Listed property loan-stock company Diversified Property Fund has reported strong growth in distributions for the year to June with a 16,51% increase on the annualised distribution for the previous nine month period to June last year.

MD David Lewis said on Wednesday the company’s new property acquisitions had performed well.

“The retail and industrial property portfolios are continuing to perform very strongly. We are achieving good increases on rentals and well above inflation,” he said.

Diversified has also been involved in intensive asset management with 19 properties sold in the period and five properties acquired.

Lewis said the intention was to reduce the number of properties further. The company wanted fewer but more substantial properties with strong growth potential.

Diversified’s property portfolio is valued at about R1,2bn while the company’s market capitalisation is about R1,6bn.

The company is focused predominantly on rural retail centres, but it still has industrial holdings.

It said market conditions in all sectors of the South African property market remained favourable.

“The industrial market was characterised by a shortage of space that supported rising rentals. This would normally result in an increase in supply of industrial premises. However, a shortage of serviced industrial land and rising building costs have limited additional supply,” said the company.

It said these dynamics were expected to continue to support further increases in rentals in the industrial market. Diversified said that in spite of an increase in interest rates, retail centres in rural areas continued to perform well due to substantial increases in social spending and the development of new mines.

Keillen Ndlovu, listed property analyst at Stanlib, said that Diversified had a number of initiatives including the creation of a wholly owned subsidiary, Fortress Asset Managers, which managed a real estate investment trust fund, and an exchange-traded fund called PropTrax, which was to be listed soon.

He said the firm also had a number of retail and industrial development projects lined up.

“This, combined with the focus on high-yielding rural retail, presents solid prospects for Diversified.”