Delta Property Fund, which came out of suspension on the JSE in July, saw its share price rise by more than 24 percent at one stage yesterday after it reported progress to reduce its debt in the six months to August 31. Photo: Supplied
Delta Property Fund, which came out of suspension on the JSE in July, saw its share price rise by more than 24 percent at one stage yesterday after it reported progress to reduce its debt in the six months to August 31. Photo: Supplied

Reit Delta Property Fund share price surges on the JSE following progress on reducing its debt

By Edward West Time of article published Nov 9, 2021

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DELTA Property Fund, which came out of suspension on the JSE in July, saw its share price rise by more than 24 percent at one stage yesterday after it reported progress to reduce its debt in the six months to August 31.

The company lifted its distribution 15.57 percent to 24.86 cents per share in the interim period, but decided not to declare an interim dividend while it continued to reduce its loan-to-value ratio.

The share price closed 19.35 percent higher at R0.74 yesterday on the JSE.

Interim chief executive Bongi Masinga said Delta had made significant traction with its debt reduction programme. Four properties were being sold for R176.5 million, the proceeds from which would be to reduce debt. The focus to reduce debt would continue, Masinga said yesterday.

Delta focuses on properties with a sovereign underpin, and would continue to operate as a specialist, listed real estate investment trust on the same basis, she said.

“Our focus remains on managing the sustainability of the business through portfolio optimisation, tenant retention and the execution of contractual capex commitments, within the context of a constrained economy,” she said.

Loan to value was at 55.7 percent, but the aim was to reduce this to below 50 percent by August 2020, and to below 40 percent by August 2024, she said in a telephone interview.

She was confident that Delta had “turned the corner” since its suspension. While the company might have to deal with litigation for some time relating to the reasons for its listing suspension, this would not affect the operations of the company. She said the company still had a long way to go to reach “its former glory”.

An average collection rate of 93.3 percent was achieved in the interim period, a time that was challenging for tenants in this economy.

Rental income was static at R723.98m from R724.7m at the same time in 2020.

The efforts of the executive management team to rebuild trust was underpinned by delivery on capital expenditure commitments, which remained a top priority to ensure that assets meet tenants’ requirements.

Capital expenditure on investment property amounted to R62m during the interim period, and management was on track with its capex programme of R183m.

Major projects completed and under way included R11m for the Poynton building, Pretoria; R6.3m at Veritas; R1.1m at Die Meent; R901 000 at Commissioner House, Bellville, Cape Town; R546 000 at 56 Barrack Street, Cape Town; R12.4m at 88 Field Street, Durban; R3.9m at 2 Devonshire, Durban; and R3.23m at SARS Kimberley.

Delta renewed 18 leases totalling 34 229 square metres, of which the majority were to non-government commercial tenants followed by retail and state-owned enterprise tenants.

Shorter term debt with Standard Bank had been renegotiated into longer term debt, while similar negotiations were under way with Nedbank, Masinga said.

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BUSINESS REPORT ONLINE

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