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Residential-focused Indluplace Properties says it is pleased with improving occupancies and has proceeded with a half-year distribution, but its student portfolio continues to underperform and it faces headwinds from high council tariffs, including for refuse.
Revenue fell 4% to R282.6m in the six months to end-March, the group said on Wednesday, with headline profit slipping 19.5% to R72.2m, as the landlord battled a competitive market and local municipalities that are struggling to deliver consistent services at affordable rates.
This includes “highly punitive calculation methods" for sewer and refuse services, it said, reporting a R4m back-charge for refuse as a result of a change to the tariff structure.
Indluplace focuses on the affordable end of the market, with 9,220 units valued at about R3.5bn. It said on Wednesday that demand for student beds had been hit by the delayed start to the academic year.
While vacancies improved to 10.3% from 11.4% a year before, average vacancies over the period had picked up, the group said and SA’s slow economic growth and financially constrained households remain a challenge. The rental residential environment is showing positive signs but is still very competitive, especially in the inner city of Johannesburg.
Induplace declared about a 13.16c dividend, a distribution of R41.34m, having not paid one in the previous comparative period. In its 2021 year, the real estate investment trust (Reit) had distributed R88.4m.
“We have seen substantial improvement in letting activity from January 2022; a welcome sign following the difficult end to 2021,” the group said. “We ended the first six months with the best occupancy rate since July 2020 and anticipate further improvements in the second half of the financial year.”
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.