Confidence vote, says Dipula, as bookbuild overshoots 32%
Dipula Income Fund has raised R790m, which will help it fund one of its most attractive portfolio acquisitions since it listed in 2011.
The group had intended to raise R600m and CEO Izak Petersen said that outdoing this number by a staggering 32% was a vote of confidence in the group’s growth strategy.
The oversubscribed book-build suggests improved confidence in South African-listed property after a difficult first quarter in which relatively little capital was raised.
Keillen Ndlovu, head of listed property at Stanlib, said that despite the increased volatility in the sector there continued to be appetite for listed property. "Retail and institutional investors are actually increasing their inflows into the sector," he said.
Petersen said he had waited for a well-priced deal that could enhance the company’s asset base. At the end of 2017, Dipula announced it would buy a diversified portfolio for R1.2bn, which it concluded at the end of March, growing its overall portfolio to beyond R8bn for the first time.
"The capital will enable us to continue realising our strategy of growing our fund through strategic acquisitions," he said.
Dipula bought the diversified portfolio from Setso Holdco and Rec Group Property Trust. The portfolio has a gross lettable area of 340,221m² and spans retail, office and industrial assets with a minimal overall vacancy of 0.8% and a weighted average lease expiry of 4.5 years.
It included Gauteng retail properties Chilli Lane and Chilli on Top, six office properties across Gauteng and the Western Cape and two redevelopment properties. The transaction included the purchase of a 50.01% stake in a company that owns industrial properties across the Eastern Cape, KwaZulu-Natal, Mpumalanga, Gauteng and the North West.
Petersen said the deal was yield enhancing and in line with Dipula’s strategy of acquiring quality properties that offered opportunities to extract additional value through redevelopments and refurbishments.
A measured acquisition strategy had led to a consistent growth path and the fund’s portfolio growing more than 300% since listing, Before the deal was announced, Dipula’s diversified portfolio had 174 properties valued at R7bn.