Dipula adds R316m Gillwell Taxi Retail Park to portfolio

Artist rendering of Gillwell Taxi Retail Park development in the East London CBD, acquired by Dipula Income Fund for R316 million..

Image gallery

Dipula Income Fund (DIA) said on Wednesday that it had agreed to acquire the Gillwell Taxi Retail Park development in the East London CBD, for R316 million.

Situated in the Buffalo City Metropolitan Municipality of the Eastern Cape province, the total consideration includes the repayment of a development loan obtained by Gillwell in order to fund the development of a retail centre on the property.

The development gained planning permission in December 2013 and this transaction will become effective after the centre’s construction is complete, in the first half of 2015.

Dipula agreed to purchase the 21,521sqm three-level shopping centre development from developers Isibonelo Property Services and Eris Property Group. It has also agreed to give Isibonelo the option to acquire a stake in this retail centre.

Dipula CEO Izak Petersen said Gillwell Taxi Retail Park met Dipula’s strategy of acquiring larger‚ quality retail assets in targeted areas and improved the quality of the company’s portfolio.

The transaction is subject to various conditions, including 80% of the development’s retail space being pre-let and rental guarantees on any unlet space.

As part of the transaction, Isibonelo and Eris will develop the centre and will also undertake its management for its first two years from opening.

The acquisition will take Dipula’s portfolio to 182 retail‚ office and industrial properties with a total value of about R4.4bn.

Dipula‚ one of only a handful of black managed property stocks‚ did not live up to expectations last year with a disappointing total return performance of -6.5% for the B units and -12.5% for the B units versus the sector’s total return of 8.39% for 2013‚ the latest figures from Catalyst Fund Managers showed.

However‚ analysts said Dipula now appeared undervalued. Both the A and B units are trading at an attractive forward yield of more than 9% compared with the sector’s average 7.5%.

Dipula is one of Meago Asset Managers Jay Padayatchi’s top picks for 2014. He said Dipula was one of the smaller stocks in the listed property space that could become a potential takeover target for larger players who were unable to find suitable yield-enhancing property acquisitions.