In its 20^th year, Dipula Properties (formerly Dipula Income Fund) has posted its interim results for the six months ended 28^th February 2025, reporting an increase in its property portfolio’s value of 5% to R10.3 billion, supporting a 6% rise in its net asset value (NAV). The REIT’s distributable earnings per share (DPS) increased 4.2% for the half year, on track with full year guidance of between 4% and 6%.

“Dipula’s operational performance reflects solid delivery and a strongly defensive position in persistently challenging conditions. However, we have felt the impact of higher prevailing interest rates and hedging costs relative to expiring hedge instruments. Encouragingly, 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,” comments CEO of Dipula Properties, Izak Petersen.

The REIT’s portfolio includes 161 retail, office, industrial and residential property across South Africa, predominantly in Gauteng with its retail assets in townships, rural, and urban convenience locations contributing 67% of portfolio income.

Dipula’s revenue for the six months was similar to the prior period at R760 million. Its net property income rose 3%, constrained by property related expenses, which grew 6%, mainly driven by municipal tariff increases. Its total cost-to-income ratio rose marginally to 43.5% (FY2024: 42.6%), driven by improved recoveries and its solar energy roll-out. Its administrative cost-to-income ratio remained unchanged at 4%.

The REIT’s operational highlights for the period include its leasing activity which contributed to a reduction in its overall portfolio vacancies from 8% to 7%. It additionally achieved a weighted average positive renewal rental rate across its portfolio, underpinned by positive rates.

Dipula’s office portfolio recorded a renewal rate of 8.3% with a lower vacancy rate of 19%, down from 23% in the prior interim period; its industrial portfolio a 6.2% renewal rate with a vacancy rate of 4%, and its retail portfolio a 2.4% renewal rate with a vacancy rate of 6%. New and renewed leases concluded during the period amounted to R309 million with its tenant retention of 79% lower than in recent periods.

The REIT intends to sell its affordable and conveniently located residential rental units (with a 9% vacancy rate), which currently represent 4% of income, to re-allocate capital to its retail and industrial portfolios which are core to its business.

Dipula invested R117 million in refurbishments and redevelopments with close on R70 million of this allocated to defensive projects. A portion of the proceeds from R125 million in disposals achieved a 4% premium to book value, contributing to funding these projects together. No acquisitions were completed during the period.

“We are firmly committed to future-proofing our portfolio. We are assessing some interesting opportunities which fall within our core focus, a few of which we hope to close in the short-term,” concludes Petersen.