Growthpoint expects up to 8% dividend growth despite interest rate uncertainty

Growthpoint Properties expects growth in both dividend per share (DPS) and distributable income per share (Dips) for its 2026 financial year to the end of June, despite global interest rate uncertainty stemming from the Middle East conflict.

SA’s largest locally listed property group, which also has investments in Australia, Romania, Poland and other African countries, released its latest interim results on Wednesday. It remains cautiously optimistic in the wake of the geopolitical situation that has effectively taken further interest rate cuts in SA off the table.

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“We expect Dips for FY2026 to grow by between 3% and 5% notwithstanding ongoing interest rate uncertainty, and DPS growth of between 6% and 8%, with a payout ratio of 87.5%,” Growthpoint said.

“The conflict in the Middle East has contributed to heightened global macroeconomic uncertainty, exacerbating inflationary pressures and thereby sustaining elevated interest rates across key markets.

“While increased volatility in energy and commodity prices, alongside broader financial market instability, threaten future economic growth prospects, it is not expected to significantly impact FY26 results,” it added.

Growthpoint share price

However, the group is still optimistic about SA’s economic reform path.

“Although structural challenges persist, including high unemployment, infrastructure bottlenecks, and exposure to global trade tensions, the overall SA macroeconomic environment reflects greater stability and renewed momentum compared to the prior year,” it said.

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“With the RMB/BER Business Confidence Index showing an improvement in Q4 2025, South Africa enters 2026 with a cautiously improving macroeconomic backdrop,” Growthpoint noted.

Despite the change in SA’s interest rate outlook since the start of March, the group highlighted the “absence of load shedding [and] easing inflation” [before the Middle East conflict and oil price spike] as positives.

“Strengthening electricity availability and ongoing recovery in logistics networks are contributing to more stable operating conditions,” it said.

It noted that lower interest rates last year have materially supported its business operations.

“The South African Reserve Bank has lowered the repo rate by a cumulative 150 basis points since FY2024. Low inflation, currently at 3.5% (FY25: 3%), is creating a more supportive environment for the property sector [in SA],” it said.

Group HY2026 highlights

• DPS increased 8.5% to 66.2 cents per share (cps) – (HY25: 61.0 cps)
• Dips increased 2.3% to 75.7 cps (HY25: 74.0 cps)
• Distributable income increased 2.1% to R2.6 billion (HY25: R2.5 billion) benefitting from lower finance expenses, an overall improvement in contribution from the three SA sectors that delivered encouraging like-for-like net property income (NPI) growth, positive renewal reversions in the retail sector, reduced portfolio vacancies with improved expense recoveries across all three sectors, partially offset by continued negative reversions in the office sector.
• Total group revenue, excluding straight-line lease income adjustments and Trading & Development division revenue, increased by 2.4% to R6.6 billion.
• Group interest cover ratio (ICR) improved from 2.5 times at FY2025 to 2.7 times, and SA ICR improved from 2.9 times at FY2025 to 3.2 times.
• Net asset value (NAV) per share, based on the SA Reit definition, decreased by 2.2% to 1 945 cps, driven by the acquisition of Auria Senior Living, a provider of later living accommodation, by Growthpoint Healthcare Property Holdings (RF) Limited, lower property values in Growthpoint Properties Australia Limited (GOZ) and the stronger rand.
• Group investment property valuations increased by R503 million (0.4%) from values reported at FY2025.

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In a separate results media release, Growthpoint said its 2026 half-year performance cements its early turnaround to positive distribution growth.

“The strong results, led by clear performance improvement in the strengthened South African portfolio and lower finance costs, show a business primed for growth and on track to meet its FY2026 guidance,” it added.

“Growthpoint has done well to achieve solid earnings growth by focusing on effective strategic execution, disciplined capital management and building positive growth momentum, putting the company in its strongest position in years,” declared Norbert Sasse, outgoing group CEO of Growthpoint Properties.

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Speaking to Moneyweb, Ian Anderson, portfolio manager at Merchant West Investments, said the key takeaway from the results is that South Africa and the V&A Waterfront were the standout performers in Growthpoint’s portfolio, while GOZ and Globalworth continue to disappoint.

“The increased payout ratio will be welcomed by shareholders – dividend growth of 8.5% driven by the increased payout ratio as Dips only increased by 2.3%,” he pointed out.

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“The stronger rand obviously had a negative impact on these results given the high non-SA exposure in GRT’s portfolio. Growthpoint is also benefiting from lower interest rates and bond yields in South Africa – the weighted average cost of their South African debt reduced to 8.5% from 8.9%.

“These results reinforce the positive domestic backdrop for South African Reits [real estate investment trusts] – improving SA property fundamentals and lower borrowing costs – which should lead to accelerating dividend growth throughout 2026 and into 2027 notwithstanding the current turmoil in the Middle East,” added Anderson.