Cape Town - Dipula, the listed diversified real estate investment trust (Reit), said on Wednesday it was close to concluding acquisition deals in excess of R500 million, while it would spend a further R200m on refurbishing some of its buildings in the next year as it seeks to improve the quality of its portfolio.
The company, which has a portfolio valued at R7 billion, said part of its strategy going forward would be to revamp some of its properties to attract long-term leases.
Dipula chief executive Izak Petersen said the refurbishment of its portfolio was important for the company to growth in a highly competitive environment.
“Dipula will continue to seek out growth opportunities from selective acquisitions, refurbishments and possible corporate action, while focusing on reducing vacancies and keeping arrears in check. We also have appetite for residential rental stock,” Petersen said.
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He said although the revamps had adversely affected vacancy levels, they have proved to be beneficial to the business.
“The facelift and expansion of the Nemisa office park in Parktown enabled the company to secure a favourable five-year lease renewal for the majority of the new enlarged space.”
The company reported a 9.5-percent increase in distributable earnings for the six months to the end of February. It attributed this to extracting value from its portfolio through the refurbishments it had undertaken.
The group’s retail vacancies rose slightly, from 7.6 percent to 7.9 percent, during the period.
The company’s office sector had a vacancy level of 15 percent, compared with 11.7 percent in the comparative period, while total vacancies remained stable at 9.2 percent.
“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,” Petersen said.
Petersen said that, as the group looked at adding to its portfolio, it would dispose of some of its non-core assets, and this process was already under way.
“In line with our strategy to rebalance our portfolio, we disposed of 28 non-core properties worth R400m, of which eight properties valued at R72.3m were transferred by February 28, 2017, while the remainder are at various transfer stages.”
Dipula’s portfolio comprises 28 low-vacancy properties totalling 66000m², including stakes in shopping and value centres in high traffic areas. By gross lettable area, Dipula’s portfolio is mainly concentrated in Gauteng. It is weighted towards retail property, which comprises more than 50 percent of its portfolio.
Dipula’s shares closed unchanged at R10.30 on the JSE on Wednesday.