Class of its own

Growthpoint Investment Partners is focused on impact investing in alternative real estate

Growthpoint Investment Partners, the capital-efficient, alternative real-estate co-investments platform by Growthpoint Properties has grown more than R15 billion of assets under management (AUM) in just four years. It now has three investment portfolios in alternative real-estate asset classes, a growing track record of performance as a leading investment partner in alternative real-estate markets and an ambitious goal to double its AUM to R30 billion in the next five years. The groundwork for the company began in 2014 when Growthpoint identified capital-light co-investment as a core strategy to harness new opportunities in changing market conditions.

Leveraging the management skills that have enabled Growthpoint to become a leading international property firm, its co-investment approach has quickly gathered momentum and is successfully attracting equity capital.

All its co-investments are made to have positive long-term socio-economic impacts. They enjoy full access to Growthpoint’s excellent governance-oversight frameworks and extensive, dedicated environmental, CSR and sustainability resources. Its investments enjoy REIT status through Growthpoint, but these unlisted investments provide exposure to direct real estate that tends to be driven by long-term fundamentals.

‘Growthpoint Investment Partners’ chosen alternative property asset classes are achieving both capital and strong income growth, and are outperforming the traditional ones. Its investments have all outperformed the broader sector, and each alternative asset class has proved to be as defensive as we expected, reinforcing our investment case,’ according to George Muchanya, head of Growthpoint Investment Partners. ‘We intend to increase the scale of our three investment platforms and seek new co-investment opportunities distinct from Growthpoint’s core assets in the retail, office and industrial sectors.

‘In doing so, we are adding meaningful depth to the real-estate market by creating access to alternative opportunities in the unlisted and co-invested environment and producing opportunities for the broader investment community.’

Invested exclusively in healthcare-property assets in SA, the Growthpoint Healthcare REIT acquires and develops acute, day and specialist hospitals, as well as laboratories and biotechnology manufacturing and warehousing facilities. It has built a R3.4 billion portfolio with a good growth pipeline of acquisitions and developments. This portfolio impacts a fundamental aspect of the social well-being of communities in SA.

So far, the Growthpoint Healthcare REIT has raised more than R1.3 billion in third-party funding and is in advanced discussions for a further R500 million investment from another third party. It recently concluded a ZAR equivalent $80 million equity and convertible debt package with the International Finance Corporation (IFC) to finance growth opportunities. The calibre of its investment partners is an endorsement of its robust ESG credentials. Growthpoint currently has a 55.9% interest in the Growthpoint Healthcare REIT. Consistent with its capital-light strategy, its stated intention is to gradually reduce its interest to between 15% and 20%.

Growthpoint Investment Partners ensures all its co-investments have a positive long-term socio-economic impact

Continuing its growth, the REIT recently acquired the specialist Cintocare Hospital in Pretoria, and a 50% undivided share in its first healthcare warehousing and distribution asset – the 22 455 m2 facility in Midrand on a long lease to Adcock Ingram, taking its portfolio to eight assets.

The Africa-focused (excluding SA) commercial real-estate investment Lango Real Estate, which Growthpoint Investment Partners established with Ninety One, has built a portfolio of prime office and retail assets in Ghana, Nigeria and Zambia worth about $620 million, and land in Angola. Lango has raised some $320 million third-party funding to date, including Growthpoint’s 16.3% shareholding. It is in advanced discussions with potential investors to raise additional capital that it intends to use mainly to acquire a pipeline of assets, particularly in Nairobi, Kenya, as well as to reduce debt. Lango is uniquely positioned for lasting socio-economic impact across sub-Saharan Africa with its multi-jurisdictional presence and cross-sector exposure.

The third and newest co-investment platform, launched by the company in December 2021, is Growthpoint’s Student Accommodation REIT. It has raised R1.4 billion in equity, including Growthpoint’s co-investment of R240 million, and continues to attract substantial investor interest. It is opening three new university student residences of close to a combined R1 billion for SA’s 2023 university academic year, building on its trusted range of student accommodation designed to enhance students’ university experience and academic success.
Its 2023 portfolio includes 7 200 beds in 10 residences across three cities and is valued at some R3 billion. Peak Studios (UCT), Brooklyn Studios ( University of Pretoria) and Apex Studios (Wits) will house 2 200 students in brand-new accommodation.

The REIT recently branded its platform as Thrive Student Living by Growthpoint, which encompasses both its student accommodation and its supportive student programme. ‘Thrive Student Living offers a new perspective on learning and living, devoted to academic success, personal growth, safety and community – creating environments where students can thrive,’ says Muchanya. ‘It is committed to supporting tomorrow’s leaders to reach their full potential.’ The REIT provides accommodation that is not only purposely designed for student life but also purpose-managed for a more successful and supportive university experience. In addition to the new properties, the portfolio includes Burnett Studios, Hatfield Studios, Festival Studios, Varsity Studios, Kingsway Studios, Richmond Studios and Central Studios.

All elements of the student experience are considered, from the welcoming, upmarket physical accommodation infrastructure to social and environmental factors such as communal space, on-site amenities, and safety and security. They also offer 24/7 support from student-life managers; provide a bridge between the academic faculty and the student’s home base; and have a year-round calendar of programmes and events. Different Thrive Student Living options are suited to a wide range of private and NSFAS students.

Thrive Student Living environments are also the natural choice for corporate bursary programmes invested in the positive educational outcomes of their bursary recipients. They are managed to the high standards of Growthpoint, which is active in initiatives across the entire education value chain as part of its transformative corporate social responsibility. It is recognised for its green building leadership, creating healthy, sustainable environments and operating with a social consciousness that adds value to communities. Fashioning vibrant campus communities aligns with Growthpoint’s ESG goals.

As it’s expected to achieve significant growth towards a national tertiary education footprint with prime, tailor-made new developments for which there is a great demand, its positive impacts go beyond education and ultimately boost job opportunities, municipal revenues and communities. The Growthpoint Student Accommodation REIT is not only opening new doors for students but has also opened up a new opportunity for investors – specifically impact investors – to access the defensive, alternative student accommodation asset class with strong fundamentals and proven resilience.

011 944 6000
[email protected]
Image: Micheile dot com on Unsplash