JSE-listed real estate investment trust Indluplace Properties reported a dividend of 49.19c for the second half of the financial year ended September 30, bringing the total dividend for the year to 97.75c, in line with the prior year.
During the period, Indluplace bedded down its R4.3-billion expanded property investment portfolio following the acquisition of a R1.4-billion portfolio from the Buffet Group.
As a result of the transaction, the portfolio now comprises 9 788 units across 176 properties that are spread across provinces and unit categories, making Indluplace a well-diversified and defensive property portfolio.
Since listing in 2015, Indluplace has grown its portfolio by a considerable 265% and has secured a significant presence in the affordable end of the residential rental market, it said on Wednesday.
The company had to contend with a tough environment, and vacancies increasing especially during the first half of the year, with vacancies at 8.4% at financial year-end, Indluplace CEO Carel de Wit told Engineering News Online.
This was heavily impacted by a single property, Highveld View, for which a number of bulk lease agreements covering 450 units were not renewed owing to power utility Eskom reducing its activity levels around Witbank, in Mpumalanga.
Excluding this property, the vacancy rate for the residential portfolio was 5.2%, compared with 3.5% a year ago, reflecting a deteriorating economic environment.
However, the company was able to weather these factors and benefited from the acquisitions of the Diluculo and Buffet portfolios in terms of revenue generation; with its expanded portfolio providing diversity in terms of locations, unit sizes and unit types for the residential rental segment.
Moreover, De Wit acclaimed that a strong management team and expert outsourced property managers allowed the company to react well to challenges experienced and to put measures and interventions in place that were largely successful, and will be continued into the next period.
Having bedded down the new properties, the company will focus on delivering sustainable dividends, disposing of noncore and nonperforming assets, as well as reconsider its exposure to bulk leases in favour of single lease agreements, Indluplace FD Terry Kaplan noted.
“There will also be a continued strong focus on tenant retention, in order to secure a lower vacancy rate over the medium term. We believe these measures will assist to mitigate risks and result in a more stable portfolio during the difficult period anticipated.
“We are optimistic about South Africa, and firmly believe that the property market will turn around,” he concluded.