Delta Property Fund posts flat increase in distributions

Delta Property Fund‚ which leases office space mainly to the government and state-owned enterprises, on Tuesday reported only a 1.02% rise in distribution to 46.40c per share in the six months to end-August from a year ago.

Delta’s R11.3bn portfolio consists of 108 properties, with a total gross lettable area of 973,431m² and includes assets held-for-sale comprising 14 properties.

Contractual rental income was up 3.3% to R782.24m, but property operating expenses dropped 0.7% to R205.26m.

The like-for-like net property income was up 6.8% to R576.37m and vacancy rates for the period increased to 11.3%, from 9.2%.

The fund said: “Vacancies in our major nodes, being Pretoria CBD and Durban CBD, are 8.1% and 15% respectively, in line with The Rode Report [for the second quarter of 2017, on the state of the South African property market].”

Delta sold four properties — Samora House, 1 and 3 Ferreira Street and the Damelin Building — for R139.1m. The company said the proceeds would be used to reduce gearing, supplement capital expenditure and invest in higher-yielding assets.

In July this year, real estate investment trust Redefine Properties sold its 22.8% stake in Delta to a women-led empowerment consortium. The deal boosted Delta’s empowerment rating, which is essential to secure long-term government leases.

In terms of tenant breakdown by gross lettable area, 33.6% is leased to the national government and 13.7% to provincial government.

Delta shares were flat at R7.35 in midmorning trade on the JSE, giving the company a market value of R5.2bn.