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 interest rate uncertainty globally brought on by 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 and 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.

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

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

“With the RMB/BER Business Confidence Index showing an improvement in Q4 2025, South Africa enters 2026 with a cautiously improving macro-economic 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” [prior to the Middle East conflict and oil price spike] has 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.

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The results for the six months ended 31 December 2025 (HY26), compared to the six months

ended 31 December 2024 (HY25), are set out below:

 

Group Highlights

 

–   Dividend per share (DPS) increased by 8.5% to 66.2 cents per share (cps) (HY25: 61.0 cps)

with solid growth in the SA sectors and a conservative SA Loan to value (LTV) ratio

providing the platform for a measured increase in the payout ratio from 82.5% to 87.5%

–   Distributable income per share (DIPS) increased by 2.3% to 75.7 cps (HY25: 74.0 cps)

–   Distributable income increased by 2.1% to R2.6bn (HY25: R2.5bn) 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 (T&D) revenue, increased by 2.4% to R6.6bn (HY25: R6.5bn)

–   Group Interest Cover Ratio (ICR) improved from 2.5 times at FY25 to 2.7 times, and SA

ICR improved from 2.9 times at FY25 to 3.2 times

–   Net asset value (NAV) per share, based on the SA REIT definition, decreased by 2.2% to

1 945 cps (30 June 2025 (FY25): 1 988 cps), driven by the acquisition of Auria Senior

Living (Auria), a provider of later living accommodation, by Growthpoint Healthcare

Property Holdings (RF) Limited (GHPH), lower property values in Growthpoint Properties

Australia Limited (GOZ) and the stronger Rand. Group investment property valuations

increased by R503.m (0.4%) from values reported at FY25.

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