Dipula Income Fund has published its results for the year ended 31 August 2024 with its portfolio, comprising retail, office, industrial, and residential assets, producing growth of 4% in value to R10.2 billion and contributing to a 5% rise in its net asset value (NAV).
The REIT reported a 7% increase in revenue to R1.487 billion (2023: R1.395 billion) despite negative rental reversions in government-tenanted offices and lower income due to prior-year disposals.
Its net property income increased by 2%, under pressure from above-inflation municipal hikes that significantly increased property expenses, higher maintenance spending, and rising third-party contract labour costs, with its net finance costs increasing by 3%.
Overall, prior disposals, bigger expenses and higher finance costs led to a decrease in distributable earnings per share of 4% to 54.39 cents (2023: 56.96 cents).
Dipula’s operational results were highlighted by high levels of active leasing with the conclusion of leases worth R1.4 billion during the year. It achieved strong tenant retention which improved from 84% to 87%, with R1.2 billion of leasing representing renewals.
Vacancies in its retail portfolio improved from 7.5% to 6.4% however, its overall portfolio vacancy rate was 7.5%, up from 6% the previous year primarily due to higher vacancies in its office and industrial assets.
Its office portfolio, which accounts for 16% of rental income, ended the year with a 22% vacancy rate. Dipula says it anticipates a gradual recovery in line with recent sector improvements, supported by limited new development activity.
Its mid-sized industrial and logistics facilities represent 14% of rental income with a vacancy rate of just 3%, boasting the lowest vacancy rate across all its assets.
Its residential portfolio, which provides affordable housing, contributes 4% to rental income and recorded an average vacancy rate of 6% for the year.
The Group improved its administrative cost-to-income ratio which reduced from 4.4% to 3.3%. While the overall cost-to-income ratio temporarily rose to 42.3% (2023: 39.5%), Dipula says this was mainly driven by elevated property-related expenses and lower municipal cost recoveries. It says this is expected to return to levels of around 40%.
Dipula invested R169 million in refurbishments and capex during the year, while disposing of assets for R37 million. The proceeds will be used towards enhancing revamps and the roll-out of renewable energy and backup power.
The Group restructured its debt facilities from 1st March 2024 with a R3.8 billion syndication programme, extending its weighted average debt expiry period significantly from 1.9 years to 4.1 years with undrawn facilities of R80 million.
Its Board declared a final gross dividend of 24.38cps for the period, totalling 90% of distributable earnings.
It’s LTV remained unchanged at 35.7% (2023: 35.7%).
