SA property firm woos US investors

1 October 2013

Growthpoint Properties, South Africa’s biggest listed property company, has launched an American Depositary Receipt (ADR) programme to attract US investors.

Growthpoint launched its ADR programme on the over-the-counter (OTC) market in the US on Monday through a sponsored ADR programme with BNY Mellon, giving US investors the opportunity to buy dollar-denominated shares in a South African-based diversified property company that distributes all its net rental income every half year.

Each Growthpoint depositary receipt represents two ordinary shares and trades on the OTC market in the US under the symbol “GWPTY”. Growthpoint ordinary shares trade on the Johannesburg Stock Exchange (JSE) under the symbol “GRT”.

Growthpoint became a real estate investment trust (REIT) on 1 July. The company is the 40th largest REIT globally by market capitalisation and the largest REIT in emerging markets.

Once all listed property companies and property unit trusts have converted to a REIT, South Africa is expected to have the eighth-largest REIT sector globally.

Lauren de Klerk, vice-president of BNY Mellon’s depositary receipts business, said the international acceptance of the REIT structure had seen two South African property opportunities becoming available to US investors in September.

“We expect more to follow, and will work closely with Growthpoint to enhance its profile and meet its objectives,” De Klerk said in a statement, adding that 34 of the JSE’s top 40 companies now had a depositary receipt (DR) programme.

Growthpoint executive director Estienne de Klerk said the US market was constantly looking for investment opportunities, “so we want to make the investment in Growthpoint as accessible as possible.

“As all income is distributed on a half-yearly basis, management seriously considers the capital allocation of new investments (either acquisitions or developments) and carefully evaluates whether a new investment is sufficiently yield-enhancing for Growthpoint,” De Klerk said. “The management team has proven in the past that this gives investors a better return.”

De Klerk said the REIT structure would “put South Africa on the map as a choice for REIT investors and specifically REIT indices. Global REIT indices represent general trends in real estate equities worldwide, where real estate activities represent the ownership, disposal and development of income-producing real estate. It also allows small investors to obtain exposure to large commercial property.”

SAinfo reporter