Delta Property Fund (“Delta” or “the Fund”),today announced that it has entered into an agreement with Redefine Properties Limited (“Redefine”) for the acquisition of 15 government tenanted commercial offices.
“This acquisition is strategically important for several reasons,” commented Sandile Nomvete, CEO of Delta.
“It supports our strategy of pursuing yield accretive, government tenanted investment opportunities where we can leverage our expertise as a sovereign underpinned REIT”.
“This particular acquisition is yield accretive at 13.27% based on actual income and excludes any vacancies, and does not take into account the impact of anticipated capex of R600 million that will be deployed over three years”.
“Our proven track record and ability to upgrade C and D grade buildings to A and B grade assets will unlock a number of redevelopment opportunities that will translate into longer leases at market related rentals and a value uplift of the portfolio”.
“Since the entire purchase consideration will be settled in shares, Delta will significantly reduce its gearing, contributing to improving its credit rating in the process.”
The portfolio to be acquired consists of 13 office buildings and two parkades, one of which includes a retail component. These assets are mainly located in KwaZulu-Natal, Johannesburg and Pretoria and are predominantly leased to national and provincial government tenants. The portfolio’s total combined GLA is 191 668 m2, generating a net property income of R168 127 831 for the 12 months ending 28 February 2017. The majority of these assets are single tenanted with low vacancies.
The aggregate purchase price amounts to R1 255 833 860 and will be settled in full through the issue of 162 043 079 Delta shares to Redefine at an issue price of R7.75 per share. Once issued, the disposal of these shares will be subject to approval by Delta’s board.