Dipula Properties announces strategic shift towards retail and industrial sectors

Dipula Properties is on the hunt for additional retail properties, ideally convenience, rural or township shopping centres north of the Orange River, CEO Izak Pieterse said Wednesday. D

ipula, the black-managed property group that celebrates two decades of operation this month and which has 61 retail, office, industrial and residential properties mainly in Gauteng, intends to sell its residential rental units, which represent 4% of income. This is to re-allocate capital to the retail and industrial sectors that are core to its business, he said.

Speaking at the release of results for the six months to February 29, Pieterse said a few opportunities may close in the short term. The property portfolio’s value increased by  5% to R10.3 billion. Distributable earnings a share (DPS) increased 4.2%, on track with full-year guidance of 4% to 6%. The dividend a share was raised to 25.60 cents from 24.58 cents a share.

He said the strength of the balance sheet and loan-to-value ratio put them in a good position for additional acquisitions, despite the high-interest rate environment. He said the company typically targets shopping centres below 25 000 square metres in size. In the industrial portfolio, the company favours smaller spaces, as opposed to large logistics industrial warehouses.

“Dipula’s operational performance reflects solid delivery and a strongly defensive position in persistently challenging conditions. We are seeing signs of recovery in the office sector and continued stability in our retail and industrial portfolios, with sustainability initiatives expected to support long-term performance,” he said.

Dipula’s revenue was similar to the prior period at R760 million. Net property income rose 3%, constrained by property-related expenses, which grew 6%, mainly due to municipal tariff increases. The cost-to-income ratio rose marginally to 43.5% from 42.6%, driven by improved recoveries and the solar energy roll-out. The administrative cost-to-income ratio was unchanged at 4%.

Operational highlights included significant leasing activity, contributing to a reduction in vacancies from 8% to 7%. The office portfolio recorded a renewal rate of 8.3%, followed by industrial at 6.2% and retail at 2.4%.

New and renewed leases concluded amounted to R309 million, securing sustainable income streams. Tenant retention of 79% was lower than in recent periods as Dipula had adopted stricter tenant criteria to improve tenant quality in its industrial portfolio, specifically for mini-units where there was high tenant turnover.

Even with this change, Dipula’s industrial vacancies decreased. Industrial and logistics assets deliver 13% of Dipula’s rental income and with a vacancy of just 4%, this segment remains stable and sought after.

Dipula’s retail portfolio reported steady vacancies at 6%. Office vacancies, which comprise 16% of Dipula’s income, ended the period lower at 19% from 23%. “The improvement is refreshing, however there is some way to go, and the Johannesburg office market remains oversupplied and highly competitive,” said Pieterse.

Dipula invested R117m in refurbishments and redevelopments. Nearly R70m was for income-generating projects, including solar PV, with the remainder allocated to defensive projects. A portion of R125m in disposals contributed to funding these projects.

“We’re firmly committed to future-proofing our portfolio,” Petersen said. Dipula’s installed solar capacity would more than double to about 16 MW during this calendar year.

Gearing was stable, at 36.3% compared to 36.1%. Additional liquidity was reflected in R400 million in undrawn facilities.

“At Dipula, we remain focused on our strategic priorities: driving operational efficiency, optimising our tenant base and recycling capital to reinforce balance sheet resilience,” said Petersen.

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