Pretoria - Indluplace Properties, the listed residential property-focused real estate investment trust (Reit), expects the downgrade in South Africa’s credit ratings to have both negative and positive impacts on its stated intention to aggressively grow its portfolio.
Carel de Wit, the chief executive of Indluplace Properties, said on Wednesday that the downgrades had changed the cost of money, which put pressure on new acquisitions.
But De Wit said the acquisitions they were working on were still accretive and they would continue chasing them.
“There are substantial portfolios and nice transactions out there. We are pursuing some large and interesting transactions,” he said.
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De Witt said Indluplace did not have a specific target for the growth or size of its portfolio and was opportunistic and did acquisitions when they were appropriate.
Terry Kaplan, the financial director at Indluplace, added that economic pressures and changes to interest rates impacted on the acquisition pipeline, but the price and yield were also moving closer together.
De Wit said higher mortgage bond rates on home loans also fed into demand for affordable rental accommodation and had opened up other opportunities for Indluplace.
Kaplan said even if it was economically tough for people, they still needed somewhere to stay and a roof over their heads was the first expense they covered.
Indluplace became the first residential-focused Reit listed on the JSE in June 2015. It listed with a portfolio comprising 95 properties and more than 3600 individual rental units valued at about R1.6 billion. Since listing, the company has grown its portfolio by more than 49 percent to 5511 residential units in 117 buildings valued at R2.4 billion.
De Wit said the value of the portfolio would increase to R2.9 billionn when the acquisition of the Diluculo portfolio transaction was finalised.
Indluplace has agreed to acquire this portfolio, comprising 1319 residential units, for R475 million. This will increase the total size of Indluplace’s portfolio to 6830 units. De Witt said this transaction was at the Competition Commission, but they did not foresee any problems in getting it approved.
Indluplace yesterday declared a dividend of 24.71 cents a share for the quarter to end-March, resulting in a 5.5 percent growth in the total dividend a share for the six months to March to 48.54c. Revenue, excluding straight-line rental income, increased by 21.5 percent to R195m from R160.7m.
Shares in Indluplace were 1.94 percent lower on the JSE on Wednesday to close at R10.10.