JOHANNESBURG (Reuters) – South Africa’s largest listed property group Growthpoint Properties reported a 10% fall in annual distributable income on Wednesday hurt by high interest rates.
Its distributable income per share (DIPS) – a primary measure of profit for real estate investment trusts (REITs) – fell to 141.9 South African cents per share in the year ended June 30, from 157.6 cents.
It warned its income would fall by 2% to 5% this year also due to high interest rates, both locally and internationally.
Analysts have said high interest rates in South Africa will likely see the commercial property market soften and property income growth come under increased pressure due to low demand and the high cost of servicing debt.
The central bank is expected to cut interest rates on Sept. 19 following an extended period of tight monetary policy after consumer inflation slowed to 4.6% year on year in July, a three-year low, from 5.1% in June.
“The property sector is capital-intensive and any reduction in borrowing and capital costs will be welcomed,” Calvin Crick, managing director for transaction services at Cushman & Wakefield, said in a recent note.
He added that interest rate cuts would help spur demand for commercial properties.
Growthpoint, with a portfolio of 511 physical properties across South Africa, Australia, the United Kingdom, Poland and Romania, said its revenue increased by 4.8% to 14.4 billion rand ($806 million).
It declared a final dividend of 117.1 cents.
($1 = 17.8727 rand)
(Reporting by Sfundo Parakozov; editing by Christopher Cushing and Jason Neely)
