Dipula expands into residential property

Dipula Income Fund – the mid-cap real estate investment trust (Reit) that made a bid for SA Corporate Real Estate earlier this year – has embarked on a fully-fledged venture to diversify into the residential property market.

CEO Izak Petersen said the group had launched a new unit, Dipula Urban Village, as part of its expansion into the residential market.

“By the end of our 2020 financial year, we plan to have about 10% of our gross group income come from the newly branded division. We are looking to have between 1 000 and 1 500 residential apartments, which will grow over time,” he added.

At the end of its 2019 full-year, Dipula held a R8.9 billion portfolio of retail, office and industrial property assets across the country. In 2018, the fund converted some of its office properties, which had higher vacancies, into apartment blocks as it dipped its toes into the residential market.

In the face of tough trading conditions locally, several of Dipula’s larger industry peers have diversified offshore in recent years. But Dipula has chosen to remain a purely SA-focused Reit.

“We don’t have plans to invest offshore,” says Petersen. “Beyond the traditional property sectors of retail, office and industrial, we are now diversifying into the residential market in SA.”

He says the Dipula Urban Village is being developed as a fully-fledged and branded residential operation. “This means all our residential buildings, whether in Joburg or Cape Town, will come under the brand. The apartments will be rented out.”

Petersen says while some of Dipula’s new stock is from conversions, the fund is open to new developments, as well acquisitions. Dipula will take delivery of 420 residential units in January next year in one of its first major residential schemes, valued at R235 million.

Dipula, which has an A and B share structure, delivered a mixed bag of results for its fullyear. The fund saw improved operational metrics, but distributions for the period were lower.

Its dividend per A-share increased by 4.2% year-on-year to 110.25 cents per share (2018: 105.81 cents). The dividend per B-share reduced to 82.71 cents per share (2018: 99.68 cents), resulting in a combined dividend per share of 192.96 cents. This was down compared to its 2018 fullyear combined dividend of 205.48 cents per share.