Delta Property Fund, the black-owned and managed real-estate group which is seeking to merge with Rebosis Property Fund, says it is finally making progress in renewing national government leases after years of frustration.
Delta, which paid only 40% of its distributable income out as a dividend for the six months to August, says it managed to renew 40 of 59 outstanding leases largely with national government in 2019.
CEO Sandile Nomvete said he was happy with the set of financial results and he hoped that the group’s share price would respond positively and on a sustained basis to management’s progress.
The share price had been punished, falling more than 80% in the year to date by the end of last week.
But on Monday it closed 11.5% higher at R1.16 a share.
As much as three quarters of Delta’s income is drawn from government tenants, with 40.3% of its revenue coming from the the national government.
The company declared a dividend of 12.19c for the period, a 69% decline from the prior comparative period, as contractual rental income fell 3.5% to R766m. This was because of increased vacancies, disposals of assets held for sale and rental reversions.
The company had achieved distribution per share of 30.48c, but held off on its dividend so it could spend the cash on providing incentives to tenants who renewed their leases.
Delta, which has assets under management worth R11.3bn, expected its distributable earnings for its year to end-February 2020 to fall by between 12% and 15%.
The company would spend R40m on upgrading its Beacon Hill office park in King William’s Town following the conclusion of a five-year lease, while spending R32.5m on a fire-compliance project at its Poyntons building in Pretoria.
In 2018, then Tshwane mayor Solly Msimanga shut down Poyntons, which houses the department of correctional services on the basis that it was unsafe.
Nomvete said Delta and fellow black-owned and managed listed property group Rebosis were in continued talks to merge, having first announced their intention to do so on August 6.
They hoped to release information about a merger scheme including “an optimal capital structure and share-swap ratio” before the end of 2019.
Rebosis, which was founded by businessman Sisa Ngebulana, owns super regional shopping centres including Baywest Mall in Port Elizabeth and Forest Hill in Centurion.
andersona@businesslive.co.za
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