LOAD SHEDDING HEADACHE HITS DIPULA INCOME FUND

LOAD SHEDDING and an increasing failure of municipal infrastructure had become a “major headache” for Dipula Income Fund, chief executive Izak Petersen said yesterday at a pre-close briefing for the six months to end-February 2020. Dipula is a JSE-listed diversified Reit that owns a portfolio of primarily retail, office and industrial properties. The R8.9 billion portfolio comprises 194 properties across 9 provinces in South Africa. The group was, however, trading well operationally, he said. Petersen said they had to replace a great deal of mechanical equipment and components due to the on-and-off nature of load-shedding. In addition, at centres where there was not sufficient back-up power, many retailers were losing turnover because of less footfall during load-shedding, he said. Another challenge was rising crime at its properties, which had led to rising operating costs. While there was no dramatic spike, the trend was up and Dipula was doing all it could to lower security costs, including the deployment of technology to improve security. The third big challenge the group was experiencing was failing municipal services, illustrated by one recent incident where Dipula had to clean up sewage that had flowed into a centre, and despite negotiations with a municipality, the group would probably have to carry the cost of cleaning. In addition, feedback from tenants – the group has some

1 700 tenants – was that their margins were under pressure. Small food service providers were struggling against online food delivery companies, some vacancies had come about as a result of banks closing branches, and there was much less prevalence of higher end furniture stores, which was no doubt a symptom of declining consumer spend. He said the group was trading well operationally, and they expected to declare a distribution in line with guidance. The average vacancy rate was 5 percent, which was a 20 percent drop from the previous period. Gearing was 41 percent at the end of January, and re-financing facilities of R663 million had been obtained.

THE CORONAVIRUS had disrupted demand and trading patterns for both the drybulk and product tanker markets, Grindrod Shipping Holdings chief executive Martyn Wade said yesterday. The disruptions had shown the high degree of interdependence of all regions and industries, he said at the release of the financial results yesterday. Grindrod Shipping Holdings has reported a $35.4 million (R535m) loss for the year ended December 31. The loss was impacted by $14.3m of non-cash impairment charges. “We look to the positive fundamentals of both the drybulk and product tanker sectors which are expected to take effect once the current crisis dissipates,” he said. He said operations in the second half of 2019 were stronger than the first half, reflecting stronger dry bulk and product tanker markets. “In this context, we continued to outperform the relevant drybulk industry benchmarks by about $660/day and $2 540/day for our handysize and supramax/ultramax fleet, respectively.” On the tanker side, he said rates increased marginally on average relative to the first half, with the market starting the period lower than the first half before strengthening significantly in the final months and continuing into the new year. An additional 33.25 percent of the ordinary and preferred equity interest in the IVS Bulk Joint Venture was signed this month for $44.1m, taking Grindrod’s interest to 66.7 percent. “The IVS Bulk transaction represents the culmination of our efforts since listing in June 2018 to streamline our corporate and financial structure by reducing the number of unconsolidated joint ventures,” he said. The company’s JSE shares soared by 13.23 percent yesterday to close at R4.45.