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Africa|Business|Financial|Industrial|Projects
africa|business|financial|industrial|projects

Dipula delivers strong FY results

20th November 2018

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Diversified real estate investment trust Dipula Income Fund on Tuesday reported double-digit growth in distributable earnings to R504.2-million for the year ended August 31.

Dipula’s property portfolio ended the year with a 25% higher value at R8.6-billion.

Dipula’s property portfolio now comprises 203 properties compared with the 174 properties it owned at the end of the previous financial year.

It maintains a retail bias in line with strategy – 66.4% of gross property income – with the remaining 19% in offices and 14.6% in industrial, respectively.

Overall, vacancies dropped from 8.5% to 7.5% and tenant covenants remained healthy.

There was a significant drop in office vacancies, which reduced by 51% from 18.7% to 9.2%.

Tenant retention was at a healthy 88%, while a positive renewal rate of 1% was achieved on expiries.

Dipula CEO Izak Petersen said that, despite the generally weak retail sector in South Africa, retail within Dipula’s portfolio remains a good performer with growth in turnover of 3% year-on-year.

He attributed this to a combination of “intense asset management efforts, Dipula’s focus on smaller retail centres and the defensive nature of its portfolio given the tenant mix in its assets.”

Dipula’s reinvestment strategy resulted in R195-million being spent on capital expenditure, inclusive of redevelopments, with a further R250-million to be spent in the next 18 months.

Further, Dipula has identified assets worth around R300-million for disposal in the short to medium term.

Dipula’s weighted average cost of debt remained in line with the prior year at 9.25%, with its gearing marginally up to 40.6% compared with 39% in 2017.

New debt of R600-million was raised, while another R600-million was successfully re-financed.

Peterson says that despite real estate being highly susceptible to the current depressed macroeconomic cycle, and listed property having taken a precipitous selling hit in 2018, Dipula managed to record solid operational performance as a result of it remaining disciplined and true to its strategy of making good strategic acquisitions and managing its assets well. 

“We increased the value of our portfolio, the quality, average size per property, cut vacancies and successfully executed our tactical defensive rebalancing strategies and objectives to position our business for headwinds. Furthermore, we kept costs in check with our net cost to income ratio being marginally down on the prior year’s 21.6% to 21.4%.”

Looking ahead, Petersen is cautious. “Real improvement in the South African economy is expected to materialise only after the national elections in 2019 but we will continue to execute on our pipeline of projects and position our business for long-term sustainability”.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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