Dipula to set aside R400m for refurbishments and upgrades

Dipula, the listed diversified real estate investment trust, plans to spend R400m over the next 18 months on further refurbishments and upgrades of its existing R6.7 billion portfolio.

Johannesburg - Dipula, the listed diversified real estate investment trust, plans to spend R400 million over the next 18 months on further refurbishments and upgrades of its existing R6.7 billion portfolio.

The refurbishments and upgrades include a R60 million revamp of the Soweto-based Protea Point Shopping Centre, while Dobson Point Shopping Centre will get a R6m facelift.

Dipula chief executive Izak Petersen said they expected an average yield in excess of 11 percent from the refurbishments and upgrades. “These revamps will not only enable us to command higher rentals, but will also provide the local community with a better shopping experience,” he said.

Dipula yesterday reported 7.1 percent growth in distributions a combined share for the six months to February. The distribution a share attributable to A-shares increased by 5 percent to 48.23707 cents from 45.94007c, which was in line with the distribution policy to A-shareholders. The distribution a share to B-shares increased by 9.7 percent to 38.78144c from 35.34590c.

Distributable earnings grew by 13 percent to R177.3m from R156.9m. The growth was attributed to solid asset management, reduced vacancies and prudent acquisitions.

Vacancies declined to 9.2 percent from 9.6 percent. Office vacancies dropped to 11.7 percent from 14 percent and retail vacancies to 7.6 percent from 10 percent, while industrial vacancies increased to 11.5 percent from 4 percent.

But Petersen said industrial vacancies had since the end of February been reduced to 3.2 percent, following the letting of the redeveloped R60m Renaissance Park warehouse to Massmart. Petersen said Dipula’s performance in challenging conditions was pleasing and sustainable.

Dipula’s results included for the first time the Moolman portfolio, in which Dipula in August took an 80 percent stake in Moolman Group co-owned companies Jarrabilla Investments and Lizinex for R686m.

The portfolio comprises 28 low-vacancy properties totalling 66 000 square metres, including stakes in shopping and value centres in high traffic areas.

Portfolio enhancing asset

Dipula in the reporting period unveiled the R320m Gillwell Taxi Retail Park in the East London central business district.

Petersen said the portfolio enhancing asset was an attractive shopping environment in contrast to the fragmented and informal competition in the area.

“The Retail Park is a modern, weatherproof development offering an exciting new mix of shops. It is strategically located given that it integrates seamlessly with the Gillwell Taxi Rank, one of the city’s main public transport hubs,” he said.

Petersen said the business remained fundamentally sound, despite the volatility in the markets and the headwinds tearing at the local economy.

He believed the increased interest rates and inflation might cause increasing tenant defaults, but he was confident that continuing to reduce vacancies and forging ahead with the portfolio growth strategy would stand Dipula in good stead. “We will continue with improving acquisitions, well-timed sales, strategic extensions and revamps.”

Dipula’s board expects distribution growth of between 7 percent and 8 percent for the year to August.

Dipula A-shares remained unchanged at R10 a share on the JSE yesterday, while the B-shares gained 2.7 percent to R9.50.

BUSINESS REPORT