As at: 21 September 2026

Executive Summary

Key highlights

In this report, we review GRT’s reported FY26 results, released in September 2026, and evaluate the impact on our outlook:

Financial results at a glance:

• SA REIT FFO grew 10.2% to R4.92 billion, and FFO per share by 10.0% to 145.2 cents. Distributable income rose by 4.4% to R5.18 billion, while DIPS advanced by 4.3% to 152.6 cents and DPS by 7.4% to 133.5 cents, supported by a higher payout ratio of 87.5% (FY25: 85%). The improvement was driven primarily by lower SA finance costs, stronger V&A income and improved SA property performance, partly offset by weaker offshore distributions.

• Revenue decreased by 5.0% to R12.90 billion. At sector level, SA revenue was broadly flat in Retail, rose by 2.6% in Office and declined by 2.6% in L&I.

• NPI declined by 6.1% to R9.06 billion and operating profit fell by 7.9% to R7.99 billion. The decline largely reflected negative straight-line lease adjustments and portfolio disposals. However, SA like-for-like NPI rose 4.4% to R5.15 billion, with Retail rising by 5.3%, Office by 3.1% and L&I by 4.9%, reflecting lower vacancies, improved recoveries and expense efficiencies across the directly held SA portfolio.

• Profit for the year expanded by 53.9% to R8.37 billion, while basic EPS advanced by 38.8% to 223.6 cents, largely reflecting positive fair-value and other non-cash movements. Group SA REIT NAV per share grew by 3.8% to R21.31, while total property assets rose by 2.8%.

• The balance sheet strengthened, with Group LTV declining from 40.1% to 38.7% and SA LTV from 34.5% to 30.2%. Group ICR improved from 2.4x to 2.6x, supported by lower leverage and funding costs, as well as asset recycling and debt repayment. SA finance costs declined by 12.9%, as average borrowings fell and the weighted average cost of debt declined from 8.9% to 8.6%.

• Retail vacancies declined from 5.3% to 3.5%, while renewals reversions improved from -0.3% to 0.8%. L&I vacancies improved from 4.1% to 2.9%, while renewal success increased from 64.7% to 77.8%.

• Office vacancies declined from 14.6% to 14.1%; however, renewal reversions weakened from -3.2% to -6.3%, with Gauteng remaining particularly challenging.

• Cost pressures remain evident, with the group SA REIT gross total cost-to-income ratio increasing from 44.4% to 45.5% and the gross administration cost-to-income ratio rose from 6.5% to 7.0%.

Analyst thesis

Our recommendation is based on:

• Improving SA property fundamentals: Leasing conditions are strengthening, vacancies are trending lower, and tenant retention is improving. The directly held SA portfolio comprises the Retail (40%), Office (39%), L&I (20%) and T&D (1%) segments. Retail and L&I remain the healthiest, while Office vacancies remain elevated.

• Growthpoint (GRT) has used asset recycling to reduce leverage and create capacity to reinvest. Management is directing capital away from lower-growth assets towards higher-quality developments and faster-growing sectors.

• Continued disposals may dilute near-term earnings, but the strategy simplifies the portfolio, strengthens the balance sheet and reallocates capital to assets with stronger growth prospects and better return profiles.

• L&I assets offer the strongest structural growth opportunity, supported by demand for modern logistics and warehousing space, low vacancies and GRT’s ongoing rotation from older industrial assets into modern, secure logistics parks.

• The 50%-owned V&A Waterfront is a differentiated earnings platform spanning retail, tourism, hospitality, residential and marine activities. It contributed 18.6% to FY26 group DIPS and offers substantial development opportunities, including the planned Granger Bay development. Regulatory approval process remains under way, with final approvals expected towards the end of 2027.

• Offshore exposure remains a source of diversification, but it also introduces uncertainty. GOZ's like-for-like property FFO increased by 2.6%, while its weighted average cost of debt edged up to 5.1% from 5.0%.

• The Cape Winelands Airport investment provides longer-term development options for GRT’s Western Cape logistics and precinct strategy, with scope for future logistics, commercial and related developments. Given the early stage of the project, we do not currently assume a material near-term earnings contribution.