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Growsmart Celebrates Top Learners at 2024 Finals

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Growsmart Educational Programme Celebrates Western Cape’s Top Learners at 2024 Finals

Cape Town, 09 October 2024 — The Growsmart Educational Programme, an initiative by Growthpoint Properties, celebrated the brightest young minds in the Western Cape at the pinnacle of its annual competition season. The final event took place at The Lookout, V&A Waterfront, where top-performing learners in literacy, mathematics, and story writing were honoured.

Launched in 2010, Growsmart is a nationally and internationally recognised initiative fully endorsed by various Education Departments and serves as the flagship programme of the Western Cape Department of Education. This impactful programme aims to enhance educational outcomes in underperforming schools by engaging learners in grades 4, 5, and 6 through a dynamic, curriculum-based competition. Focusing on literacy, mathematics, and story writing, Growsmart helps intermediate learners improve critical academic skills while fostering creativity and problem-solving abilities.

2024 Western Cape Competition

The 2024 competition kicked off in April, with schools from districts including Cape Metro and West Coast District participating. Following multiple rounds and semi-finals, the best 15 learners in literacy and mathematics and 10 learners in story writing advanced to the final competition.

In the Literacy Competition, the 15 finalists were selected from 327 participants and tested on their ability to spell, define, and use words in sentences, alongside their understanding of verbs, nouns, idioms, and adjectives. The winners are:

  • 1st Place: Delft South Primary School
  • 2nd Place: Teske Primary School
  • 3rd Place: Dagbreek Primary School

This marks Delft South Primary School’s second consecutive win, earning the school an iPad Lab valued at R350,000, further enhancing its learning resources.

In the Mathematics Competition, 15 finalists out of the 321 participants tackled questions ranging from BODMAS to problem-solving and mental maths. The winners are:

1st Place         Idasvallei Primary School

2nd Place        Diazville Primary School

3rd Place        Eikendal Primary School

The Story Writing Competition is a project-based, mentor-led event in which learners

submit their own original written stories. Nearly 166 storybooks were submitted. The

winners are:

1st Place                     Tuscany Primary School, Olwam Sondlo

2nd Place                    Helderkruin Primary School, Sobo Ndongo

3rd Place                    Kenmere Primary School, Jordan Theart

Most Creative             Kenmere Primary School, Kylah Simons

The winning schools were awarded prizes to further support their educational efforts and enhance their students’ learning experiences.

Inspiring Future Leaders

Jewel Harris, Founder of Growsmart and General Manager of Growthpoint Properties Cape Town, applauded the dedication and talent of this year’s participants. “Congratulations to everyone who took part in this year’s interactive programme. It has been more focused, relevant, engaging, and innovative than ever before. Well done to the winning learners, mentors, and schools.”

Shawn Theunissen, Head of Corporate Social Responsibility at Growthpoint Properties, echoed these sentiments, adding, “The winning learners and mentors represent the leaders of tomorrow and today. We’re incredibly proud of them all. Investing in positive social impact across the entire education value chain not only transforms lives today but also shapes future generations.”

A Platform for Continued Success

Beyond the competition, Growsmart provides learners with additional opportunities through the Growsmart Bursary Programme, supporting their ongoing educational journey.

As Growsmart concludes its fifteenth year in the Western Cape, the programme continues to expand its reach and impact, celebrating growing successes in the Eastern Cape and Limpopo. Growsmart remains dedicated to creating educational opportunities that empower communities and foster future global citizens within a more inclusive society.

Guests were greeted with a complimentary coffee generously sponsored by Vida e Caffè and served with a smile by their friendly baristas.

Congratulations to all the Western Cape winners!

Growthpoint advances sustainability goals with automation and 1ai

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Growthpoint Properties advances sustainability goals with automation and 1ai 

Growthpoint Properties (JSE: GRT) has developed a bespoke automation solution in partnership with 1ai, a leading provider of intelligent automation solutions, to streamline the processing of municipal invoices while unlocking valuable sustainability data. The initiative forms part of Growthpoint’s broader efforts in using pioneering technology to enhance operational efficiencies and reduce environmental impact to achieve its ambitious sustainability goals.

With its extensive South African portfolio spanning around 350 buildings, Growthpoint processes more than 1,100 municipal invoices each month, a task requiring around 160 hours of manual handling, and diverting resources from other vital activities. This makes it difficult to extract and apply critical data related to utility consumption, such as power and water use information.

Recognising the potential for automation to transform this process, Growthpoint collaborated with 1ai to develop a bespoke system that automates the invoice processing workflow while extracting and structuring the useful sustainability data embedded within the documents. The result is a process that combines advanced Robotic Process Automation (RPA) with powerful text extraction algorithms, designed to manage the varied formats and complexities of municipal invoices.

The project has already delivered substantial operational benefits. In addition to saving 475 hours per month across both invoice processing, as well as the extraction and analysis of sustainability data, Growthpoint can now redirect resources towards other efforts, such as enhancing sustainability reporting and supporting the company’s broader environmental, social, and governance (ESG) goals.

Engelbert Binedell, Chief Operating Officer at Growthpoint Properties, says, “Automation has significantly improved our invoice processing and data analysis capabilities. By accurately capturing detailed utility data, we are now better equipped to meet our sustainability targets and optimise resource management across our properties. This improves our efficiency and enhances our strategic decision-making process.”

Rudolph Janse van Rensburg, Founder and CEO of 1ai, adds, “Our partnership with Growthpoint demonstrates the practical value of intelligent automation in managing complex processes. By streamlining the processing of municipal invoices, and thereby unlocking critical sustainability data, we have helped Growthpoint enhance operational efficiency while gaining valuable insights that support their sustainability goals. Our collaboration reflects a shared commitment to leveraging technology to drive efficiency, sustainability, and innovation in the property sector.”

The success of the initiative is a key component of Growthpoint’s strategy of incorporating intelligent automation across various aspects of its operations, with plans to expand the application of RPA to other critical areas, including vendor onboarding and contract lifecycle management.

Binedell says the automation initiative aligns with Growthpoint’s vision of remaining at the forefront of sustainable property management and setting new standards for operational excellence and environmental stewardship within the industry.

Growthpoint to sell its stake in Capital & Regional to NewRiver

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Growthpoint simplifies its business as it agrees to sell its stake in Capital & Regional to NewRiver.

25 September 2024 : Growthpoint Properties (JSE: GRT) has conditionally agreed to dispose of its entire 69% shareholding in Capital & Regional (C&R), which is dual-listed on the London Stock Exchange and the Johannesburg Stock Exchange and invests primarily in UK community-focused shopping centres. The proposed disposal reflects Growthpoint’s strategy to simplify its business and optimise its international investments.

Growthpoint’s disposal decision forms part of a broader transaction in progress whereby NewRiver REIT, which also invests in UK shopping centres, has announced its offer to buy all the issued and to-be-issued C&R shares for a total of GBP147 million (or 62.5 pence per C&R share), of which Growthpoint would receive GBP101.4 million.

In the proposed cash and share transaction, each C&R share would be exchanged for 31.25 pence in cash and 0.41946 new NewRiver shares. For Growthpoint, this would amount to approximately GBP50.7 million in cash and 67.4 million new NewRiver shares, representing an approximately 14% interest in NewRiver, post the completion of the transaction.

Commenting on the proposed disposal, Norbert Sasse, Group CEO of Growthpoint Properties, says, “We still believe C&R is an attractive platform with a high-quality portfolio of assets and strong prospects. However, it has become non-core to our group-wide strategic focus, representing 4.6% of total assets by book value and 3.6% of total distributable income. Given our aim of simplifying the business and optimising our international portfolio, we have clearly stated that we were evaluating all options to maximise the value of our investment in C&R.”

After receiving unsolicited expressions of interest in C&R, Growthpoint contemplated disposal, and NewRiver’s offer represents a favourable 21% premium to both its closing share price the day before its preliminary expression of interest was received on 23 May 2024 and the three-month volume-weighted average price to the same date.

Like all C&R shareholders, under the conditions of the offer, Growthpoint will be entitled to the interim dividend declared by C&R for the six-month period to 30 June 2024 of 2.85pps, expected to be paid on 27 September 2024. On completion of the transaction, it will also be entitled to a further dividend, equivalent to 1.3 pence per C&R share, paid either by NewRiver or C&R, depending on the effective date of the transaction.

Growthpoint will use the cash proceeds to strengthen its current balance sheet and position it to pursue investment opportunities in line with its communicated strategy. It may consider selling down its NewRiver shares in due course in line with its drive to simplify its business and optimise its international investments.

The transaction remains subject to the usual conditions, including the approval of C&R shareholders representing 75% of its shares, with Growthpoint’s approval alone taking this number to nearly 69%.

On completion of the transaction, C&R will be delisted, and 40.6% of Growthpoint’s property assets by book value will be located offshore.

Growthpoint reports strong group-wide operational performance

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Growthpoint reports strong group-wide operational performance with signs of the property cycle turning positive

Growthpoint Properties Limited (JSE: GRT) achieved robust operational results across its local and international investments for the 30 June 2024 financial year, with reports strong group-wide operational performance an improved contribution from Capital & Regional (C&R), and steadily improving property metrics from its stable South African portfolio. The strong operational performance has, however, been overshadowed by the negative impact of higher interest rates, lower dividends from Globalworth Real Estate Investments (GWI) and reduced profit from the South African trading and development division, leaving distributable income down 10% in line with guidance provided to the market.

Norbert Sasse, Group CEO of Growthpoint Properties, comments, “The improvement in our domestic portfolio’s property fundamentals and the strong operational performance of our international investments, indicate that we may have passed the lowest point of the curve and are now seeing signs of improvement. We successfully progressed the company’s strategic initiatives in a year that was as tough as ever but ended with brighter prospects on the horizon.”

Sasse notes that post-election, there is a more bullish feeling overall. “There is undoubtedly a greater sense of positivity, which has resulted in a rise in foreign investment in SA bonds and equities and will become more evident in the property sector as higher interest rates start working their way out of debt-servicing costs.”

Sasse adds, “Interest rates are anticipated to come down, and the effect of this is likely to start showing in our business from the second half of FY25. Nevertheless, the ongoing refinancing of interest rate swaps and cross-currency interest rate swaps at significantly higher rates continues to remain a challenge for earnings growth.”

In line with this, the solid operational performances produced by Growthpoint’s direct and indirect investments in FY24, remained overshadowed by higher interest rates globally. Growthpoint will distribute a total dividend per share (DPS) of 117.1cps, 10% down from the prior year, based on a payout ratio of 82.5%. Total property assets decreased by 2.8% to R174.7bn at year end..

Growthpoint’s diversified portfolio and income streams position it defensively for FY25. The improvement in its domestic portfolio’s property fundamentals and the strong fundamentals of its international investments indicate the bottom of the property cycle. It is, however, important to recognise that the ongoing impact of high interest rates, both locally and domestically, remains a challenge for distributable income per share (DIPS) growth in FY25, which is expected to decline by 2% to 5%. As Growthpoint assesses interest rate expectations across its investment geographies, it is evident that there are positive indicators supporting its outlook for FY26 when Growthpoint expects positive DIPS growth to resume.

Growthpoint’s group SA REIT loan-to-value (LTV) ratio was 42.3% (FY23: 40.1%), impacted mainly by an increase in Growthpoint Properties Australia’s (GOZ) LTV as a result of valuation write-downs. It recorded an interest cover ratio (ICR) of 2.4 times (FY23: 2.9 times). Growthpoint enjoys excellent access to funding and secured attractive margins during the period. Even so, it was not immune to the impact of high interest rates and significant refinancing of cross-currency interest rate swaps resulted in higher interest rates than those on expiry. 78.9% of its SA debt book is fixed for an average term of 1.9 years at a rate that moved up from 9.1% to 9.6%, or from 6.7% to 7.2% if you include cross-currency interest rate swaps and foreign-denominated debt. Net SA finance costs increased by R381.0m from FY23, and its weighted average term of debt increased from 3.5 years to 4.0 years.

“We believe LTVs, linked to valuations, are stabilising, other than possibly for GOZ where interest rates are lagging. We will, however, continue to focus on strategic initiatives to preserve liquidity and balance sheet strength in the long term. This supports us in achieving our key goals of enhancing the quality of the SA portfolio and optimising our international investments,” says Sasse.

Growthpoint remains well capitalised with significant access to liquidity, with R465.9m cash on its SA balance sheet and R6.3bn in SA unutilised committed debt facilities, with both numbers including Growthpoint Investment Partners. It will retain a further R842.3m from its 82.5% payout ratio. Growthpoint has a modest R2.8bn of debt maturing in the next 12 months, and the outlook for both its Fitch global scale rating at BB+ and national scale rating at AAA(zaf) and Moody’s global scale rating at Ba2 and national scale rating at Aa1.za, remain stable.

Growthpoint continued optimising its international investment, with 42.1% of property assets by book value located offshore and 32.4% of DIPS earned offshore. Foreign currency income remained steady at R1.6bn.

Growthpoint owns 57 office and industrial properties in Australia valued at R54.7bn through a 63.7% shareholding in GOZ and six community shopping centres in the UK valued at R9.2bn through a 68.9% investment in LSE- and JSE-listed C&R. Through its 29.5% investment in LSE AIM-listed GWI, Growthpoint owns an interest in 59 office and mixed-use properties in Poland and Romania with its effective share valued at R15.1bn. Growthpoint reinvested the June and December 2023 dividends received from C&R and GWI and invested in C&R’s open offer for the acquisition of Gyle Shopping Centre in Edinburgh.

“GOZ remains a core investment for Growthpoint, and we continue to evaluate all options to maximise the value of our investments in C&R and GWI,” says Sasse.

The excellent operational performance that distinguishes GOZ continued. It recorded successful leasing, supporting a portfolio occupancy of 97% by gross lettable area, of which 80% is leased to the government, listed and large organisations. It continues to have a long weighted average lease expiry of 5.7 years.

GOZ’s balance sheet is robust. Its gearing, although up from 37.2%, remains within its target range at 40.7%, driven by higher interest rates that saw GOZ’s portfolio valuation decline for the office and industrial sector by 11.2% and 1.8%, respectively, on a like-for-like basis over 12 months, with the total portfolio valued at AUD4.4bn at FY24. GOZ extended AUD470.0m of bank facilities in FY24. 74.5% of its debt is fixed for an average term of 2.5 years at a rate of 3.4%, and it has AUD293.0m of undrawn debt facilities.

With a slightly increased payout ratio from 79.4% in FY23 to 80.7%, GOZ’s DPS decreased from AUD21.4cps for FY23 to AUD19.3cps for FY24, while its funds from operations (FFO) per share declined by 10.8% to AUD23.9cps for FY24 from AUD26.8cps in the prior year. This is principally due to the material once-off lease cancellation fees received in the prior period, the disposal of two assets and higher interest rates.

“While GOZ still plans to grow its funds management platform, conditions were not conducive to furthering this growth during the year. The headwinds GOZ faced in FY24 have not yet fully subsided, and it has provided FY25 FFO guidance of AUD 22.3cps to AUD 23.1cps and distribution guidance of AUD 18.2cps,” confirms Sasse.

C&R’s community-focused, value-driven, needs-based retail strategy has driven a period of robust operational performance. Net rental income growth of 17.4% mainly due to the acquisition of Gyle Shopping Centre. Like-for-like property valuations increased 0.6% and have been stable over the last three years. C&R achieved strong leasing results, with new leases signed at an average premium of 8.8% on previous rentals. Portfolio occupancy increased to 93.1% by GLA.

C&R increased its DPS to GBP5.8pps totalling R173.9m (FY23: 5.5pps or R103.6m). Their LTV ratio increased marginally from 42.0% at FY23 to 43.0%. C&R has an average debt maturity term of 3.6 years at an average cost of 4.25%, with 97.8% of debt fixed until September 2025 and 78% until at least January 2027.

“C&R is defensively positioned and expected to continue delivering a stable performance,” Sasse says.

GWI reduced vacancies to 13.8% from 14.5% at FY23, with impressive leasing outcomes underpinning a resilient operating performance. The disposal of its fully owned industrial portfolio was the main contributor to a 10.8% decrease in GWI’s portfolio value. GWI has low gearing of 39.9%, EUR210.3m of cash on hand and EUR187.0m of undrawn debt facilities.

Given the significant refinancing of its Eurobond during the year, at 6.25% versus 3.0%, GWI’s DPS reduced 27.6% to EUR21.0cps totalling R304.0m (FY23: EUR29.0cps or R395.4m)

“GWI has bedded down its bond refinance, which places the company more firmly on the front foot, with liquidity to pursue opportunities in the market,” notes Sasse.

In South Africa, Growthpoint owns and manages a diversified core portfolio of 345 retail, office, and logistics and industrial properties. It also owns nine trading and development properties. Its continuous drive to elevate the quality of this portfolio includes investing in its core assets to protect and enhance value through active asset management initiatives, and developing new high-quality assets, refurbishing existing assets, disposing of non-core assets, and enhancing sustainability initiatives across all three sectors.

Growthpoint continued to invest in the portfolio with upgrades and new developments of R2.1bn. It sold 17 non-strategic properties for R907.7m during the year and two trading and development properties for R294.3m with a combined profit on book value of R24.4m. It intends to sell a further R2.8bn of assets in FY25. In total, Growthpoint has sold 161 properties for R12.4bn since 1 July 2016. It also continued to recycle capital from the sale of smaller, non-core properties into developing and redeveloping quality assets.

With almost all key numbers improving, the SA business delivered an admirable operational performance. Overall, vacancies improved with excellent letting, reducing from 9.7% to 8.7% over the year. Even office occupancies made a noteworthy recovery. Rental renewal growth demonstrated an equally encouraging trend, moving from -12.9% to -6.0% over the same period. Likewise, its renewal success increased from 64.9% to 76.3%. Bad debts and arrears reduced dramatically and are reverting to long-term trends.

The SA valuations, with a portfolio value of R66.3bn (FY23:R64.1bn) at FY24, were positively impacted by the improved property metrics across all three sectors and reduced vacancies in the office and retail sectors coupled with the repositioning of the portfolio to higher-quality assets by way of disposals and developments.

Growthpoint’s Cape Town and KwaZulu-Natal portfolios are performing particularly well, where all three sectors are nearing full occupancy. This is a good sign for positive rental reversions, as both markets are becoming more competitive.

Growthpoint’s total expense ratio for its SA business increased to 36.7% (FY23: 35.9%), primarily driven by disposals, above-inflation hikes in municipal rates and taxes, and rising utilities costs. On a positive note, with less loadshedding in 2024 so far, diesel spend reduced from R140.0m in FY23 to R112.6m in FY24, and diesel cost recoveries as a percentage of recoverable diesel spend was 82.0%.

The SA logistics and industrial portfolio is well-let despite a few challenging vacancies and has benefited from ongoing leasing success. Like-for-like net property income (NPI) grew by 2.6%. Renewal success increased considerably from 59.1% to 78.3%, and renewal rental growth moved up from -10.4% to -3.3%.

Overall, this sector is distinguished by relatively better property dynamics, supporting new developments. During the year it completed the speculative development of 15 units totalling 63,017sqm across Cape Town, KZN and Gauteng, all of which have experienced good leasing uptake. It also completed two client-driven developments in Gauteng, including a 28,375sqm logistics warehouse in Isando.

The SA retail property portfolio like-for-like NPI increased substantially, swinging positive from -1.7% for FY23 to +4.1% for FY24, and the portfolio value increased by 0.9%. Its core vacancy remained low, at 4.0%. Growthpoint’s retail portfolio continued to benefit from refurbishments and extensions at several malls, and strong trading density growth of 4.1% (FY23:6.2%) with the Western Cape outperforming at 5.7%.

In addition to the upgrades and extensions at River Square and Vaal Mall completed during the year, Growthpoint is set to finish the major redevelopment of Bayside Mall in November 2024. Its upgrade of Beacon Bay Retail, including a 3,100sqm expansion incorporating Builders Express, is scheduled for completion in June 2025. The Longbeach Mall extension for its 2,300sqm Builders Express will be ready in November 2025.

The office sector continued to recover as people returned to offices, and Growthpoint’s SA office property portfolio showed a welcome increase in value of 1.2% after printing a 0.9% decline in the prior year’s value. Vacancies were reduced yet again across all nodes, improving from 19.2% to 15.1% at FY24. Sandton, which represents 22.2% of Growthpoint’s office portfolio, showed a particularly notable change for the better, with vacancies reducing by around 33,000sqm during the period, taking the node’s vacancy rate from 28.7% at FY23 to a much improved 20.1% at FY24. Like-for-like NPI for this sector continued to firm, moving from -1.9% for FY23 to -1.0% for FY24. Similarly, renewal growth also improved significantly from -20.1% to -14.8%.

Growthpoint has two demand-driven developments underway in its office portfolio. It has initiated a net-zero carbon redevelopment at 36 Hans Strydom in Cape Town for Ninety One, who will occupy the building on a 15-year lease once completed in July 2025. Additionally, in response to tourism and hospitality demand in the Western Cape, Growthpoint is developing the 154-room Hilton Canopy Hotel in its Longkloof mixed-use precinct, set to open in December 2024.

Continuing to invest in the quality of its SA portfolio, Growthpoint has committed R1.5bn to furthering this in FY25. Growthpoint’s in-house trading and development division develops assets for its own balance sheet, earns development fees from external projects and profits from the sale of trading and development assets, and development projects for Growthpoint Investment Partners. This year the division earned R42.2m of trading profits, R9.8m of development fees and R25.4m of net property income.

The division was active with third-party trading and development projects, selling out its first major residential development, Kent residential apartments in La Lucia, Umhlanga, and a small community shopping centre in KZN. Additionally, its Riverwoods office-to-residential conversion in Bedfordview, is 80% sold, with proceeds expected in FY25. It also delivered two student accommodation properties, Horizon Heights and Fountains View, for the 2024 academic year. The team is currently working on The Crescent Studios (previously The Podium) and Arteria­ Parktown (33 Princess of Wales).

Growthpoint is committed to excellent environmental, social, and governance (ESG) performance and has made significant strides toward its carbon-neutral 2050 target. As part of its strong environmental actions, Growthpoint has installed 40.7MWp of solar power and has 123 green building certifications. Additionally, it signed a milestone Power Purchase Agreement (PPA) for renewable energy, securing 195GWh of green power, equating to 32% of its FY23 energy consumption. Its recently announced e-co2 solution provides tenants with renewable electricity at fixed escalations. Further, reducing water and waste intensity is a priority for FY25.

Growthpoint retains its Level 1 BEE status and continues to invest in successful corporate social initiatives, most notably the Property Point enterprise development programme. Due to its positive impact, this project has been widely adopted across the sector and become an industry-wide initiative.

“The stable and improving metrics from our SA business are encouraging, and we will continue improving the quality of this portfolio, including its sustainability, by championing renewable energy and similar solutions that support environmental and social stewardship,” says Sasse.

The iconic V&A Waterfront, Cape Town, in which Growthpoint has a 50% interest with its share of property assets valued at R11.5bn, delivered stellar results, with exceptional performances from its retail, hospitality and attraction sectors, driven by tourism. This strong position was bolstered by the completion of new developments, negligible vacancies at just 0.3% across the precinct, and strong demand supporting rental levels. The new Union Castle building is fully let, anchored by Marble restaurant and a flagship Nike store, and will open in time for the festive season.

The V&A’s like-for-like NPI, which includes a growing portion of operating income, increased by 13.4%. “The V&A expects mid-single digit growth next year as it undertakes major upgrades. The extensive refurbishment of Table Bay Hotel will begin in February 2025, and it will relaunch as the InterContinental Table Bay Cape Town later in the year. The conversion and extension of an existing wing of the mall for international luxury brands is set to open in November 2025 has commenced, so normal trading in this area has paused for the project,” says Sasse.

Growthpoint Investment Partners continued to grow its assets under management (AUM) and fees. It ended the year with R18.0bn of AUM, growing towards its goal of R30bn of AUM by the end of FY27. Growthpoint’s capital-efficient alternative real estate co-investment platform includes three funds that are distinct from Growthpoint’s retail, office and logistics and industrial core assets. They are Growthpoint Healthcare Property Holdings, Growthpoint Student Accommodation Holdings, which operates under the Thrive Student Living brand, and Lango Real Estate with prime office and retail assets in Ghana, Nigeria and Zambia, and land in Angola and Nigeria.

“Overall, Growthpoint Investment Partners made a steady contribution to our earnings with mixed results for the dividends and management fees earned across its three funds. Management fees increased by 10.2%, while dividends dropped by 16.0%. Growthpoint Investment Partners is actively raising capital in the funds, which are increasingly enjoying opportunities for growth through both development and acquisition,” says Sasse.

“We have made gains in every area of opportunity available to us this year. Growthpoint is a strong, diversified business with talented employees, a solid financial foundation, and a clear strategy for delivering value to all stakeholders. We have much to look forward to,” says Sasse.

Growthpoint gears up for certified renewable energy to offices

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In a first for South Africa, Growthpoint gears up for certified renewable energy rollout to offices

Pioneering a greener future for South Africa, Growthpoint Properties (JSE: GRT), the country’s leading real estate investment trust (REIT), is set to transform the commercial real estate landscape by introducing a clean, green energy benefit scheme called e-CO2 at 10 of its properties in Sandton, Johannesburg. This significant milestone is the next step in the rollout of its innovative renewable energy transition – a first for South Africa.

With all major elements already in place for the groundbreaking scheme to debut in July 2025, Growthpoint will deliver the first green energy to its office buildings through wheeling, reducing carbon footprints and generating Renewable Energy Certificates (RECs) for tenants using the latest blockchain technology. The move establishes Growthpoint as a trailblazer in the renewable energy field by introducing a new offering for the commercial real estate sector in South Africa.

The Growthpoint e-CO2 green energy benefit scheme (e-CO2 is short for electricity minus carbon dioxide and pronounced “eco two”) is an innovative solution that will deliver green energy through wheeling from multiple renewable sources — water, wind, sunshine — directly to commercial properties. It is made possible by Growthpoint’s Power Purchase Agreement (PPA) with Etana Energy.

At the end of 2023, Growthpoint signed the landmark PPA with licenced electricity trader Etana Energy to wheel electricity generated by independent power producers to its buildings in several locations across the country. Wheeling involves the buying and selling of sustainably sourced electricity between private parties, using the existing transmission or distribution network.

Since this can be done over long distances, it gives more users greater access to renewable energy, which is an especially scarce commodity for offices in central business districts. Buildings in these areas, almost without exception, have insufficient roof space for meaningful on-site renewable energy production.

Through the agreement with Etana Energy, Growthpoint has secured exclusive rights to purchase all of the roughly 30GWh that will be generated annually by a hydroelectric power plant developed and operated by Serengeti Energy. The hydroelectric project, which will effectively generate 24/7 baseload power, is located on the Ash River within the Lesotho Highlands Water Scheme (LHWS) near Clarens in the Free State. Construction of the plant is well underway as it is readied to commence operation officially on 1 July 2025.

Following this, the majority of wind and some solar production from Etana’s signed generating portfolio will be added to the grid from 2026, and further sources could be added in future.

Paul Kollenberg, Growthpoint Properties Head of Asset Management: Offices, says: “This agreement secures us a significant 195GWh of clean electricity annually for Growthpoint and our tenants at specific buildings, and represents an important step forward in our sustainability journey. Over the past decade, we have prioritised the advancement of environmental, social and governance (ESG) strategies, and we understand how important it is for our clients to do likewise.”

Commitment to sustainability across its supply chain and for SA Inc.

Environmental sustainability is at the core of Growthpoint’s business, which has been at the forefront of integrating green buildings as an accepted practice in the commercial property sector. It is committed to creating sustained value by integrating ESG into corporate strategy.

Growthpoint’s climate commitment target is being carbon neutral by 2050. By committing significant resources to drive this within its operations and across its supply chain, Growthpoint is setting a precedent for sustainable business practices, enabling other businesses to do the same, and supporting long-term cost savings for its clients.

Delivering savings and ESG benefits to users

Being part of the e-CO2 green energy benefit scheme makes it easier for businesses consuming clean, wheeled power to achieve their ESG targets because at least 70% of their electricity will be from renewable sources such as wind, hydro and solar. Depending on availability, a select few businesses will also be able to elect to receive 100% renewable energy. Growthpoint has already started registering businesses eager to receive clean, green energy to meet their environmental goals.

Werner van Antwerpen, Head Corporate Advisory at Growthpoint, explains, “Opting into e-CO2 gives users access to certified RECs that can be used for annual emission reduction in ESG reporting to contribute towards tenants’ environmental goals or can be traded in the open market.”

Consuming electricity in this way can significantly reduce a company’s Scope 2 emissions (as outlined in the Greenhouse Gas Protocol), which include indirect carbon emissions from electricity used by a company. Scope 1 involves direct emissions, while Scope 3 covers associated and indirect emissions in the supply chain. All three are essential to address in the journey to net zero carbon emissions.

Building occupants also benefit directly from e-CO2 in terms of a reduction in the cost of occupation. The tenants’ monthly renewable electricity allocation is used to calculate the benefit, and the longer a tenant stays in a building, the greater the savings.

“Growthpoint is also passing on cost benefits it receives from signing the PPA to the tenant. The cost benefit for a tenant opting for e-CO2 is the difference between the full increase in the electricity price applied by the local municipal authority or Eskom approved by NERSA annually and a fixed escalation rate for the renewable energy part of their electricity cost over the duration of the lease. This guarantees long-term savings. The longer your lease, the more the cost benefit saving becomes each year,” says Kollenberg.

Users at qualifying properties will receive their power as they always have, through the existing power grid. While this does not directly shield them from load shedding, Growthpoint is increasing generating capacity in the larger South African electricity network, reducing the likelihood of load shedding in the long term

e-CO2 is initially available for new leases or renewals only in specific jurisdictions and to select buildings within the Growthpoint portfolio, but this will be expanded over time. The first buildings part of e-CO2 – all located in Sandton – are 138 West Street, The Annex, The Place, Fredman Towers, The Towers, Grayston Office Park, Sandown Mews, 12 Alice Lane, Advocates Chambers and Pinmill Farm.

“We are incredibly proud of this innovative initiative, made possible by a visionary team, dedicated partners and many passionate and talented people over a number of years. It not only benefits the immediate occupants of Growthpoint’s properties but helps to create a brighter and more sustainable future for South Africa,” concludes Kollenberg