Dipula Income Fund has published its financial results for the six months ended February 2024, reporting improved operational and financial metrics.
The REIT’s revenue grew by 9% with its net property income having increased by 6%. While its rental income remained under pressure, with some rentals still reverting to market due to the tough office environment, Dipula reported a 2% increase in rental income. Its net income growth was supported by the Group’s “tight check on expenses” which increased relative to inflation. Its net asset value increased by 2% to R6 billion.
“This is a good set of results in which Dipula delivered top-line growth, albeit at relatively modest levels — a solid achievement given the background of elevated inflation, interest rates at their peak, and double-digit electricity tariff increases,” comments Dipula’s CEO, Izak Petersen.
However, high interest rates resulted in a decrease in interim distributable earnings per share of 3%. The declared dividends amounted to 90% of distributable earnings.
The REIT concluded R105 million of new leases during the period with renewals worth R845 million, achieving a tenant retention ratio of 89% and doubling its lease expiry profile of its office portfolio from 1.5 years to three years.
Vacancies improved from 10% to 8% during the period. Its retail portfolio reported a decrease in vacancies from 9% to 6% with its office portfolio, which accounts for only 15% of its gross income exposure, reporting a decrease from 27% to 23%. Vacancies in its industrial portfolio remained at 5% compared to 4% in the prior period. The average vacancy in Dipula’s residential portfolio of 76 units for the period was 6%, recording rental growth of between 2% and 8% across its different properties.
“We believe that our residential assets offer great quality accommodation for tenants at extremely competitive rentals, especially in the ongoing tough operating environment in South Africa,” reports Petersen.
The company concluded its debt syndication, which extended its weighted average debt term to four years. Its debt levels remained stable at R3.7 billion, with 61% hedged and no major facilities expiring in the next four years. Gearing decreased over the period to a healthy 36.3% from 36.9%.
Dipula anticipates stable conditions for the rest of its financial year to August 2024, with improved performance in 2025 as it completes various capital projects.
“A reduction in interest rates would boost performance going forward. Our rentals have room for improvement and will respond well to any uptick in the trading environment. Dipula will continue to drive stakeholder value with our focused, prudent approach to capital allocation while maintaining our strong balance sheet and working to further reduce vacancies and run efficient operations,” Petersen concludes.
