Growthpoint’s selldown out of Dexus Industria REIT a carrot to investors

Growthpoint is one of the country’s largest office and industrial landlords with a portfolio across Australia.

Growthpoint Properties Australia’s $132m selldown out of the Dexus Industria REIT this week could be just what the group needs to win over investors.

Real estate investment trust investors have kept their distance from the listed landlord because of its high debt level. But the sale will be used to pay off loans.

Growthpoint Properties Australia bought the stake years ago when it had aspirations to buy the APN Industrial Fund, but Dexus instead bought the fund’s manager and renamed the fund Dexus Industria REIT, killing its chances for gaining control.

It proved to be a good investment, though, with 6 per cent returns over each quarter, however with its own loan interest repayments around the same level, it was earnings neutral.

Investors have generally avoided Growthpoint Properties Australia because its debt levels have sat between 35 per cent to 40 per cent, when most Australian REITs are at about 30 per cent, or as low as about 25 per cent now in a weaker economic environment.

Driving them higher has been a decline in its office property values of about 20 per cent in the current market, but the debt level will now be 36.9 per cent.

Working on Tuesday’s trade was Jarden, offloading its 15.1 per cent stake at $2.75, a 3.8 per cent discount to its last traded price of $2.86.

Growthpoint is 65 per cent-owned by Growthpoint Properties South Africa and is one of the country’s largest office and industrial landlords with a portfolio across Australia.

It owns and manages 58 properties worth about $5.1bn.