Dipula CEO Izak Petersen
The Dipula Property Fund aims to increase its portfolio size from R4-billion to R10-billion over the next five years, by acquiring diverse assets to grow the quality and sustainability of its portfolio income, CEO Izak Petersen said on Tuesday.
Speaking at an interim results media briefing for the six months ended February, he said the company forged ahead with its strategy to achieve portfolio growth by increasing the quality, size and value of its assets. Dipula planned to grow the average value of its assets to R50-million within the next five years and was currently targeting assets across all commercial sectors valued from R20-million to R400-million.
“Since listing in August 2011, Dipula has closed deals that will, once all assets are transferred, more than double the size of the fund,” Petersen said.
During the period under review, the fund grew its assets by 36.2% and currently had R499-million of assets under development with R945-million of assets awaiting transfer. Following the implementation of all acquisition deals, Dipula’s portfolio would comprise 183 retail, industrial and office properties valued at about R4.3-billion.
The company had acquired 24 properties valued at R2.29-billion since listing, with R737-million in respect of which agreements were entered into during the period under review. Petersen pointed out that as part of its profile refining process, the company had disposed of 15 noncore assets during the half year, bringing to 16 its disposals thus far. A further 24 noncore properties had been earmarked for sale.
At implementation of all deals, Dipula’s average property value would increase from R12-million to R23-million and its average property size would rise by about 1 000 m2 to more than 3 500 m2. The average value of properties acquired by Dipula since listing is R95.4-million.
Further, Dipula’s B-linked units were the best performer in the listed property sector for the 2012 calendar year, with total returns of 77.27%, compared with the sector average of 35.8%.
Meanwhile, financial director Brigitte de Bruyn said the property fund boosted its distributable earnings by 44.1% year-on-year during the period under review, from R71.16-million to R102.56-million.
The company reported an 18.5% increase in net property income to R126.43-million and an 11.8% revenue increase to R153.64-million, while half-year distributions of 41.67c an A-linked unit and 29.80c a B-linked unit were achieved, representing distribution growth per unit of 5% and 7.4%, respectively.
The fund’s vacancies improved from 10.4% to 9.8% during the reporting period, with the most remarkable improvement in occupancy levels being in its industrial and office portfolios.
Also contributing to the improved occupancy levels was the successful completion of the revamp of Dipula’s Finance House and Arbeid Street properties, with a further nine properties identified for extensions, revamps and redevelopments.
Peterson said the fund expected the year ahead to hold various challenges, including no immediate economic recovery, slow gross domestic product growth, high wage demands, electricity supply concerns, weakening rand and a slow recovery in China.
He pointed out, however, that Dipula planned to implement various measures to deflect the impact of these challenges. These included incentives to retain tenants, cost containment to lower electricity costs, selecting good investments to continue enhancing Dipula’s portfolio, closing current deals as quickly as possible and selling noncore assets identified for sale.
“Despite continuing sluggish economic conditions, Dipula should achieve full-year per unit distribution growth of between 6.5% and 7.5%.
“Some acquired properties took longer than anticipated to transfer and, with slower-than-expected letting, impacted on growth. The full benefits of these acquisitions and some latest lettings will come through in the 2014 financial year,” Petersen assured.