Indluplace sees uptick in leasing

Indluplace, a residential real estate investment trust (Reit), says vacancies across its portfolio are decreasing due to several leasing initiatives.

After rising slightly in December, vacancies have come down. Since the onset of the new calendar year, leasing activity has been the highest in years.

“February recorded the highest monthly new-deal count yet of 481 leases,” the company said in a trading update on Wednesday,.

Occupancies, excluding student accommodation, rose from 89.7% in March 2022 to 94%.

Indluplace has a portfolio of 124 buildings, valued at R3.3bn, with most of the properties in Gauteng, with further limited exposure in Mpumalanga and the Free State.

The company portfolio vacancies decreased from 8.2% in March 2022 to 4.2%, with vacancies in the Johannesburg inner city decreasing from 14.2% to 9.3%.

Leasing and marketing initiatives have resulted in the student accommodation portfolio reaching more than 92% in the past month. Of the 2,472 beds, only 49 are vacant after taking units used by house parents and house committees into account.

Rental collections were about 98% at end-February. The company expects bad debts written off for the interim period will improve from the 1.8 % achieved during the 2022 financial year.

In addition to a more challenging economic environment, tenants that are under financial strain, increases in municipal rates and taxes, and changes in billing in some instances continue to pose a risk to the business, the company said.

The company used R15m of sale proceeds of a building in Durban and five apartments in Pretoria to pay off debt. In its 2022 financial year results, Indluplace’s debt stood at R1.35bn, with its loan-to-value — a key measure of the financial health of a property company — reaching 38.5%.

Earlier in March , JSE-listed SA Corporate Real Estate proposed to acquire the entire issued ordinary share of Indluplace for R3.40 per share.

SA Corporate said the deal would enable growth of its residential portfolio held through Afhco Holdings and provide liquidity for Indluplace shareholders.

The company owns a diversified portfolio of assets in SA valued at R15bn and a 50% stake in three Zambian entities with properties valued at R1.1bn.

In its pre-close presentation for the period ending March 31, Fairvest, which holds a 61% stake in Indluplace, said it had received an offer from SA Corporate for its entire stake for R651.4m.

Fairvest will use the funds to reduce debt — resulting in a more than 5% loan-to-value, which was at 38.1% at the end of the 2022 financial year — and improve the group’s interest cover ratio.

The JSE-listed Reit with a diversified portfolio valued at R11.9bn excluding Indluplace said the disposal of its Indluplace interest aligns with its strategy to refocus its portfolio towards markets in the lower living standard measure and convenience retail.

Indluplace will release results for the six months to March 31 on May 24.