File picture: James White

CAPE TOWN – Indluplace Properties, the largest residential focused JSE-listed REIT, said distributable income fell 22 percent to R120.5 million in the six months to March 31 as costs such as legal fees for defaulting tenants and higher than inflation municipal charge increases eroded profit growth.

The group, which has one of the biggest portfolios of affordable housing in the country, declared a dividend of 37.49 cents per share for the six months, compared with 48.56c in the comparable period last year.

Since listing in 2015, Indluplace has built a solid, residential property portfolio that provides a mix of affordable rental accommodation that caters for the housing of individuals, single-headed and mid-sized households, with its portfolio expanding by 269 percent to 9 933 units over the period.

The portfolio now comprises a significant share (47 percent) of two-bed units and bachelor and one-bed units (41 percent).

“The last six months have proven even more challenging than expected, with low economic growth persisting and pressure on the consumer increasing,” said CEO Carel de Wit.

“We have had to put more resources into our marketing efforts, while maintaining escalations at a minimum in order to limit vacancies. While we have been able to contain vacancies and tenant churn, this inevitably had an impact on our profits for this period”, he added. 

Strategies were in place for a better second half, but management anticipated the full year dividend to decline by 20 percent.