Indluplace Properties has published its annual results for the year ended September 2022, declaring a dividend of 31.95 cents per share, 13.6% higher than the full year dividend for 2021, after an 85% pay-out ratio.
With the REIT’s 125 buildings mainly situated in Gauteng, with some exposure to Mpumalanga and the Free State, it owns and manages a portfolio of 9 249 residential units, approximately 15 549m² of associated retail space and 480 student accommodation units.
While its residential portfolio recorded an improvement in occupancy to 91.5% at yearend, up from 87% at the beginning of the year, letting in the company’s Vanderbijlpark student buildings was “disappointing” after the universities transitioned away from head leases.
“Our team has concluded more than 34% more new leases in this year than 2019, the last pre-Covid year. Unfortunately, higher than normal tenant turnover meant that the recovery was slower than we had hoped,” commented CEO, Carel De Wit. “The environment in Vanderbijlpark has been very uncertain, but we have introduced various management improvements and are confident of a much-improved 2023.”
As part of the strategic re-organisation of its portfolio, the company continued with its disposal program and transferred a further 13 non-core properties worth R62.6 million during the year which also includes 24 sectional title units that were sold individually. A further three properties have been sold for R41 million with transfers expected in 2023 and further individual sectional title sales worth about R36 million are also expected.
Secured financial liabilities reduced from R1.39 billion to R1.36 billion as part of the proceeds from disposals which have been used to pay off term facilities due to the tough economic environment with interest rate increases. Indluplace renewed facilities to the value of R604 million, one with a current lender and the second by bringing on a new lender to diversify the exposure.
Contractual revenue fell to R465 million from R490 million in the previous year, as average residential vacancies over the twelve months decreased from 12.8% to 8.5%, due to a specific drive from the internal letting team, offset by the disposal of non-core properties.
Its property operating costs decreased from R336.7 million to R315.8 million, a combination of the effect of disposed properties and strict management of expenses, countered by higher than inflation municipal cost increases. Bad debts and legal fees have also decreased post-Covid-19.
“Indluplace will focus on ensuring that the portfolio attracts quality tenants by ensuring its properties remain attractive and competitive and improving the internal teams. Ensuring occupancies in the student portfolio is critical, but we are positive of our ability to grow distributions in the coming year.”
The group’s loan-to-value ratio (LTV) currently sits at 38.45% (including derivatives).