Indluplace Properties, the first residential focused REIT listed on the JSE, says despite the current tough environment, it had a “very good” year, growing its diversified portfolio and proving to be a major player in providing value for money rental housing across location.
Indluplace’s investment property has increased from R2,4 billion to R2,9 billion in the year to 30 September 2017. This mainly relates to the acquisition of the Diluculo Properties for R475 million; comprising 1 319 residential units across eight properties. Garden Views, a 64-unit complex in Randburg, was also acquired for R25 million during the reporting period. The total number of residential units was 6 859 at the end of the reporting period.
Indluplace declared a dividend of 24,48 cents per share for the quarter ended 30 September 2017. This brings the total dividend for the full year to 97,75 cents per share, in line with the 5,6% distribution growth guided.
“Despite the current tough environment, Indluplace had a very good year, growing our diversified portfolio and proving to be a major player in providing value for money rental housing across location, building type and unit type across various income groups. We are very pleased to deliver dividend growth to shareholders in line with expectations, emphasising the defensive nature of our investment case,” said CEO, Carel de Wit.
“The recent acquisitions reflect Indluplace’s ability to grow the fund aggressively over time, through acquiring yield enhancing properties. We have remained disciplined and focused with our strategy of only acquiring properties and portfolios that will provide income on day of acquisition,” said De Wit.
Post year end the fund acquired 2 803 residential units for R1,4 billion from the Buffet Group. The portfolio comprises 48 properties, mainly spread across Gauteng, with two buildings in KwaZulu-Natal; making it the fund’s debut to the province. The group’s loan to value (‘LTV’) ratio has increased to 32,9% as Indluplace obtained financing from Absa and Investec to part fund the acquisition.
“The Buffet transaction was significant for Indluplace. The portfolio compliments our current portfolio, being diverse in location as well as building and unit type,” commented De Wit.
Vacancies remained stable during the reporting period at 3,5% compared to 3,5% reported at 30 September 2016. Property expenses have increased from R130,6 million to R153,3 million which is in line with the increased property portfolio. The net property expense ratio of 22,4% is in line with expectations and the nature of our current portfolio.
“We work closely with our specialist outsourced property managers, providing excellent tenant management, to implement agreed strategies to reduce vacancies across the portfolio. Our arrears and debt levels were well controlled. This is something we monitor closely,” commented Terry Kaplan, FD.
The company’s revenue excluding straight line rental income, has increased from R349 million to R409 million year-on-year at 30 September 2017. About R19 million of the increase is as a result of the Diluculo acquisition, which became effective as of 1 July 2017, while the balance relates to annual escalations and the annualisation of the acquisitions concluded in the previous financial year.
“We are confident that the shortage of well-priced, well managed rental housing in South Africa provides us with ample opportunities for continued growth of our diverse portfolio while unlocking shareholder value in the future. The dividend growth from our current portfolio, excluding any further acquisitions and the potential effect of increased gearing levels, is expected to be between 4% and 7% for the 2018 financial year,” concluded De Wit.