Dipula Income Fund will resolve its A and B dual share structure, ahead of a proposed R1 billion investment in the company by Resilient REIT in its new financial year to August 31, 2022, Dipula’s CEO Izak Petersen said yesterday. Photo: Supplied
Dipula Income Fund will resolve its A and B dual share structure, ahead of a proposed R1 billion investment in the company by Resilient REIT in its new financial year to August 31, 2022, Dipula’s CEO Izak Petersen said yesterday. Photo: Supplied

SA-focused diversified REIT Dipula Income Fund makes simplifying its dual share structure a priority

By Edward West Time of article published Nov 18, 2021

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DIPULA Income Fund will resolve its A and B dual share structure, ahead of a proposed R1 billion investment in the company by Resilient REIT in its new financial year to August 31, 2022, Dipula’s CEO Izak Petersen said yesterday.

Dipula, a South Africa focused diversified REIT, saw its share price surge 7.45 percent to R4.47 yesterday morning after it reported a 23.5 percent increase in distributable earnings to R552 million in the year to August 31, 2021, resulting in a 64.7 percent increase in B-share distributable earnings to 89.70 cents.

A-share distributable earnings growth was up 3.9 percent to 118.95 cents per share in line with the A share preferential entitlement. This after a final dividend of 59.93 cents per A-share and 44.60 cents per B-share was declared.

Petersen said in a telephone interview the tough times faced by REITS in general through the pandemic and Dipula’s continued strong performance had demonstrated the defensiveness of its portfolio under tough conditions.

He said the board had paid out a dividend of 100 percent of distributable earnings, something that had always been done except in 2020 where there were liquidity constraints. However, the board said yesterday it may have to be prudent in evaluating the 2022 dividend, considering debt reduction commitments, growth and capital expenditure programmes.

A condition for the Resilient transaction is that Dipula will create a single class share structure and shareholders were currently considering a proposal to swap A shares for B shares, he said.

“We expect that once this transaction is approved and implemented, Dipula shareholders will be aligned, Dipula will be positioned to unlock value for shareholders with greater investor demand for our share, the NAV discount will narrow, and it will result in much improved share liquidity,” he said.

He said equity transaction should enable the group to take advantage of potential consolidation and strategic opportunities within the property sector.

He said he had heard positive and negative comments from shareholders about the share simplification and equity process, but “we hope all shareholders will be pragmatic in finding a compromise amongst themselves for the strengthening of Dipula in the interest of all stakeholders. This deal is for the sake of a sustainable, successful, Dipula,” he said.

Contractual rental income for the year increased by 8.4 percent to R1,09 billion, while property expenses were limited to R444m from R423m in 2020, an increase of 5 percent.

Dipula’s cost-to-income ratio reduced to 36.3 percent from 38 percent.

Dipula’s portfolio value remained stable at R9bn, comprising 187 properties (2020: 190 properties). The residential rental component consisted of 712 units (440) valued at R434m (R265m), which amounted to 6 percent by rental income (2020: 1 percent).

Property valuations on a like-for-like basis were 0.2 percent higher than the prior year.

Dipula spent R52m on capex during the year and had budgeted a further R238m over the next 18 months, of which R172m was earmarked for portfolio refurbishments.

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