Delta CEO Sandile Nomvete
Delta Property Fund, a specialist black-managed and substantially black-owned property fund with a significant sovereign underpin, today reported solid financial results for the year ended 28 February 2015.
Full year distribution grew by 15.7% to 84.07 cents per share, following the Fund’s change in capital structure and conversion to Real Estate Investment Trust (REIT) status during the year under review.
Delta CEO, Sandile Nomvete commented: “I’m very pleased with the results we achieved in a difficult trading environment. This is mainly as a result of our continued focus on the fundamentals such as managing lease renewals, vacancies, cost of debt growing the portfolio through yield enhancing acquisitions and refurbishments.
“I’m also proud to say that we received our first distribution from our investment in Delta International during the year. This is in line with our objective of diversifying Delta’s portfolio of government focused assets into other high-growth, specialist property sectors.”
During the review period, Delta continued to internalise its management team which supported a marginal reduction in the net cost-to-income ratio from 10.77% in the prior year to 10.16% for the reporting year.
Delta has remained consistent in its strategy to operate as a predominantly government tenanted fund with 59.3% of revenue being derived from the government office sector. The balance is split between other offices (32.5%), retail (5.9%) and industrial (2.3%).
During the year under review, Delta transferred R737.3 million of direct property acquisitions. These were acquired at an aggregate yield of 11.06%, adding 94 918 m2 to the portfolio’s overall gross lettable area (GLA). The average property value in the portfolio is R102 million with a weighted average rental per square meter for the full portfolio of R95.84.
Nomvete points out that although some of these acquisitions increased the vacancy rate from 4.6% in the prior reporting year to 7.1%, these vacancies were not paid for.
“Given our ability to refurbish and upgrade assets in the right location to tenant specifications, we are confident that these vacancies will be filled, adding to Delta’s forward yield,” he added.
Post year end, Delta successfully raised R735.1 million in an oversubscribed vendor placement. The proceeds were used to pay down existing debt facilities and to fund new acquisitions. Subsequent to the capital raise, Delta’s Loan to Value reduced from 49.9% to 45.72%.
Nomvete remarked that the South African property market finds itself in a challenging position, with low economic growth and rising costs.
“Despite this, we are confident that our continued focus on fundamentals and the defensive nature of our portfolio combined with prudent debt management will position us to achieve our forward guidance distribution growth of 8% for 2016.” he concluded.
- Distribution of 84.07 cents per share declared, up 15.7%
- R1 billion revenue achieved
- Loan to Value reduced from 49.9% to 45.72% post year-end
- NAV per share of R10.02 (2014: R9.28)
- Portfolio growth of 23.7% to R8.4 billion
- R737.3 million worth of direct property acquisitions transferred
- Maiden US$ distribution received from Delta International
- Oversubscribed capital raise of R735.1 million post year end