Indluplace maintains dividend despite tough year. The real estate investment trust saw a rise in vacancies after Eskom cut back

on activity in Witbank, resulting in the non-renewal of residential contracts

Indluplace has kept its dividend unchanged for the year to end-September,

despite an operating environment characterised by high unemployment and a big

increase in the cost of living. As the only residential-focused REIT (real

estate investment trust) on the JSE, the state of the consumer has a direct

impact on Indluplace. It said this had affected its ability to grow dividends

in the short term and also made accurate forecasting difficult.

To make matters worse, a cutback in Eskom's activity in Witbank has resulted

in less demand for accommodation in the areas, with the non-renewal of bulk

residential contracts with contractors who had been working for the utility.

That pushed vacancies up to 8.4%, largely due to a single Witbank property:

Highveld View. Excluding Highveld View, Indluplace said the vacancy rate for

the remainder of its portfolio was 5.2%. It expects vacancies rep remain

around these levels. It says it's looking at various options for Highveld View

and plans to dispose of the property in the medium term.

Contractual income rose 71% to 563 rand million in the year to end-September,

boosted by the acquisition of Diluculo Properties and the Buffet portfolio in

July and October 2017. The acquisitions also boosted Indluplace's residential

portfolio of 9,788 units to 4.3 rand billion after adding 2,803 units last year.

The REIT is paying a final distribution of 49.19c per share, taking its total

dividend to 97.75c per share.

Due to the non-renewal of bulk contracts at Highveld View and the expected

slow take-up of individual units at lower market rentals than previously

obtained, Indluplace expects next year's dividends to be down by between 3%

and 10%. It plans to dispose of non-performing and non-core assets, including

gradually reducing its exposure to the remaining head leases and positioning

its position for long-term, sustainable growth.

Indluplace remains positive about the investment case for the rental

residential market in the longer term and will continue to look for

opportunities in South Africa," the REIT said.

Its shares closed unchanged at 8.49 rand.