Dipula A-units lead the pack of buying opportunities in new property listings

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Dipula A-units lead the pack of buying opportunities in new property listings
Thursday, 26th January 2012

Dipula Income Fund A-units (JSE:DIA) are tipped as a top prospect in the seven new property sector listings on the JSE since November 2010. Keillen Ndlovu, Stanlib head of property funds, notes that: "Dipula A-units offer investors looking for secure, predictable income streams an attractive initial yield of 9,5%." Dipula Income Fund listed on the JSE in August 2011. The company owns a diversified property portfolio, located throughout South Africa. It enjoys a retail bias to low income households. "Dipula A-units also provide almost guaranteed income growth of 5% per annum," says Ndlovu. "It is in line with the market, but is more certain than other single-unit property stocks. The income protection that Dipula A-units offer is similar to bonds." Dipula features an acquisitive growth strategy, excellent BEE credentials thanks to a black-owned asset manager and a sizable stake in the fund by management. Dipula Income Fund CEO Izak Petersen explains that it will continue to seek portfolio and income strengthening opportunities for its investors. "It is important to acquire assets that will show resilience in all market conditions" says Petersen. We therefore always do a thorough fundamental analysis of the growth potential of each asset we acquire at the same time ensuring that all is done not to compromise income in the short term. Of course the key is to ensure that our portfolio can stand the test of time in terms of capital and income growth and we need to therefore balance these key considerations at all times". He further states that the B units are excellent value at a forward yield of approximately 11.3% at the current trading levels. "Dipula's value proposition is solid and whilst we have A and B units investors should rest assured that we are building a good enterprise that should deliver for both unit holders. I believe that both units offer good value to investors. B unit holders should be handsomely rewarded whilst the A units will continue to enjoy the added security though also having potential upside on capital growth." The company announced a R247,8 million purchase of three retail properties in late December 2011. These strategic acquisitions remain subject to several approvals. Once final, they will grow Dipula's portfolio to 178 properties valued over R2.3 billion, covering 463,000sqm. "We continue to build a portfolio that will deliver growth in distributions and capital for our investors," notes Petersen. "Increasing critical mass, asset quality and diversification will drive performance." Ndlovu also identified Vividend Income Fund, Synergy A-units and Rebosis as currently offering good buying opportunities. "However, it is important to note that most of the new listings are not very liquid. Liquidity is likely to improve over time as they do property acquisitions partially funded with equity", he adds.