Dipula: Building defensively
At its half-year to 28 February 2015, Dipula Income Fund r e por t e d a d i v e r s i f i e d portfolio of 176 properties throughout South Africa, predominantly in Gauteng where it has 72% exposure. It has grown its retail exposure to nearly 60% and has more than doubled the average value of its properties to R27m since its listing in August 2011.
To date, the JSE-listed REIT has grown its portfolio to R5.7bn, up from R2.1bn when Dipula listed over three years ago. A pending pipeline of acquisitions and developments, 90% of it retail, will grow that portfolio by a further R1bn by the end of 2015.
Despite a challenging environment, revenue accelerated by 24.6% and the company reported 33% growth i n distributable earnings, a f ig ure that translates to growth of 6.8% per combined unit for the half-year to the end of February. CEO Izak Petersen says the company is also on track to deliver distribution growth of between 6.5% and 7.5% for the 2015 financial year.
Even though vacancies decreased to 7.3% from 9.6%, Dipula, like many others in the sector, was impacted by Ellerines vacancies. But the fund can look forward to improved retail performance in the second half as post the reporting period 75% of those vacancies have been relet. The company also improved on leasing performance. New leases amounted to R52m with renewals about R102m, much of this from retail.
In line with its strategy to build a defensive portfolio and acquire portfolioenhancing assets, Dipula raised R700m in equity plus another R270m in debt to fund acquisitions. Among the R742m worth of acquisitions concluded are Umzimkhulu Mall in KwaZulu-Natal, Corporate Park Industrial in Polokwane, Wadeville Industrial southeast of Johannesburg and Hyde Close in Hyde Park, Johannesburg.
Notably, Dipula has acquired little office space. In fact, all acquisitions – bar one off ice building – in the past two-odd years have been industrial and retail. The company is even converting its Crownwood Property in Ormonde, Johannesburg South, f rom off ices to warehousing. The R50m project, scheduled for completion in November, is already 60% pre-let.
Aside f rom a concentration in Gauteng, Petersen says they are also