Indluplace sets sights on national footprint

Mission is on to source opportunities in other provinces

INDLUPLACE Properties, the listed residential property-focused real estate investment trust, is aiming to grow a national footprint.

Most of its rental properties are currently located in Gauteng.

Indluplace chief executive Carel de Wit said yesterday that about 7 percent of its rental properties were outside of Gauteng and it had a complex in Mpumalanga, two buildings in Durban and one in Bloemfontein.

“We have some exposure in other provinces but its small,” De Wit said. “Our mission is to grow a national footprint. We are looking at opportunities in other provinces. When there is a longterm proven demand we will look at opportunities in that way.”

De Witt said that in three years since the listing, Indluplace had grown its residential portfolio by more than 260 percent to 9 662 units.

In June last year the company announced the R1.4 billion acquisition of a portfolio of 2 803 units spread over 48 properties from the Buffet Group, a private equity and investment consortium.

De Witt said Indluplace’s portfolio had been transformed over the past year, with the Buffet transaction resulting in year-on-year unit growth of 74 percent.

He said they had been operationally focused during the past six months to bed down these acquisitions, but were now starting to look at acquisition opportunities again.

De Witt said there were definitely opportunities to grow the fund substantially more and they would do some acquisitions in the remainder of this financial year, but the growth would not be at the same level as in the previous year.

Financial director Terry Kaplan said Indluplace was well positioned to fund future acquisitions with a current loan to the value of about 29.4 percent.

“We always said we would have a conservative balance and the long-term loan to value would be under 35 percent. But there may be a point in time with the right acquisition and opportunity that we might push it more,” he said.

Diverse De Witt said they were building a defensive diverse rental property portfolio in terms of location, building types, inner city and outside the inner city and rental levels therefore tenant income levels.

He said they had about 10 percent exposure to student specific accommodation, but this was not a focus area.

Kaplan said the average rental charged was R4 600 a month and they did have a few top end units that at rentals of R12 000 a month, but that was not the norm.

Indluplace yesterday declared an interim dividend a share of 48.56 cents for the six months to March compared to 48.54c in the previous corresponding period.

Revenue, excluding straight line rental income, increased by almost 72 percent to R334.7 million from R195m, because of the acquisitions concluded in the year and rental escalations.

Vacancies increased to 6.3 percent from 4.5 percent.

De Witt said vacancies across the portfolio had been successfully reduced post the reporting period.

Kaplan said bad debt and arrears were at 3.5 percent of total revenue for the six months and had crept up from under 1.5 percent in the prior period.

But Kaplan said about 2.8 percent of the 3.5 percent represented provisions for an area rental boycott in Windsor that had negatively impacted on one of its properties and for late payments.

Indluplace expects dividend growth of about 4 percent for its full year.

Shares in Indluplace dropped 0.99 percent on the JSE yesterday to close at R10.05.