Dip­ula lifts rev­enue and prop­erty in­come |

Port­fo­lio in­creased to R8.9bn from R8.6bn

Pretoria News - - BUSINESS REPORT - ED­WARD WEST ed­[email protected]

SOUTH African-fo­cused real es­tate in­vest­ment trust Dip­ula In­come Fund lifted rev­enue and prop­erty in­come a solid 17 per­cent and 19 per­cent, re­spec­tively, in the year to Au­gust 31 due mainly to a sharp 20 per­cent re­duc­tion in va­can­cies and the con­sol­i­da­tion of ac­qui­si­tions.

Its port­fo­lio in­creased to R8.9 bil­lion from R8.6bn due to pos­i­tive reval­u­a­tions in a mar­ket char­ac­terised by many neg­a­tive reval­u­a­tions. In ad­di­tion, the re­duc­tion in va­can­cies com­pares well with many other lo­cal-land­lords who are deal­ing with ris­ing va­can­cies.

“We have re­mained dis­ci­plined in the ex­e­cu­tion of our strat­egy of build­ing a re­silient port­fo­lio. Key here is we are op­er­a­tionally sound. Some funds have been go­ing the spe­cial­ist route, but we al­ways main­tained that in the South African con­text its bet­ter to be di­ver­si­fied. We have dif­fer­ent prop­er­ties, in dif­fer­ent lo­ca­tions, and they are not over-rented,” chief ex­ec­u­tive Izak Petersen said in a tele­phone in­ter­view.

Their range of strate­gies to de-risk the port­fo­lio over the years in­cluded leas­ing, con­ver­sions, ex­ten­sions and re­de­vel­op­ments.

“The re­sult of these strate­gies is a sig­nif­i­cant im­prove­ment in our oc­cu­pancy level to 94 per­cent,” he said. The net prop­erty cost-to-in­come ra­tio de­clined by 8 per­cent to 17 per­cent, he added.

The div­i­dend per A-share in­creased by 4.2 per­cent year-on-year to 110.25 cents a share. The div­i­dend per B-share re­duced to 82.71c a share from 99.68c in 2018, re­sult­ing in a com­bined div­i­dend per share of 192.96c ver­sus 205.48c in 2018.

At year-end the group’s prop­erty port­fo­lio con­sisted of 194 prop­er­ties val­ued at R8.9 bil­lion with a to­tal gross let­table area of 923 679 square me­tres, com­pared to 203 prop­er­ties of 930 644 square val­ued at R8.6bn in the prior year.

Net op­er­at­ing profit in­creased 18.6 per­cent to R894.1 mil­lion.

Dip­ula spent R78m on re­de­vel­op­ments in the year that re­sulted in ten­ant­ing op­por­tu­ni­ties. More im­prove­ments were planned for 2020 and be­yond.

Gear­ing was main­tained at around 40 per­cent.

At year-end its blended in­ter­est rate was 9.29 per­cent of which 78 per­cent had been hedged. Ex­actly 187 new ten­an­cies were se­cured, equat­ing to 83 595M2 of GLA, R422m in lease value at an av­er­age es­ca­la­tion of 7.9 per­cent, and a weighted av­er­age lease ex­piry pe­riod of four years.

Group re­tail va­can­cies were 8.4 per­cent, of­fices 7.8 per­cent and in­dus­trial 2.3 per­cent.

The va­cancy fac­tor was sig­nif­i­cantly be­low SA Prop­erty Own­ers’ As­so­ci­a­tion av­er­ages, said Petersen.

Ten­ant re­ten­tion was 85 per­cent with an ag­gre­gate rental in­crease of 1.1 per­cent be­ing achieved in a mar­ket oth­er­wise ev­i­denced by neg­a­tive rental re­ver­sions.

Petersen at­trib­uted this to Dip­ula’s as­sets not be­ing over-rented and that rentals were in fact at lev­els that left room for growth.

The an­tic­i­pated div­i­dend per share on the com­bined ba­sis would in­crease by 2 per­cent for the year end­ing Au­gust 31 next year com­pared to the cur­rent year.

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