JSE-listed real estate investment trust (Reit) Dipula Properties has reported a 20% year-on-year increase in distributable earnings to R310-million for the six months ended February 28, supported by improved operational and financial performance.

Dipula announced an upgrade to its distributable earnings guidance of 7%, to between 7% and 8% for the full 2026 financial year. A continued focus on prudent tenant selection and retention is expected to support stable income growth, while sustained balance sheet resilience is an ongoing priority.

Supported by positive property valuations, with around R700-million of strategic acquisitions, Dipula’s property portfolio increased in value by 12% to R11.5-billion, buoyed by higher income prospects.

Its net asset value increased by 16% and Dipula’s average property value increased to R74-million from R64-million.

Dipula’s revenue, excluding straight-lining, increased 7% to R811-million, net property income rose by 9%, and cost containment and improved recovery levels continue to be a management priority.

The total cost-to-income ratio of 42.8% reflected a marginal decrease, notwithstanding property expenses increasing by 5%, and largely coming from escalating municipal charges and utility costs.

Operational highlights included significant leasing activity, with retail portfolio vacancies at 5%, and total portfolio vacancies reducing from 8.5% at the end of the 2025 financial year to 7% for the six-month period. Letting activity was led by the retail and industrial sectors and office occupancies remained stable, showing isolated areas of improvement.

Dipula boosted tenant retention from 79% to 90% and achieved a significantly improved weighted average positive renewal rental rate across the portfolio of 6%, and active leasing secured sustainable income streams.

Industry association SA Reit took transfer of five strategic acquisitions totalling about R700-million at various stages from September 2025, and the largest of these was the R480-million purchase of Protea Gardens Mall, in Soweto, transferred in January.

Dipula Properties CEO Izak Petersen highlights that these results reflect responsible capital management and several strategic priorities, including selective, value-enhancing acquisitions and redevelopments to enhance organic portfolio growth, thereby ensuring rigorous asset management, and sustained operational and financial discipline.

He says this performance was also supported by a favourable interest rate environment.

"The Dipula team has delivered an excellent set of results, with all key metrics trending positively. This performance reflects our continued focus on long-term shareholder value.

“We continue to show that we are an actively and optimistically managed business. Dipula shareholders have enjoyed exceptional returns since listing,” adds Petersen.

Dipula owns 155 properties and generates 67% of its income from retail properties located conveniently close to where people live in townships, rural and urban convenience locations.

The company also has a core portfolio of mid-sized logistics and industrial assets, equating to 16% of its income, with multi-purpose office assets sitting at 14%, and a small noncore affordable, quality residential property portfolio at 3%.

Dipula has invested in a portfolio of well-positioned assets across South Africa, with 58% of these assets located in Gauteng, and driving its active capital recycling, the company disposed of 12 noncore properties during the six-month period for a combined R130-million.

Proceeds contributed to repaying debt and funding value-enhancing asset management strategies, quality-improving acquisitions and sustainability initiatives.

Dipula invested R56-million in refurbishments and redevelopments to sustain and enhance the quality of its portfolio assets, of which R30-million are for income-generating capital expenditure. Solar PV capacity grew significantly during the six-month period, nearly trebling from about 6 MW to 16.6 MW.

The company has also maintained prudent debt levels given that gearing reduced to 34% and its interest coverage ratio (ICR) strengthened 3.4 times to 2.8.

Moreover, funding costs reduced by 11% as a result of lower interest rates during the six-month period, and Dipula also refinanced a portion of its debt in February at more competitive rates, which also extended its debt expiry profile.

“We will continue to assess acquisition opportunities that are strategically aligned with our portfolio objectives. Dipula’s capital allocation will see us growing and enhancing the quality of properties in our retail portfolio, increasing exposure to logistics and industrial properties and advancing our sustainability programmes,” Petersen says.

Looking ahead, interest rates remain Dipula’s biggest macroeconomic challenge and while geopolitical tensions may temper market momentum and place near-term pressure on rental growth and interest rates, Petersen says the company portfolio is well positioned to navigate these challenges through disciplined asset management, the strategic disposal of noncore assets, and a targeted investment in core defensive sectors.