“Obviously as a company we’re always looking at raising sufficient funds to run the business, and we need to keep all of our options open with regards to raising capital awareness, especially real estate. Our model in particular is that we pay out pretty much all of our profits every six months,” Growthpoint Properties CEO Norbert Sasse told CNBC Africa on Thursday.
“We don’t have the benefit of retained income and big cash reserves that we can build up over time. Whenever we’re acquisitive, make new investments or spend capital on refurbishing our buildings, we need to raise new capital either in the form of taking on more debt, and the other alternative is obviously equity capital.”
Growthpoint is the second South African registered property company to launch the American depositary receipt programme (ADR), with Redefine Property being the first in September this year.
Sasse added that the ADR programme will give Growthpoint greater access to international markets and also increase the company’s ability to raise future equity capital.
“There are various types of ADR programmes. You get some that are very heavy, vis-á-vis regulation and regulatory compliance in the US. You can imagine, to be listed on a US stock exchange, there’s significant regulatory hurdles that one has to overcome,” he explained.
The particular ADR programme had low levels of red tape for Growthpoint, and will be run by the Bank of New York Mellon.
“Our total foreign shareholding at the moment is about 17 odd per cent, so still relatively small. The South African domestic listed property investment market have been very good to us, we’ve always had great access to capital here locally,” said Sasse.
“As one grows to the kinds of levels that we’re at today, not only in terms of our debt market and a debt capital market, or relying on the South African banking market, we definitely have to keep all of our options open.”