Indluplace - specialist management to drive Indluplace perfomance

Posted On Thursday, 09 May 2019 15:59 Published by
Rate this item
(0 votes)

Indluplace Properties Limited (“Indluplace”), the largest, residential focused JSE-listed REIT, with a portfolio that provides affordable rental housing, today released its financial results for the six months ended 31 March 2019.


Indluplace reported a dividend of 37.49 cents per share for the period.

Since listing in 2015, Indluplace has transformed into a solid, residential property portfolio which provides a mix of affordable rental accommodation that caters for the housing needs of individuals, single-headed and mid-sized households. In recent years, the portfolio has expanded by as much as 269% to 9 933 units, following the acquisition of a large portfolio in 2017, which added 2 803 units.  The Indluplace portfolio now comprises a significant share (47%) of two-bed units and bachelor and one-bed units (41%).

The challenging economic environment experienced over the past year has validated Indluplace’s strategy to focus on these housing brackets in both the inner city and suburban areas, where affordability considerations for low income families are paramount. This is especially the case given the mounting pressures on disposable incomes emanating from rising utility and transport costs, and food prices. However, these cost pressures, coupled with high unemployment levels have become quite embedded in recent months, inevitably impacting on the portfolio’s financial performance.

“The last six months have proven to be even more challenging than expected, with low economic growth persisting and pressure on the consumer increasing.  We have had to put more resources into our marketing efforts, while maintaining escalations at a minimum in order to limit vacancies.  While we have been able to contain vacancies and tenant churn, this inevitably had an impact on our profits for this period”, commented Carel de Wit, CEO of Indluplace.

For the period ended 31 March 2019, vacancies increased to 8.7%, from 6.3% in March 2018. However, this number is significantly skewed by the impact of vacancies at Highveld View in Emalahleni, resulting from the non-renewal of bulk leases linked to the construction at Eskom’s Kusile power station in 2018. Excluding Highveld View, vacancies would have been around 5.7% which is similar to the comparative previous period, as a result of management’s focused marketing efforts.

The company’s revenue, excluding straight line rental income declined to R318.3 million compared to R334.7 million at 31 March 2018, with the non-renewal of the Highveld View bulk leases accounting for a substantial portion of the decline. Higher than inflationary municipal cost increases, coupled with heightened costs such as legal fees that relate to managing non-paying tenants resulted in a net expense ratio of 32.3%.

Terry Kaplan, FD of Indluplace explained: “Our expenses for the reporting period increased by 7% to R138.9 million on the back of rising municipal costs, legal fees and increased maintenance expenses. We believe some of these pressures will ease as the operating environment improves and will therefore, in the interim, remain focused on ensuring that we maintain a hands-on management approach and continue to mitigate downside risks in order to deliver stable returns to investors over the medium-term.”  

CEO De Wit concluded: “The current environment has encouraged us to crystallise our strategy and to deliberately shift from student accommodation and head leases to concentrate on our core business which is to provide value for money options to individuals choosing to rent in well managed, well maintained buildings.  We will be increasing our operational team to position our portfolio optimally as we believe that demand and affordability will improve once the macroeconomic environment stabilises. We anticipate that the performance of the portfolio will improve in the second half of this financial year and look forward to less political and economic uncertainty, which should result in improved investment returns”.

Last modified on Thursday, 09 May 2019 16:09

Most Popular

Balwin Properties announces R9 billion Munyaka Crystal Lagoon development in Waterfall, Midrand

Feb 06, 2020
Munyaka Crystal Lagoon
JSE listed Balwin Properties, a developer that cares about environmentally responsible…

Atterbury develops new Cape Town showroom for WeBuyCars

Jan 30, 2020
Atterbury We Buy Cars exterior view
Leading property developer and investor Atterbury has handed over the innovative…

New fire safety global standard being developed for buildings and infrastructure

Jan 30, 2020
TC Chetty RICS SA Country Manager
The Royal Institution of Chartered Surveyors (RICS) is collaborating with a coalition of…

382 Jan Smuts avenue gets caffein boost

Jan 28, 2020
382 Jan Smuts, which is situated in the heart of Craighall, one of the busiest and most…

Green Building Council SA to reduce physical footprint

Jan 29, 2020
Dora Modise CEO GBCSA
Green Building Council South Africa (GBCSA) will be reducing their physical office…

Please publish modules in offcanvas position.