Office and industry owner Growthpoint Properties Australia is ready to go shopping, with lower debt and a war chest of unused debt, after recording record growth in the valuation of his portfolio of $ 4.5 billion dollars.
The value of the portfolio increased 10.2% in fiscal 2021, the largest 12-month like-for-like increase to date for the real estate trust, led by Tim Collyer. Much of this growth was driven by a substantial revaluation of the industrial sector – itself the result of the boom in e-commerce – as well as strong leasing across the portfolio.
A series of finance leases have enabled Growthpoint to close 12% of its portfolio by income. Among the highlights, he signed Bunnings to take over most of an office tower he had speculatively built in Richmond, in east-central Melbourne. Struck amid the extended COVID-19 lockdown in Melbourne last year, it was one of the largest office leases nationwide in fiscal year 2021.
The rise in value has done wonders for Growthpoint’s balance sheet, lowering its debt ratio to an all-time high. With $ 387 million in unused debt, Growthpoint is looking for acquisition opportunities. Capitalization rates, akin to investment returns, of its industrial assets have fallen below those of its office towers, making logistics properties more expensive to acquire than office space, Collyer noted.
âIt’s competitive and the returns are low. We will still watch the [industrial] market, but it is more expensive than the office market, where more attractive returns are offered in certain sectors, âhe said. The Australian Financial Review.