It is increasingly becoming difficult for property counters to find lucrative opportunities in the domestic market, but Dipula Income Fund (Dipula) seems to continue its acquisition spree.
Dipula had a busy year of acquisitions which put it in good stead for its growth ambitions.
For the six months to February 28 it acquired properties worth R742 million and post the period, properties worth R261 million were added to its retail, industrial and office portfolio.
In total, the real estate investment trust (REIT) assembled acquisitions worth R1 billion, bringing the value of its assets to R4.7 billion.
Dipula’s acquisitive strategy boosted it to report a combined 6.8% growth in combined distributions of 81.28 cents. Distributions for Dipula’s A-linked unit grew by 5% to 45.94 cents and its B-linked unit grew by 9.3% to 35.34 cents.
Dipula has 176 properties in its portfolio and is awaiting properties worth R391 million to transfer to the company by June. By the end of the year, Dipula is expected to grow its portfolio by a further R1 billion as its pipeline of developments and acquisitions – which are still under negotiation – rolls out.
Some of the acquisitions Dipula concluded include the 15 000 square metre Umzimkhulu Mall in KwaZulu-Natal, the 28 000 square metre Corporate Park Industrial in Polokwane, the 6 000 square metre Wadeville Industrial and the 1 000 square metre Hyde Close office building in Hyde Park.
The company’s CEO Izak Petersen in a statement says Dipula’s performance is indicative of its growth story and commitment to its strategy.
“At the heart of our strategy is to continue building a defensive portfolio that will carry us through tough times, balancing income growth and asset quality,” Petersen says.
Dipula has grown its retail exposure to about 60% of the portfolio; with assets including Blackheath Pavillion in Johannesburg, Gezina Galleries in Pretoria, Free State based The Plaza Shopping Centre and more.
Overall vacancies across Dipula’s property portfolio decreased to 7.3% from 9.6%. On a sector basis, office vacancies reached 11%, industrial 2% and retail 8%. Dipula had exposure to the demise of African Bank through its furniture subsidiary Ellerine Holdings which vacated 75% of its space. Dipula subsequently relet the space.
“We expect a further reduction in the retail vacancy in months to come,” Petersen says.
During the period, Dipula reported rental escalations of 7.9% and a 68% tenant retention across its property portfolio.
It expects to deliver distribution growth of between 6.5% and 7.5% for the 2015 financial year.
Petersen comments on the company’s focus over the next financial period: “Dipula will continue to focus on delivering our pipeline of acquisitions, completing the conversion of our capital structure, bedding down our new property management structure, simplifying our group structure and continue to prioritise our leasing and tenant focus. All this will support sustained value creation for our investors.”