Delta Property Fund, a R2,1 billion property group and predominantly government-tenanted BEE company is to list on the JSE. The listing, scheduled for early next month, will follow a Nedbank Capital-led capital-raising exercise of R980 million. The object of the listing is to reduce gearing levels and to fund future acquisitions. On listing, Delta is expected to have a loan to value of 40%. Delta’s vision is to own a property portfolio valued in excess of R7 billion by 2017.
Nedbank Corporate Property Finance is providing the bulk of the funding and is working in collaboration with Nedbank Capital, the sponsor and advisor for the listing, to bring the fund to market.
“We consider this a high quality listing and are confident it will be positively received by investors seeking a blue-chip investment in the JSE’s property sector,” says Ken Reynolds, Nedbank Corporate Property Finance’s regional executive. Delta will make its JSE debut at R8,20 a share.
Delta was established by the founding shareholders of Motseng Investment Holdings, which was founded in 1998 as a provider of support services to landlords, property funds and property managing agents. In 2002, it expanded into the property sector through a joint venture with Mariott Property Services.
Delta will be managed by MPI Asset Management, the same management team that has been managing the properties owned by Delta to date. The asset management team has over 75 years’ experience collectively, and has been instrumental in establishing the property portfolio and positioning Delta as a landlord to government and SARS.
The property management of Delta will be undertaken by Motseng Property Services, a subsidiary of Motseng Investment Holdings, who has competently managed Delta’s existing properties to date and has a wealth of experience in the field of property management.
Sandile Nomvete, Delta’s CEO, characterises the company’s strategic advantage as its ability to identify and secure government-leased and SARS-leased properties and to collect rentals timeously. Delta has no bed debts. Nomvete identifies a particular Delta strength as having successfully redeveloped and refurbished buildings to tenant requirements, thereby enhancing the property value and yield. “We have achieved long-term lease renewals and market comparative escalations rates as tenant requirements and demands are proactively met and exceeded,” he says.
As much as 40% of the portfolio is in Gauteng, with 18% in KwaZulu Natal and 14% in the Western Cape. The remainder is fairly evenly spread throughout the other provinces.
Nomvete maintains that it is important for black empowerment property companies to have government as a tenant. “After all, government goes out of its way to actively support emerging black landlords,” he says.
© Property Wheel