Major Reits post solid earnings growth, boosted by SA property

Growthpoint Properties has reported a 4.3% increase in distributable income per share (Dips), from 146.3 cents to 152.6 cents for the 12 months ended 30 June 2026.

The real estate giant attributed the growth to operational improvement in the South African sectors, an enhanced contribution from the V&A Waterfront and a “meaningful” reduction in finance costs following interest rate reductions and a decrease in leverage on the SA balance sheet.

The group’s distributable income increased by 4.4% to R5.2 billion, while basic headline earnings per share decreased by 24.9% to 119.40 cents per share.

Its offshore investments, including Growthpoint Properties Australia, Globalworth Real Estate Investments and Lango Real Estate, are currently delivering comparatively softer outcomes than the South African portfolio.

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This is as a result of relatively higher interest rate environments, significant office exposure and more challenging leasing dynamics.

“In Europe and the rest of Africa, performance is influenced by structural considerations, including our minority position in GWI and its relatively illiquid shares, while Lango continues to carry elevated US dollar debt,” the JSE-listed real estate investment trust (Reit) said in a Sens on Wednesday.

While these factors constrain near-term returns and capital flexibility, the investments continue to provide meaningful geographic and earnings diversification over the longer term.

“We continue to assess their strategic positioning within the group and together with our partners and other stakeholders, evaluate alternative ownership, capital and operating structures that could unlock greater value and position these platforms for sustainable growth over time,” the group added.

SA highlights

SA revenue (excluding trading and development revenue) increased by a marginal 0.5% to R8.3 billion. On a like-for-like basis, comparative growth was 4.1%.

The result includes the impact of:

Asset disposals during the year, including R3 billion of office assets, R1.3 billion of industrial assets and R568 million of retail assets.
Decreased vacancies across all three sectors, the completion of developments including the Arterial Industrial Estate, the redevelopment of Bayside Mall and Beacon Bay Retail Park and the introduction of the Longkloof Precinct Hotel

V&A Waterfront highlights

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The V&A Waterfront remains one of the group’s highest quality income sources. It owns 50% of the world-class attraction.

Like-for-like net property income at the V&A increased by 10.6%, supported by a healthy tourism market, increased footfall and positive economic momentum in the Western Cape.

“These had a positive impact on retail densities, hotel occupation and growth in non-GLA (gross lettable area) spend,” the Reit said.

Growthpoint’s 50% share of distributable income increased by 19% to R964 million.

The result benefited from once-off profits in residential sales at 5 Dock Road, which more than offset the impact of closure of the Table Bay Hotel during its redevelopment.

“The V&A Waterfront’s development pipeline continues to support the long-term growth of high-quality income streams within a world-class precinct.”

Read: V&A launches R1.4bn retiree residential development

As part of the group’s strategy, it said its development and capital expenditure will continue to be focused on the stronger performing Western Cape province due to its more attractive property market fundamentals.

Growthpoint outlook

The group described South Africa’s operating environment as showing greater stability, with tentative signs of improvement emerging across selected areas of the economy.

However structural constraints, including unemployment, infrastructure challenges and global trade uncertainty, remain.

International developments, including the ongoing conflicts in the Middle East, are expected to continue to have an unfavourable impact on inflation, interest rates, energy prices and economic activity across the markets.

“Against this backdrop, Growthpoint enters FY27 with improving South African property fundamentals, a stronger balance sheet and a portfolio increasingly positioned towards higher-quality and more resilient income.

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“Our priorities remain focused on disciplined capital allocation, tenant retention, active asset management, cost containment and continued investment in sustainable, energy-efficient properties,” the Reit said.

Read: South Africa ‘stands out’ for Growthpoint Properties

The group said it intends to recycle between R2 billion and R3 billion of assets annually, subject to market conditions, acceptable pricing and disciplined execution.

While disposals may create short-term earnings dilution, the proceeds are expected to support debt reduction, investment in higher-growth sectors and regions, and the development pipeline, thereby strengthening the portfolio’s long-term earnings quality and resilience.

Growthpoint added the South African portfolio is expected to benefit from improved vacancies, stronger tenant retention, longer lease commitments and healthy contractual escalations.

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Read: Growthpoint turns Ninety One’s Cape Town HQ into a lower-carbon asset

Hyprop performance

Retail-focused Reit Hyprop delivered double-digit Dips growth of 11.7%, driven by strong operating results.

The outcome for the year ended 30 June 2026, also released in a Sens on Wednesday, is in line with the upper end of its guidance.

The firm’s distributable income  was up R1.7 billion, a 13.7% improvement.

The group’s SA portfolio pulled a 4.9% increase in tenants’ turnover, to R29.8 billion. Trading density was up 5.5% and the average monthly foot count was 7.3 million.

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During the period under review, the group launched the first Walmart store in Africa at Clearwater Mall.

Read: Over 85 000 shoppers came to Clearwater Mall on Walmart debut day, says Hyprop

Snapshot of Hyprop’s financial statement. Image: Sens

Hyprop’s outlook

Despite global economic volatility from ongoing geopolitical tensions, policy uncertainty, and evolving trade dynamics, Hyprop has also described South Africa’s medium-term outlook as improving, supported by structural reforms in energy and logistics, creating a more stable environment for investment.

“Inflation and interest rate risks may present short-term headwinds, but are expected to abate in time and we remain confident that our dominant, experience-led retail centres will continue to trade well during these times,” Hyprop said.

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It added Eastern Europe (EE) offers attractive risk-adjusted returns, supported by sound macroeconomics, rising wages and EU investment.

“Prospects for our SA and EE portfolios remain positive, underpinned by dominant assets and resilient tenant and shopper bases.”

Building on the significant momentum of the last few years, the group anticipates an increase of 7-9% in distributable income per share from the 2026 financial year to 2027.

Hyprop share price

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