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Monday, May 23, 2022

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Dipula seeing new growth opportunities after A and B share consolidation

DIPULA’S portfolio of convenience retail centres recorded average turnover growth of 14 percent, period-on-period. Contractual rental income across the portfolio increased by 0.6 percent to R541 million.

DIPULA’S portfolio of convenience retail centres recorded average turnover growth of 14 percent, period-on-period. Contractual rental income across the portfolio increased by 0.6 percent to R541 million.

Published May 6, 2022

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SOUTH African-focused diversified Reit, Dipula Income Fund, said its defensive retail portfolio performed well through challenging trading conditions and it paid out a B-share distribution of 61.97 cents per share for the six months to February 28.

“Following shareholder’s approval to simplify the group’s capital structure, this is the last time the dividend will be paid to the existing formula. We expect the scheme to be implemented immediately after the dividend payment on June 7 this year,” CEO Izak Petersen said.

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He said the plan to have only one class of shares would open opportunities that had in the past been denied to the group due to its dual share structure.

Dipula will buy back and cancel all its issued A shares at a swop ratio of 2.4 B shares for every A share in issue.

The B share distribution, made on a 100 percent pay-out ratio, compared with the 42.22 cents payout in 2021. The A-share distribution was raised to 61.97 cents from 59.02 cents.

Petersen said in a telephone interview that the retail centres and the industrial portfolio had performed well in the six months.

He said vacancies had crept up in the retail portfolio, but this was mainly due to refurbishments being made to properties in Johannesburg, and some bank tenants that had reduced space, a process he believed was over.

He expected vacancies in the office portfolio to stabilise at some point. He said businesses had not yet fully accounted for the cost of the pandemic on their businesses through losing the culture of their business from employees working from home.

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Dipula’s portfolio of convenience retail centres recorded average turnover growth of 14 percent, period-on-period. Contractual rental income across the portfolio increased by 0.6 percent to R541 million.

Property related expenses showed an inflationary increase of 5.8 percent to R232m.

Net property income fell slightly to R441m from R457m. The balance sheet was healthy.

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The group’s portfolio value remained stable at about R9bn and comprised 186 properties versus 189 in 2021. Ninety three new leases were concluded during the period.

The portfolio vacancy excluding residential increased to 9.3 percent (7.6 percent) driven mainly by the office sector as tenants downsized due to changing user needs and challenging economic conditions.

Vacancies by sector were retail 10.8 percent (9.9 percent), offices 17.3 percent (11.6 percent) and industrial 3.9 percent (3.2 percent).

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Tenant retention ratio was at 78 percent (77 percent), with especially the office and industrial portfolios showing strong retentions of 93 percent (78 percent) and 91 percent (83 percent) respectively. Retentions in the retail portfolio were at 63 percent (74 percent).

Residential vacancies were 18 percent, mainly due to vacancies at Palm Springs in Cosmo City, which is still recovering from the impact of Covid-19 related job-losses, but the vacancies were likely to be lower at Palm Springs by year end, he said.

Occupancies at Urban Village Midrand, Bruma and Norwood were 92 percent, 97 percent and 96 percent respectively.

The violent protest action in July 2021 impacted 12 of Dipula’s properties, 11 of which were now fully operational and trading. Dipula had received partial settlements from its insurers for the damaged properties and was in the final stages of agreeing the final settlement figures with the insurers.

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