 2146 Date: 22/02/2012 09:14:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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