Indluplace Properties delivers revenue growth through improved portfolio diversification

Posted On Wednesday, 14 November 2018 12:58 Published by
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Indluplace Properties Limited, a JSE-listed REIT with a portfolio that provides affordable rental housing, today released its financial results for the year ended 30 September 2018.

 Carel_de_Wit_CEO_Indluplace

Indluplace reported a dividend of 49.19 cents per share for the six months ended September, bringing the total dividend for the year to 97.75 cents per share, in line with the prior year.

During the reporting period, Indluplace bedded down its R4.3 billion (2017: R2.9 billion) expanded property investment portfolio following the acquisition of a R1.4 billion portfolio from the Buffet Group. As a result of the transaction, the portfolio now comprises 9 788 units across 176 properties that are spread across provinces and unit categories, making Indluplace a well-diversified and defensive property portfolio.

Commenting on the year’s results, CEO Carel de Wit, said: “Notwithstanding a strenuous macroeconomic environment, we have benefited from the acquisitions of the Diluculo and Buffet portfolios in terms of revenue generation. Our expanded portfolio provides diversity in terms of location as well as mix of unit sizes and unit types that cater for the residential rental segment, which is expected to continue growing in the long term.”

Since listing in 2015, Indluplace has grown its portfolio by an impressive 265% and has secured a significant presence in the affordable end of the residential rental market. The transformative acquisitions included in this year’s results resulted in a higher loan-to-value ratio of 30.1% (2017: 6.8%) through R1.5 billion in facilities secured from ABSA, Investec and Standard Bank.

“The LTV remains well within reasonable levels following the latest acquisitions. Having bedded down the new properties, we will now focus on delivering sustainable dividends, disposing of non-core and non-performing assets as well as reconsidering our exposure to bulk leases in favour of single lease agreements. There will also be a continued strong focus on tenant retention, in order to secure a lower vacancy rate over the medium term. We believe these measures will assist to mitigate risks and result in a more stable portfolio during the difficult period anticipated,” Terry Kaplan, Indluplace FD explained.

By the end of the 2018 financial year, vacancies had increased to 8.4%, heavily impacted by a single property, Highveld View, for which a number of bulk lease agreements covering 450 units were not renewed due to Eskom reducing its activity levels around Witbank. Excluding this property, the vacancy rate for the residential portfolio was 5.2% compared to 3.5% a year ago, reflecting a deteriorating economic environment.

“Whilst the recent acquisitions contribute positively to revenue generation, economic uncertainty and affordability pressures will continue to weigh heavily on consumers and investor returns are expected to be constrained in the short term. However, we remain confident that the actions put in place to improve vacancies and optimise the portfolio will reinforce our defensive positioning and align us further with the market demand for well-priced, quality accommodation in the inner city and suburban areas,” concluded de Wit.

  • Full year dividend of 97.75 cents per share in line with prior year
  • Portfolio expanded to R4.3 billion
  • Focus on portfolio optimisation opportunities to ensure medium-term growth
  • Strong balance sheet with LTV of 30%
Last modified on Monday, 19 November 2018 08:30
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