Dipula Properties, which owns a no‑frills portfolio of mostly strip‑style convenience centres in townships, CBDs and rural areas, typically anchored by a Checkers or a Boxer, has quietly emerged as the JSE’s biggest money‑spinner.
An investment of R10,000 in the stock five years ago would today be worth R95,424. This has made the real estate investment trust (Reit) the JSE’s top‑performing counter in the annual Sunday Times Top 100 Companies list.
That translates into a juicy compound annual growth rate of 57% and a total return of 854%. The ranking includes companies with a market cap of at least R5bn, and compares total returns of a hypothetical R10,000 invested on September 1 2024, held for five years to August 31 2025 (with dividends reinvested).
Co-founder and CEO Izak Petersen’s strategy — to stick to his knitting by focusing on a local niche subsector he knows well, rather than venturing offshore like many of his Reit peers — has been critical to the company’s outperformance. Dipula, whose market cap was still sitting below R5bn 18 months ago, comfortably beat previous large‑cap winners, including Capitec, Investec and Gold Fields. Dipula’s market cap has now swelled to R6.8bn.
The unassuming Petersen, a chartered accountant who listed Dipula nearly 15 years ago, has been instrumental in growing the company’s exposure to lower‑LSM markets with robust cash economies.
Over the past decade Dipula’s Gauteng‑biased portfolio has doubled in value — from R5.4bn to R10.8bn. Today it owns 80 shopping centres, sized roughly between 10,000m² and 20,000m², catering mostly for lower‑income shoppers’ daily needs.
Retail makes up about 70% of Dipula’s assets, with the remainder split between logistics/industrial properties and offices (mainly government tenanted) and a small rental housing portfolio.
Earlier this year, Petersen said the company is actively looking for acquisition opportunities again after a post‑pandemic hiatus in dealmaking. In August he closed five transactions worth about R700m at an average 10% yield, including three shopping centres and two industrial properties.
One was the 24,000m² Protea Gardens Mall in Soweto, bought for R480m. It is now Dipula’s largest property and brings the number of assets owned in the sprawling Gauteng township to seven. Other flagships include Gezina Galleries and Hammanskraal Shopping Centre in Tshwane; Chilli Lane in Sunninghill, Joburg; and Gillwell Mall in East London’s CBD.
There are more deals to come. Last week, at Dipula’s results presentation for the year to August, Petersen said falling interest rates, a strong balance sheet and a recovery in earnings growth mean Dipula is well positioned to continue bulking up its portfolio.
“The gap between buyers and sellers has also closed nicely, so we’re looking to take advantage of some exciting opportunities.”
Petersen said the acquisition pipeline will likely include more mid‑sized convenience and community centres, where retail spending is underpinned by social grants. “That’s Dipula’s sweet spot. We’re not playing in the regional and super‑regional mall space,” he said, but added that location is critical. “We still like township and rural areas, but they have to be undersupplied.”
He said many areas still offer growth opportunities. As such, national retailers — especially those in the grocery, health-care and value fashion segments, such as Shoprite, Boxer, Spar, Dis‑Chem, Clicks, Mr Price and Pepkor — are still keen to roll out new stores and product categories in high-density informal economies.
Petersen typically looks for one‑level strip‑type centres with low operating costs “so you don’t need to spend money keeping lifts and escalators running”.
He’s also looking to buy more distribution centres in the 10,000m²‑20,000m² range, “smaller, older assets that we can apply some makeup to”. Petersen said that given Dipula’s relatively small size, the Reit doesn’t need to do huge deals “to move the needle.”
Meanwhile, the intention is to continue recycling smaller and noncore properties. Sales to the value of R200m were concluded in the year to August. The plan is to also sell Dipula’s R379m rental housing portfolio. Vacancies there have already halved, from 12% to 6%.
The gap between buyers and sellers has also closed nicely, so we’re looking to take advantage of some exciting opportunities
— Izak Petersen
Like other South Africa‑focused property stocks, Dipula has used the post‑pandemic downturn to sweat its existing portfolio, which has resulted in lower vacancies, higher tenant retention rates, positive rental reversions and valuation uplifts.
Last week, Dipula posted an inflation‑beating 5.2% increase in dividends for the year to August. NAV rose 7.5% (10% for the retail portfolio), supported by positive rental reversions and improved income growth prospects.
Perhaps more importantly, Petersen expects next year to be an even stronger period on the back of a continued recovery in South Africa’s leasing environment and further potential rate cuts.
He’s pencilled in 7% earnings growth for the 12 months to August 2026 but said: “I think we will do better than that.”
Earnings growth momentum will be supported by what Petersen referred to as “a real estate sector in early recovery, fuelled by easing inflation, lower interest rates, some improvement in national political and policy stability and a more stable electricity grid”.
Despite Dipula’s share price touching a six‑year high of 670c this week — up 26% year to date — the stock is still trading at a discount to NAV of more than 10%. Analysts believe there’s further upside to be had, given that Dipula, like most of its peers, has only just returned to inflation‑beating earnings growth. The market generally expects the recovery to gain further momentum next year.
This month Anchor Stockbrokers placed a 12‑month target price of 700c‑750c on Dipula, which translates into share price growth of up to 12%.
Dipula’s proposed inclusion in the JSE’s all property index (Alpi) in March next year will support further demand for the shares, given that the Reit will then be on the radars of larger fund managers, which are mandated to invest in the Alpi universe. Dipula wasn’t in the index before, given its relatively small size.
Sesfikile Capital investment analyst Zinhle Simelane says that after years of relatively subdued activity in the capital markets, Dipula has regained momentum with a renewed focus on acquisitions, disposals and refurbishments.
“This year’s acquisitive push into retail and industrial assets marks a strategic and intentional shift, complemented by capex aimed at yield‑enhancing refurbishments and tenant repositioning that continue to strengthen portfolio quality,” Simelane says.
“We like it that management is actively searching for growth and not just playing defence.”
She says the recycling of smaller, vacant assets into higher‑yielding opportunities, alongside growing solar investments and improving debt metrics, will further boost earnings visibility.
She notes that even after the recent share price rally, Dipula is still trading at a forward earnings yield of roughly 9.6%, “which remains compelling”.
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