JSE-listed diversified real estate investment trust (Reit) Dipula Income Fund has “overcome tough macroeconomic conditions” to post a 5.8% increase in combined dividends a share for the financial year ended August 31, driven entirely by organic growth.

The Reit’s revenue edged over the R10-billion mark, with the property portfolio valued at R6.9-billion at year-end.

CEO Izak Petersen said ongoing focus on the Reit’s strategy of disposing of noncore properties, entering into quality-enhancing acquisitions and “sweating existing assets” enabled Dipula to continue performing well in a difficult trading environment. 

Distributable earnings for the year grew by 11.3% to R428-million.

Vacancies in the overall portfolio remained stable year-on-year at 8.5%. Retail vacancies improved from 8.5% to 7.1%, while industrial vacancies improved from 5.9% to 5.4%.

Leases worth R631-million, covering over 179 000 m², were concluded across all sectors. Petersen added that rental escalations remained above inflation at 7%.

Dipula sold 27 properties during the year for a combined R295-million at an average yield of 10%.

“These disposals reduced the number of properties in our portfolio to 174 compared to 201 properties at the previous year-end, while the valuation remained on par with 2016. This further resulted in an increase in the average size and value per property in line with our strategic intent.” 

The sale proceeds would be used towards debt repayment and recycled into the Reit’s redevelopment programme.

Dipula also continued extracting value from its existing properties and concluded around R50-million worth of refurbishments and developments. A further R265-million worth is planned for the next 18 months at an estimated 11% yield.

Petersen concluded that general prevailing trading conditions were expected to continue, and provided it did not worsen materially, Dipula should post dividend growth of around 5% for the year ending August 31, 2018.