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South Africa's biggest listed property owner, Growthpoint Properties says its flagship V&A Waterfront property has been the hardest hit by the travel bans and its recovery will depend on the resumption of international tourism.
Growthpoint said even before the Covid-19 pandemic had hit, it was expecting a tough year given that property fundamentals were already weak in South Africa and not helped by sluggish economic growth.
But negative growth in the South African business was supposed to be offset by gains from the V&A Waterfront and the offshore businesses.
"Historically the V&A has been a standout performer for Growthpoint. However, given its strong reliance on international and local tourism and heavy weighting to the retail and restaurant trade, it has suffered disproportionately to the rest of the South African portfolio," wrote Growthpoint in the results announcement on Wednesday.
The V&A Waterfront saw vacancy rate increase to 1.5% from 1.2% during the year to 30 June. At the inception of SA's lockdown in May, Growthpoint said the flagship tourist destination was only collecting half of the rent it normally collects from tenants.
The group said its international investments in Australia (GOZ) and in Eastern Europe (GWI) were affected by Covid-19 to a much lesser extent because of their focus on office and industrial properties, as well as their strong weighting toward listed corporates, multinationals and government tenants. But its recently acquired UK business, C&R was severely hit because of its 100% retail focus.
But the South African retail business was still the one impacted the most because of the initial hard lockdown. Growthpoint ended up providing rental relief of R436.3 million to its retail tenants, R277.5 million in rental discounts and deferred another R158.8 million in deferred rent. It was able to recover only R17.4 million of the deferred rental by 30 June. Furthermore, the company incurred R6.8 million of Covid-19-related expenses to keep its shopping centres and offices compliant with social distancing and sanitising rules.
