Dipula reduces vacancies in tough market

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Dipula reduces vacancies in tough market

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Published Date: 2019-11-21 | Source: Stephen Gunnion | Author: Stephen Gunnion

Dipula reduces vacancies in tough market

The fund has declared a lower combined dividend due to longer lead times on new leases, higher costs and the weak economy.

Dipula Income Fund has maintained a reduction in vacancies in its portfolio, which gained momentum in the first half of the year. And despite sustained economic headwinds, it has grown net operating profit by 19% thanks to a "defensive retail underpin", combined with strategic management interventions and cost containment.

The real estate investment trust has an R8.9 billion portfolio of 194 retail, office and industrial properties across the country, but predominantly in Gauteng. It also invests in the residential rental sector. It reduced vacancies by a fifth to 6% from 7.5% in the year to end-August.

Revenue increased by 17% to R1.34 billion and net property income grew 19% to R927 million, boosted by acquisitions from the prior year that have now been accounted for over a full 12-month period. Distributable earnings increased by 1.3% to R510.6 million and it has declared combined dividends of 192.96c per share, with holders of its 'A' shares due to receive 110.25c, up 4.2% from last year, while 'B' shareholders will get 82.71c, down 17%.

The group said the reduction in dividend growth was mainly due to longer lead times on new leases, higher costs of leasing and the impact of the economic slowdown on tenants. It said its focus on cost containment resulted in a decline in its net property cost-to-income ratio to 17.1% from 18.6% previously.

Its net tangible asset value increased by 3% to R10.11 per share.

Dipula said it expected its combined dividend to rise by 2% next year, assuming no further deterioration in macroeconomic conditions, no major corporate failures and the ability of its tenants to absorb rising costs.

Its A shares rose 4.7% to R10.48 yesterday while its B shares closed unchanged at R3.75.





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