This resulted in a 6,3% increase in dividends per combined share for the six months to February 2017, despite a limping economy. This translates into growth in dividends per share for A-shareholders of  5% and 7,9% for B-shareholders. The group continued successfully extracting value from its existing property portfolio through re-development initiatives to record organic growth. 

Dipula CEO Izak Petersen says, ‘’Focus on “sweating Dipula’s assets” resulted in the healthy performance that overcame a challenging macro-economic environment. It has become difficult to continue growing in a stagnant economy with heightened uncertainty, but our team came through brilliantly.” To this end Dipula bolstered its team in the period with well-experienced and qualified people who can effectively help steer the REIT through a foreseeably tough era ahead.

Vacancies in the R7 billion portfolio remained stable in the period at 9.2%, compared to the prior comparable period. The office sector remains challenging with vacancies now at 15.1%  compared to 11.7% in the prior period. Retail vacancies were marginally up from 7.6% to 7.9%, while industrial vacancies improved to 8.8% from 11.5%. 

Petersen explains: “This is due to tenants facing  an increasing cost of occupation  while  turnovers grow at a slower pace  given the poor economy. This also results in increasing tenant drop-off in all property sectors.” A portion of the vacancies is as a result of strategic revamps currently in progress.  The facelift and expansion to A spec of its Nemisa office park in Parktown enabled Dipula to secure a favourable five-year lease renewal for the majority of the new enlarged space.

In line with strategy the REIT continued to find value and is in the process of concluding acquisition deals worth more than R500 million. Further, an amount of R200 million will be spent on strategic revamps in the next 6 to 18 months. “In line with our strategy to rebalance our portfolio, we also disposed of 28 non-core properties worth R400 million, of which eight  properties valued at R72.3 million were transferred by 28 February 2017 while the remainder are at various transfer stages,” says Petersen.

With an eye on all aspects of the business, the finance team contracted more beneficial swaps in the period that saw the REIT’s interest hedge rise from 48.2% in the prior period, 70.6% at the end of February 2017 to 82.1% of all debt presently.

Petersen looks back to look ahead.  “For the 2016 calendar year the chief national property index - SAPY - maintained its second place return of 10.2%, beaten only by the ALBI which returned 15.4%.  However over the three and five year terms ending at December 2016, the SAPY outperformed the ALBI, ALSI and Cash.  Dipula B-shares performed in the top 5 over five years and 4th over 3 years relative to all other listed property counters over the same periods. 

Going forward Dipula will continue to seek out growth opportunities from selective acquisitions, refurbishments and possible  corporate action while focussing on reducing vacancies and keeping arrears in check. “We also have appetite for residential rental stock,” concludes Petersen. 

Dipula is forecasting an increase in dividends for the full year to August 2017 of between 5% to 6,5%, subject to macro conditions and tenant resilience not worsening materially.

Dipula shares closed yesterday at R10,30 and R12,00 per A share and B share, respectively.