Dip­ula: Build­ing de­fen­sively

Finweek English Edition - - IN THE NEWS - BY GLENDA WIL­LIAMS

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

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