Delta Property Fund today announced its intention to participate in a private placement to invited investors by Delta International Property Holdings Limited.
In terms of the private placement, Delta will acquire approximately 14 714 628 common shares in Delta International at a price of US$2.00 per common share for an aggregate purchase consideration of US$29 429 256 or R312 273 830 as Delta will settle the purchase consideration in Rand.
Delta has secured US Dollar based debt facilities at interest rates of 4% per annum to fund the acquisition, resulting in a yield enhancing acquisition within the fund.
“This acquisition offers us immediate access to a US Dollar based investment, providing a Rand hedge. It is in line with our strategy of augmenting Delta Property Fund’s portfolio of mainly government let strategic commercial offices with other high-growth investments which we as Delta don’t have to manage.
“We are very excited about the growth opportunities Delta International stands to unlock on the African continent,” commented Delta’s CEO, Sandile Nomvete.
Delta International will be the first outright Africa property listing on the JSE. The Fund consists of quality office and retail assets underpinned by long-term leases, low vacancies and strong anchor tenants in Morocco and Mozambique.
Delta International offers attractive capital value and income growth potential with a US Dollar based forward yield of 7.8%.
Delta Property Fund also updated the market on its forecast distribution for the year ending 28 February 2015 and anticipates a distribution per linked unit of between 83 and 84 cents per linked unit, translating to distribution growth of between 14% and 15% over the prior comparable period.
“We are forecasting his considerable growth despite tough market conditions, mainly as a result of a reduction in debt following the disposal of Delta’s entire holding in Ascension for a cash amount of R349 million and our continued reduction of operational costs across the 78 assets in our portfolio,” said Nomvete.
“Although we remain committed to achieving double digit distribution growth going forward, economic conditions are increasingly weighing on the market as it struggles to absorb low growth and higher rates and utility costs,” he concluded.