Post period end, SA entered a Covid-19 lockdown that has undoubtedly exacerbated the already dire situation.
The Group’s revenue and distributable earnings for the period were roughly in line with the prior period at R680 million (H1 2019: R688 million) and R254 million (H1 2019: R258 million), respectively.
“We are pleased with our leasing performance under very tough conditions. Our team has worked exceptionally hard to reduce vacancies. During the period we secured 78 new tenants to the value of R94 million and renewed 112 leases, equating to 58 529m, worth R276 million over the lease term. The leases were roughly three years long for new leases and renewals.
“Our industrial leasing went particularly well, reporting a vacancy of 2.8% compared to 8.0% in the comparable period,” commented CEO Izak Petersen.
Dipula’s overall tenant retention rate was 80%, which represents retention rates of 74% for retail, 92% for office and 82% for industrial. The Company had a net negative reversion rate of 0.9% across the portfolio, which is a pleasing performance under the circumstances.
Dipula had sold four properties for an aggregate price of R49 million at an average yield of 10.5%. Due to prevailing market conditions there were no acquisitions concluded during the period. The Group had invested R28 million in portfolio improving refurbishments.
The Group’s property portfolio of 190 properties was valued at R8.9 billion an increase of 3.6% period on period.
“We successfully refinanced debt of R663 million during the period. We have no foreign currency debt exposure and 79% of our interest rate exposure was hedged at the end of the period. Our gearing is at a comfortable 40% level. We are well within our debt covenant limits by all measurement metrics,” Petersen stated.
Dipula is awaiting the imminent transfer of its 50.1% stake in Palm Springs, a 428 unit residential property development in Cosmo City, North West of Johannesburg. The anticipated effective date for the transaction is 1 July 2020.
“We remain committed to our stated strategy of improving the quality of our portfolio, focussing on defensive assets, tactical capital allocation and retaining a competent and committed team. This with the knowledge that market conditions are ever changing, and that we therefore need to be agile and find the gaps under all conditions,” added Petersen.
Considering the uncertainty surrounding the impact of COVID-19, the board has deferred its decision regarding the declaration of an interim dividend. The Company indicated that a decision on whether to declare a dividend will be taken before or on the publication of its financial results for the year ending 31 August 2020.
“The effects of the pandemic on human lives and its consequences on human suffering are likely to be with us for a long time to come, as the world battles to find solutions. Now, more than ever, humanity needs to stand together and provide support to the most vulnerable of our society.
“We are doing all that is possible within our limited resources to support our stakeholders through this pandemic and although not easy, working with our various stakeholders, we will find well balanced solutions that seek to address sustainability for Dipula and its stakeholders.”
“Our immediate focus is capital preservation and liquidity, ensuring the safety of our staff, tenants and shoppers as lockdown restrictions are gradually lifted. We will keep the market updated as the impact of the pandemic becomes more apparent,” concluded Petersen.
