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IPF’s portfolio was written down by an aggregate R899m during the year and together with the disposal of certain properties, this saw the value of investment properties decline to R15.2bn (FY20: R16.0bn like for like). In particular, the REIT sold its minority interests in the UK, Australia and Pan-European Light Industrial investments, remaining with a 65% shareholding of its Pan European Logistics (“PEL”) platform, which made up 44% of the group’s consolidated balance sheet at FY21, with the remainder located in South Africa.
The Stable outlook reflects our expectation that IPF will continue to benefit from the high-quality earnings generated by its offshore investment, while reporting a stable performance on the local front. An upgrade would depend on IPF’s ability to notably improve leverage metrics on a look through basis. Improved profitability, evidenced by core net property income growth, particularly for the South African portfolio will also be positive for the ratings.