Growthpoint Properties (JSE: GRT) continues to successfully rebalance its South African portfolio with two deals that reduce its exposure to Gauteng offices and unlock almost R2bn in capital to rotate into its strategy targeting higher-performing sectors and regions.
Both transactions have been agreed between Discovery and the current co-owners of the Discovery buildings at Sandton Summit, Growthpoint and Truzen 114 Trust, which hold 55% and 45% respectively.
For the larger transaction, Growthpoint will sell its stake in the Discovery head office, or Discovery Phase 1, to Discovery in a cash transaction with proceeds of R2.3bn. Growthpoint’s 55% stake in the building equates to 50,466m², which was valued at R2.2bn at the end of Growthpoint’s most recent financial reporting period, 30 June 2025. Truzen will also sell its 45% stake to Discovery.
At the same time Growthpoint is acquiring Truzen’s 45% stake in the adjacent Discovery Phase 2 at an attractive, market-aligned consideration of R323 million. The 19,369m² multi-tenant building was fully let on 30 June 2025.
Once the transactions are completed, subject to conditions including Competition Commission approval, each building will be 100% owned by its respective owner – Discovery will wholly own Discovery Phase One and Growthpoint will be the sole owner of Discovery Phase 2 – on a sectional title basis.
The transactions are consistent with Growthpoint’s disciplined approach to capital allocation. The deals make financial sense, reflect active asset management and support effective capital recycling by reweighting Growthpoint’s South African portfolio in line with its strategy.Estienne de Klerk, SA CEO of Growthpoint Properties
Growthpoint’s domestic strategy is to increase portfolio weighting towards sectors and regions expected to deliver better growth over the longer term, specifically retail and logistics properties, and investment in the Western Cape.
Effective capital rotation is a balancing act. We continually review the portfolio to identify where it makes sense to reduce overweight positions and sell assets attracting investor demand to fund our strategy and add value. In this case, the Discovery Head Office was identified for disposal despite its P-grade quality and blue-chip tenant.Estienne de Klerk, SA CEO of Growthpoint Properties
The combined transactions reduce Growthpoint’s office concentration in Gauteng and Sandton by more than 30,000m2 to a more appropriate level, realise value and unlock nearly R2bn to deploy into further strategic asset rotation. The result enables Growthpoint to manage its portfolio weighting responsibly while maintaining overall portfolio quality.
Alongside this, with 100% ownership of the P-Grade Discovery Phase 2, Growthpoint increases its exposure to potential upside from shorter-lease, multitenant offices in a market where rental conditions are firming. Multitenant offices also offer more income diversification and lower letting risk.
At the same time, Growthpoint will continue its long-standing relationship with Discovery as a tenant at Discovery Phase 2 and elsewhere in its portfolio.
These transactions are a vote of confidence in Sandton, its office market and its blue-chip tenants, all of which Growthpoint will continue to invest in at suitable levels. Discovery Phase One has attracted a significant investment from Discovery. With our 100% investment in Discovery Phase Two, Growthpoint retains an appropriate presence in the Sandton Summit precinct, where we are also due to break ground on the R1.2 billion Olympus Sandton residential development with Tricolt later this month.Estienne de Klerk, SA CEO of Growthpoint Properties
The full financial effects of the transaction will be reported in the results for Growthpoint’s six months ended 31 December 2025, which will be published on Wednesday, 11 March 2026. However, the transaction will have no impact on these interim results. With conditions still to be met and transfers taking time, the transactions are expected to have little, if any, effects during Growthpoint’s financial year to 30 June 2026.
Looking at operating metrics, Growthpoint has advised that, once final, the transaction will result in a higher reported office vacancy percentage, as a large, fully let asset is removed from the portfolio.
Growthpoint creates space to thrive with innovative and sustainable property solutions in environmentally friendly buildings, while improving the social and material wellbeing of individuals and communities. Growthpoint is South Africa’s largest primary JSE-listed REIT. It is an international property company invested in real estate and communities in South Africa and across the African continent, Australia and Eastern Europe. Growthpoint is at the forefront of environmental innovation in the property sector in South Africa. Visit growthpoint.co.za for more information. Connect with Growthpoint on Facebook, Twitter, LinkedIn and YouTube.
