Delta Property Fund to continue trading as a going concern

Delta Property Fund

Delta Property Fund has reported a profit from operations of R399.2 million for FY2024 in comparison to the loss of R226.1 million during FY2023. The Group says its improved financial performance can be attributed to reduced administrative expenses, better recoveries, and a lower fair value adjustment loss on its property portfolio.

The Group reported a lost of R77.6 million compared to a loss of R749.7 million during FY2024 with finance costs remaining its highest line item at R484.2 million (FY2023: R457.9 million).

Its administrative expenses decreased by 11.5% while its property operating costs increased by 0.2%. Its reported results considered a fair value loss of R217.2 million which includes a fair value adjustment loss on its portfolio of R180.1 million in comparison to FY2023’s loss of R833.6 million.

While dividend income was received from Delta’s investment in Grit alongside other income from tenant reinstatements, the Group’s improved financial performance was offset by a decrease in rental income of 5.4% largely due to rental reversions.

Strong cash inflows from rental income were generated through the collection of outstanding arrears. The cash generated for the year consists of income from operations of R658.9 million, interest income of R10.5 million, and proceeds from the disposal of assets of R13.5 million. These proceeds were utilised to pay finance costs of R474.8 million, taxation of R84.8 million, net capital expenditure of R36.7 million, and net debt repayment of R103.2 million.

Delta has renewed debt facilities with Nedbank to the 7th of April 2025 which were on a month-to-month basis and initially extended to the 7th of April 2024. Additionally, its Investec facilities were renewed for 24 months until the 30th of June 2025. The Group also concluded a revolving credit facility of R37.5 million with Nedbank.

The Group has reduced its overall debt by approximately R183.2 million (FY2023: R352.9 million) with the disposal of Standard Bank Greyville, the Nedbank Building, and Enterprise Park contributing R74.1 million to its debt reduction. The remaining R109.7 million will be funded from cash flow and dividend income.

During the year, Delta transferred three properties for R88.4 million. Post yearend, an additional six assets were sold for a gross consideration of R144.9 million with these proceeds allocated to reducing the Group’s debt facilities.

Management renewed 55 leases totalling 154 88m2 with an average lease term of three years. In addition, the Group concluded new leases totalling 11 542m2 with an average lease term of 3.4 years. However, portfolio vacancies have marginally increased from 32.9% in FY2023 to 33.4% in FY2024 primarily due to tenants that vacated buildings. Its weighted average lease expiry (WALE) has moved from 12.1 months during FY2023 to 15.3 months during FY2024.

The Group says it is “actively implementing its strategy and believes it is on the right trajectory to achieve positive outcomes, as demonstrated by these results.”

Delta’s Board has carried out a review of the going concern assessment and having considered its solvency and liquidity, couples with its cash flow projections,  concluded that the Group is in a financial position to meet its cash requirements for the future and to continue trading as a going concern. A divided was not declared for FY2024.

Delta’s LTV decreased slightly from 59.9% during FY2023 to 59.4% during FY2024.