JSE-listed real estate investment trust Dipula Properties says its performance for the second half of its financial year to end August 31 outpaced that of the first half, driving a full-year increase of 5% in distributable earnings, translating to full-year distributable earnings a share of 57.26c.

Dipula’s property portfolio increased in like-for-like value by 6% to R10.8-billion, supported by improved property fundamentals and proactive asset management. Its property portfolio also increased by 10% for retail, buoyed by higher income prospects and supporting a 7.5% rise in net asset value.

Dipula’s revenue increased 4% to R1.52-billion, while net property income rose 3%.

Cost control also continues to be a management priority. The total cost-to-income ratio of 43.2%, compared with 42.6% in the 2024 financial year, reflected a marginal increase owing to inflation-driven property expense increases and the effect of lower office rental renewals achieved the previous year.

The administrative cost-to-income remained stable at below 4%, which highlighted continued cost discipline at corporate level.

Further, operational highlights included significant leasing activity, with retail portfolio vacancies decreasing to 5%. This is despite total portfolio vacancies edging up slightly to 8.5% from 7.5% during the year, mainly owing to short-term dynamics in highly lettable properties in the office and industrial portfolios.

Meanwhile, Dipula achieved a weighted average positive renewal rental rate across the portfolio of 0.6%, which is a significant improvement over the negative 9.7% renewal rental rate for the financial year to August 31, 2024.

New and renewed leases concluded during the period amounted to R801-million, which secures sustainable income streams, the company says.

Additionally, Dipula invested R214-million in refurbishments and redevelopments, which is a 37% increase over the prior financial year, to drive income growth. A further R170-million is planned for the 2026 financial year to enhance successful core assets.

The company returned to acquisitive growth during the year and finalised five strategic acquisition agreements in August totalling about R700-million, at a total average weighted yield of 10%.

The largest of these was the R480-million purchase of the 24 000 m² Protea Gardens Mall community shopping centre, in Soweto.

The company's capital allocation strategy focuses on high-quality mid-sized logistics and industrial assets, which is a core component of its growth plan.

Dipula has secured two industrial properties with strong tenant profiles. It agreed to acquire a newly developed, state-of-the-art distribution centre of 16 000 m² in Klerksdorp, which is being leased over the long term to blue-chip pharmaceutical and biotechnology multinational Bayer.

Additionally, Airborne Industrial Park, which is a fully let multi-tenant complex of 6 964 m² near the OR Tambo International Airport, saw ownership transferred to Dipula in August.

The transactions are being funded, in part, by Dipula’s September equity raise of R550-million.

Further, key environmental, social and governance initiatives during the financial year under review included expanding rooftop solar capacity, enhancing energy efficiency, waste and water management and supporting employee development and community projects.

It invested R54-million in solar PV installations during the year, bringing its installed solar capacity to about 6 MW. An additional 10 MW of new solar projects are slated for completion in the first quarter of 2026.

While there is still progress to be made, Dipula has started its sustainability journey in earnest. Emissions avoidance increased by 240% compared with the prior financial year and the share of green energy consumed in its portfolio more than doubled to 5% from 2%, the company says.

During the financial year under review, Dipula reduced its gearing to 34.9%, down from 35.7% in the 2024 financial year. It also maintained a steady interest cover ratio of 2.8 times at year end, which reflects a consistently well-managed balance sheet.

Post year-end, gearing had reduced to 29%, the company adds.

Meanwhile, Dipula remains optimistic about its prospects, supported by a real estate sector in early recovery, easing inflation, lower interest rates, some improvement to national political and policy stability and a more stable electricity grid.

It is expecting continued growth in distributable earnings of 7% for its 2026 financial year, says CEO Izak Petersen.

The results reflect prudent capital allocation backed by rigorous asset management, financial and operational discipline, and the reignition of acquisitive growth, he says.

The South African real estate sector has seen meaningful improvement recently with more to come, and this could accelerate, should there be improvements to the persistent local government inefficiencies that are posing material risks and structural constraints to sector growth.

“We remain optimistic about South Africa and the property sector’s outlook, while being realistic about the challenges we face.

“Dipula will continue focusing on growing our presence in defensive retail and industrial assets through strategic capital allocation, disciplined operations and active hands-on management,” says Petersen.