Growthpoint Properties has issued its trading update for the nine months ended 31^st March, reporting an improvement in its South African vacancies from 8.7% at 30 June 2024 (FY2024) to 8.3% as at 31^st December 2024 (HY2025). The REIT recorded 775 095m² of total space let during the period, comprising 434 945m² of renewals and 340 150m² of new lets.

Renewal rental growth rates improved across all asset classes, reducing from -6% at FY2024 to -1.8% at HY2025, currently sitting at -1%. However, Growthpoint’s lease renewal success rate declined from 76.3% at FY2024 to 68.8% at HY2025, currently sitting at 67.4%.

Growthpoint’s weighted average lease term on renewals remained steady at 3.6 years, unchanged from HY2025, but lower than the 3.7 years achieved during FY2024. Rental escalations for renewals were also stable at 6.9%.

The REIT reported trading density growth of 4.5% for the nine months ended 31^st of March 2025 in its retail portfolio, reflecting an annual average trading density of R36 333 per square metre. Footfall grew 2.6% year-on-year with a rent-to-turnover ratio of 7.6%. Between January and March 2025, trading density growth improved 5.5% with its community centres outperforming regional malls, posting an annual trading density of R56 305 per square metre.

The Company’s core retail vacancies remained low at 4.6%. Including office space within shopping centres, retail vacancies increased from 5.5% at FY2024 to 5.7% primarily due to Game exiting Brooklyn Mall and Alberton City with space reductions by Edgars at Alberton City, Northgate Mall, and Kolonnade Shopping Mall. Growthpoint says it anticipates further Edgards reductions at Walmer Park Shopping Centre, Paarl Mall, and Vaal Mall during FY2026, with an exit from Keywest Shopping Centre.

The office vacancies at Golden Acre remain a major contributor to total retail vacancies, with the asset in the process of being sold and expected to transfer by the end of FY2025, together with Grand Parade, for a combined R521.3 million in sales proceeds.

Growthpoint says rental reversions are reflecting a stabilising retail trading environment and continue to trend towards neutral-to-positive levels, improving from -2.1% at FY2024 to -1.2% at HY2025, currently sitting at -0.8%. The Company says it expects renewal growth of similar levels at the end of the current financial year.

Its renewal success rate decreased from 86.4% at FY2024, to 84.4% at HY2025 and to 84.6% currently, mainly due to non-renewals in our Gauteng portfolio at Alberton City, Brooklyn Mall and Northgate Mall. Growthpoint says that R304.4 million of retail assets were sold and transferred by the end of March 2025, in line with its strategy to dispose of CBD properties and smaller retail assets.

The major upgrade of Bayside Mall in the Western Cape is complete, resulting in a turnover and footfall increase of 26% and 14% respectively, for the nine months ended 31 March 2025. The redevelopment of the former Edgars premises for Builders Express at Beacon Bay Retail Park in the Eastern Cape were also completed. A total upgrade of this centre is under way and due for completion by June 2025. Checkers has relocated to the former Game premises in Watercrest Mall while Shoprite has opened in the space formerly occupied by Checkers. Construction of a new Shoprite at Northgate Mall has begun and is scheduled for completion in July 2025.

Growthpoint says the office sector continues to experience mixed dynamics with vacancies having stabilised following a prolonged decline. The Company concluded leases for 123 524m² and renewals for 93 423m², improving its vacancies to 14.7%, down from 15.9% at HY2025 and 15.1% at FY2024.

Its Western Cape and KwaZulu-Natal portfolios continue to outperform its Gauteng portfolio, driven by stronger demand and limited supply.

In KwaZulu-Natal, vacancies remained low at 0.4% while the Western Cape saw an increase from 5.3% at FY2024 to 8.0% mainly due to RCS vacating at Golf Park and relocating to another premises.11 Adderley, which also carries a large vacancy, is in the process of being sold with transfer anticipated for the end of June 2025. The sale will reduce Growthpoint’s total office vacancies to 6.1% in the Western Cape.

The overall vacancy reduction was driven mainly by the Company’s inland portfolio, where vacancies decreased from 19.3% at FY2024 to 17.9% due to disposals and letting at Gilloolys View, The Place and 3012a William Nicol.

The Company’s office rental reversions improved from -14.8% at FY2024 to – 6.9% at HY2025 and are currently at -3.3%. Gauteng recorded an improvement from -19.9% at FY2024 to -4.8%, while KwaZulu-Natal declined from -8.7% at FY2024 to -12.0%. The Western Cape delivered a turnaround, improving from -9.4% at FY2024 to a positive 3.5%.

Its office lease renewal success rate declined from 62.1% at FY2024 to 54.7%, primarily due to four non-renewals totalling c. 28 000m², accounting for 36.4% of leases not renewed in the period.

Growthpoint sold and transferred Boundary Place, Illovo for R39.5 million during Q3 of FY2024 with Lumley House in Parktown North transferred post-March 2025 for R23.3 million. Its Board also approved the disposal of two non-core office assets in Parktown for a combined R156.7 million and one in Bryanston for R73 million.

Vacancies in its industrial portfolio improved from 5.2% at FY2024 to 4.4% primarily due to the successful leasing of new speculative developments, albeit higher than 3.5% recorded at HY2025. Regional vacancy trends include an increase in KwaZulu-Natal from 1.1% at HY2025 to 3.4%, and in the Western Cape from 0.6% at HY2025 to 5%. In Gauteng, where two-thirds of the REIT’s industrial portfolio is located, vacancies declined from 5.3% at HY2025 to 4.5%.

The Company’s industrial rental reversions improved, moving into positive territory from -3.3% at FY2024, 0.9% at HY2025 and now at 0.7%. The Western Cape portfolio stands out with positive rental growth of 8.1%, driven by strong demand and limited supply. Reversions remain negative in Gauteng and KwaZulu-Natal, at -2.5% and -3.6% respectively with tenant retention having declined from 78.3% at FY2024 to 71.7% at HY2025 and is currently at 65.4%.

During the reporting period, Growthpoint sold and transferred 9 industrial assets for R672.7 million with a further 5 properties totalling R295.7 million transferred post the 1^st of April 2025.

Earnings before interest and tax (EBIT) for the V&A Waterfront grew by 23% compared to the same nine months in 2024, driven by a full period of office rental from Investec and the inclusion of The Portswood and The Commodore Hotels, now owned by the V&A Waterfront and managed under contract by Legacy as the operator.

Growth in EBIT was also supported by increased retail sales which boosted turnover-based rental income. Retail sales grew 5%, muted due to the exclusion of the Easter holidays which fell in April this year, with a reduction in sales of 2.5% while the Luxury Mall is under development. Over a 12-month period, visitor numbers reduced by 2% with total footfall recording 24.5 million.

The office space in the precinct continued to perform well with strong demand and zero vacancies contributing positively.

Several key developments in the precinct commenced or advanced during the period including The Union Castle Building (with a gross lettable area (GLA) of 2 678m²) reopening in December 2024; development of the 3 759m² new luxury wing in the Victoria Wharf with all space committed and scheduled to open between December 2025 and April 2026; the commission of the desalination plant that has been operational since mid-March 2025; The Table Bay Hotel’s major refurbishment which will operate under a franchise agreement with InterContinental Hotel Group and scheduled to open in December 2025; and the construction of the 5 Dock Road residential apartments which commenced during the period and scheduled for completion in November 2025.

The V&A Waterfront’s development pipeline is being funded through a combination of shareholder and third-party funding. As at 31 March 2025, the V&A Waterfront had R3.75 billion in committed third-party facilities, including R3.5 billion in green loans. R1.16 billion was undrawn at the reporting date.

At HY2025, Growthpoint reported distributable income per share (DIPS) growth of 3.9% compared to its initial FY2025 guidance of a decrease in DIPS of 2% to 5%. Further to its updated guidance in mid-March 2025, Growthpoint now anticipates DIPS growth of between 2% and 3%, primarily driven by the improved performance and property fundamentals in SA, as well as the outperformance by the V&A Waterfront and lower interest rates.

The REIT will publish its full-year results for the year ending 30^th June 2025 on the 10^th of September 2025.