Growthpoint Properties has set an asset disposal target of R3.5 billion for FY2026 to reduce its exposure in the office sector (particularly its B grade office space) and older industrial and manufacturing assets and to exit its retail assets in deteriorating CBDs – as well as smaller retail assets.

In its trading update for the three months from 1st July 2025 to 30th September 2025 (Q1), the REIT says that for FY2026, it plans to invest approximately R1.3 billion in its core portfolio (excluding Growthpoint Investment Partners), with a focus on increasing its exposure in the Western Cape, particularly in the logistics and retail sectors.

Its SA portfolio’s vacancies improved from 8.2% as at 30^th June 2025 (FY2025) to 7.4% – the lowest since June 2019, driven by new lettings in its office and industrial assets with a total of 338 928m² of space let (234 970m² renewals and 103 958m² new lets).

Its overall SA renewal rental growth rate declined from -0.9% at FY2025 to -0.6%, driven by office lease renewals that resulted in negative reversions. Growthpoint’s lease renewal success rate improved from 68.2% to 82.1% – the highest level over a decade.

The portfolio’s weighted average lease expiry (WALE) on renewals improved to 3.8 years from the 3.5 years achieved at the end of FY2025 with rental escalations on renewals decreasing from 6.9% at FY2025 to 6.7%.

Growthpoint’s retail portfolio recorded an increase in its average trading density to R37 020 per m² when compared to R35 257 per m² for the year ended September 2024, representing a 5% growth rate and a 3% increase on the prior year. Footfall across its retail assets grew 3% year-on-year (FY2025: 1.1%) with a 7.7% rent-to-turnover ratio.

In Q1 2025, trading density growth improved 4.2% (FY 2025 Q1: 2.8%), with community centres outperforming regional malls, posting an annual trading density of R57 909 per m² (FY2025: R54 222 per m²). Gauteng and the Western Cape delivered trading density growth of 5.5% (FY2025: 1.6%) and 5.2% (FY2025: 4.7%) respectively.

Vacancies decreased to 4.6%, the lowest level since June 2019, following the conversion of an 8 566m² area at Alberton City into a taxi rank, reducing both GLA and vacancies. The REIT says it expects vacancies to decrease further by June 2026, supported by disposals and new lettings.

The portfolio’s renewal growth rate improved from -0.3% at FY2025 to 2.4% with 74.5% of leases that renewed in Q1 2025 by GLA, in flat to positive territory, supported by major renewals at N1 City Mall, Goodwood and Longbeach Mall in Noordhoek, Cape Town.

Based on current trends, Growthpoint anticipates renewal growth to remain positive through FY2026 although cautious given ongoing pressure in the apparel sector.

Its retail portfolio’s renewal success rate strengthened to 87.6%, the highest since June 2016, with the Western Cape delivering an improvement to 98.2%.

Growthpoint sold Waterfall Value Centre in Rustenburg for R118 million in October 2025 and it expects to dispose of a further four retail assets worth R1.1 billion by June 2026.

The REIT’s office vacancies remained unchanged from FY2025 at 14.6% while its office assets in the Western Cape recorded an improvement from 5.4% at FY2025 to 3.3%. Its Gauteng office assets’ vacancies increased from 18.5% as at FY2025 to 19.2% with KwaZulu Natal recording a 1.3% vacancy rate.

The Group says renewal rental growth remains negative at 11.4% with renewal success rates improving from 57.5% to 81.5%.

Weighted average lease periods on office renewals increased, influenced by long-term commitments from major tenants in the Western Cape and Johannesburg which have lifted the portfolio’s WALE of those leases renewed from 3.0 years to 4.2 years.

During the quarter, Growthpoint sold and transferred 70 Grayston in Sandton for R40 million, The Oval in Bryanston for R73 million, and Arnold Crescent in Johannesburg for R13 million. It says it expects to dispose of a further 10 assets worth R960.7 million by the end of June 2026.

Its logistics/industrial portfolio recorded reduced vacancies from 4.1% at FY2025 to 2.5% – the lowest level in over a decade, driven by new lettings.

Regionally, the Western Cape improved from 3.4% to 2.3%, Gauteng from 5.9% to 3.4%, while KwaZulu-Natal remained stable at 0.5% with the portfolio’s renewal success rate having increased from 64.7% to 79.8%, reflecting stronger tenant retention, particularly in Gauteng and KwaZulu-Natal.

The portfolio’s overall renewal growth rate declined from 0.4% to -1.7% due to two lease renewals in Gauteng and KwaZulu-Natal with 59.7% of renewals by GLA flat or positive. Cape Town delivered 7.7% growth.

The weighted average lease period on Growthpoint’s industrial renewals increased from 3 years at FY2025 to 4.2 years.

The Company sold five industrial manufacturing properties during Q1 for a combined R265.6 million with three additional properties transferred post Q1 for R152.5 million and a further 9 assets expected to transfer by June 2026, generating R861.1 million.

While the V&A Waterfront’s performance continues to be impacted by the decommissioning and redevelopment of The Table Bay Hotel, which is due to reopen as an InterContinental Hotel in December 2025, its EBIT grew 5% compared to the same three months in 2024 with like-for-like EBIT growth of 16% – underpinned by an 8% increase in retail sales.

Growthpoint points out that hotels remained in demand with average daily rates having increased by 16% when compared to the same period in 2024.

Development on the 3 759m² new luxury wing in the Victoria Wharf is well advanced, with completion expected in December 2025 with phased occupation while the development of the Quay 7 luxury hotel, comprising 142 keys, is well progressed to be completed by June 2026, says the Group.

The V&A Waterfront’s development pipeline is being funded through third-party bank funding. As at 30th September 2025, the V&A Waterfront had total debt of R4.2 billion (FY2025: R3.3 billion) including R710 million (FY2025: R290 million) in revolving credit facilities. The Company increased its variable debt to R3.3 billion (FY2025: R2.8 billion) but improved its risk management position with 70% of that debt now hedged (FY2025: 64%).

Its fixed rate debt decreased to R179 million (FY2025: R192 million) and the average variable interest rate decreased slightly to 8.4% (FY2025: 8.7%). The undrawn facilities increased to R1.5 billion (FY2025: R0.6 billion).

During Q1, a R250 million revolving credit facility expired and was successfully refinanced. An additional R1.5 billion in debt was raised, increasing total third-party debt facilities to R5.5 billion.

Growthpoint’s guidance remains unchanged, anticipating distributable income per share (DIPS) growth of between 3% and 5% for FY2026 and dividend per share (DPS) growth of between 6% and 8% – based on a FY2026 payout ratio of 87.5%.

The REIT will release its half-year results for the six months ended 31st December 2025 in mid-March 2026.