Delta Africa (formerly Delta International) today announced solid interim quarterly results for the nine months ended 31 March 2016.
In addition to Anfa Place Shopping Centre in Morocco, the Company continued with its growth plans across targeted first wave jurisdictions on the continent, expanding into Zambia and Mauritius as well as acquiring additional assets in Mozambique.
Delta Africa’s recently announced merger with The Pivotal Fund Limited’s planned Africa fund, will result in further geographical expansion in Kenya and Nigeria.
Commented Chief Executive, Bronwyn Corbett:
“Despite a challenging operating environment, our relentless efforts are increasingly gaining traction and we declared a profit of US$22.1 million for the reporting period, compared to a US$4.9 million loss in the comparative nine month period”.
“We continue to enjoy strong support from our key institutional shareholders, having raised US$28.6 million and US$8.0 million post the period respectively. These raises were at a premium to net asset value and proceeds were deployed in expanding the portfolio through strategic acquisitions and reduced our cost of funding significantly”.
“The quality of leases acquired as part of the new portfolios reduced Delta’s operating expenses as a percentage of revenue significantly to 18.0% during the reporting period, compared to 25% in the comparative nine months.”
During the period, Delta successfully settled the vendor loan relating to the acquisition of Anfa Place Shopping Centre in Morocco by means of a long-term facility of US$51.2 million with Investec Bank. This loan was Investec Bank’s first entry into the Moroccan market and is denominated in Euro’s (60%) and US Dollars (40%), similar to the currency weighting of the Moroccan Dirham.
“The hard currency denomination of the loan allowed us to secure more favourable terms, versus the higher Moroccan Dirham lending rate”.
“The refinance transaction resulted in a significant reduction of our borrowing costs on the vendor loan, down from 8.9% to an all-in rate of 5.52%, of which 65% is at a fixed rate,” commented Corbett.
The Group has secured fixed interest rates on 73% of its interest rate exposure on property loans.
Subsequent to a number of acquisitions during the reporting period, Delta’s portfolio mostly comprises retail (51% of gross asset value) and Commercial Offices (44% of gross asset value) with the balance comprising Corporate Accommodation and Light Commercial.
The acquisitions partly offset Delta Africa’s geographical concentration risk, with 45% of the portfolio (by value) located in Mozambique, 35% in Zambia, 12% in Zambia and 8% in Mauritius.
Vacancies across the portfolio is 8.2% by GLA and mainly relates to the strategic exit of a non-performing tenant at Anfa Place Shopping Centre. Negotiations with an internationally recognised tenant were being concluded at the time of writing.
Delta Africa declared its third distribution of 6.17 US$ cents per share for the six month period ended 31 December 2015, which was paid on 14 March 2016. The Company remains on track to achieve its distribution growth forecast of between 3% and 6% on the prior year’s full year distribution of 11.28 US$ cents per share.