South Africa-focused real estate investment trust Dipula Income Fund’s revenue increased 3% to R1.35 billion for the year to August 31, indicative of the resilience of the portfolio as there were no major acquisitions or disposals, CEO Izak Peterson said yesterday.
Its B-share distributable earnings per share fell to 73.19 cents in the year to August 31, from 89.67c in the period a year before and the A-share distributable earnings per share fell to 61.97c from 118.95c, but these figures were not comparable due to the A and B share consolidation scheme implemented during the year.
This scheme resulted in the share capital at August 31 comprising 895 747 744 ordinary shares, compared with 264 665 819 Dipula A-shares and 264 665 819 Dipula B-shares that were in issue in 2021.
Peterson said in an interview that the scheme had so far resulted in increased share volumes traded, a higher share price, the group’s credit rating had moved up a notch, and major institutional shareholders had retained their shareholdings in the group.
Dipula’s strategy for its retail, office, industrial and residential properties is a bias towards convenience, rural and township retail centres, which management said had yielded a solid performance since listing.
Looking to the new financial year, Peterson said there were still efficiencies to be gained from the portfolio.
They also focused on environmental, social and governance (ESG), including alternative energy, back-up power, energy efficient lighting, water saving, refuse recycling and better community relations.
“These are not easy matters to deal with, but it has to be done,” he said.
Regarding the liquidity and tradeability of the shares, he said that although nothing was on the table, they might consider “sensible corporate deals”, but the group would not do anything dilutive to net asset value.
Leasing had been strong in the past year. “Hopefully we will see a strong performance from our retail, industrial and residential portfolio in the new financial year,” he said.
The office portfolio vacancy rate ended at 29%, but offices represented a relatively small component of the total portfolio.
Some offices were being converted to residential and storage, there appeared to be a slow return to offices by office workers, working arrangements were more flexible, and there were less new offices being built in Gauteng, so he expected to vacancy rate would improve over time.
Dipula’s margins came under pressure through the year due to the high inflation environment, especially in administered costs and municipal rates, which caused property expenses to rise by 5.1% year-on-year. Consequently net property income was 1.6% higher than the prior year at R880 million.
The portfolio value increased by 4.5% to R9.6bn from a 5.2% overall increase in valuations relative to the prior year.