Dipula Properties has reported interim distributable earnings per share (EPS) within its full-year guidance and is seeing signs of recovery in the office sector.
The group, which has a portfolio of 161 retail, office, industrial and residential properties across SA, predominantly in Gauteng, reported a 4.2% rise in distributable EPS to 28.44c for the half year to end-February, and is on track for its full-year guidance of 4%-6%.
Revenue rose slightly to R760.1m from R755m a year ago and net asset value per share rose to R7.01 from R6.60, the company, formerly known as Dipula Income Fund, said on Wednesday. A dividend of 25.6c per share was declared.
“Dipula’s operational performance reflects solid delivery and a strongly defensive position in persistently challenging conditions,” said CEO Izak Petersen.
He added, however, that the group felt the impact of higher prevailing interest rates and hedging costs relative to expiring hedge instruments.
“Encouragingly, we are seeing signs of recovery in the office sector and continued stability in our retail and industrial portfolios, with sustainability initiatives expected to support long-term performance,” he said.
Operational highlights included significant leasing activity, contributing to a reduction in overall portfolio vacancies from 8% to 7%.
Dipula’s office portfolio recorded a renewal rate of 8.3% followed by industrial at 6.2% and retail at 2.4%. New and renewed leases concluded during the period amounted to R309m, securing sustainable income streams, it said.
Tenant retention of 79% was lower than in recent periods as Dipula adopted stricter criteria to improve tenant quality in its industrial portfolio, specifically for mini-units where there is high tenant turnover.
Industrial and logistics assets delivered 13% of Dipula’s rental income and, with a vacancy of just 4%, this segment remained stable and sought-after, the group said.
The retail portfolio reported steady vacancies at 6%. Offices comprise 16% of Dipula’s income, and the office vacancy rate ended the period at 19%, down from 23% in the year-earlier period.
“The office improvement is refreshing, however, there is still some way to go, and the Johannesburg office market remains oversupplied and highly competitive,” Petersen said.
It invested R117m in refurbishments and redevelopments, nearly R70m of which was for income-generating projects, including solar PV, with the remainder allocated to defensive projects.
A portion of the proceeds from R125m in disposals contributed to funding these projects.
While no acquisitions were completed during the period, Dipula had a strategic pipeline of growth opportunities, he said.
“We are assessing some interesting opportunities which fall within our core focus, a few of which we hope to close in the short term.”
Dipula’s installed solar capacity will more than double to about 16MW after the instillation of an additional 9MW of new solar projects to be rolled out during this calendar year.
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