Delta Property Fund, the black-owned and managed real-estate group which is the largest listed landlord to the state, has sold R104.4m of its shares in Grit Real Estate, so it can reduce debt and supplement its capital spending.
Delta sold some 6.5-million shares in Grit, the only pan-African property fund listed on the JSE, for R16.06 a share in an off-market transaction, with the move reducing its shareholding in that property counter to 5.7%, from 7.8%.
Grit was co-founded by Delta CEO Sandile Nomvete and was called Delta International, then Delta Africa before being renamed Mara Delta after a merger with Mara Diversified Property Holdings. It was rebranded as Grit in 2017.
Delta spent much of 2019 re-signing leases with government tenants after three years of delays. More than three quarters of its revenue is earned from state entities.
Its earnings have come under pressure which prompted it to hold on to cash for refurbishing its buildings.
It paid only 40% of its distributable income out as a dividend for the six months to August, but said it managed to renew 40 of 59 outstanding leases largely with the national government in 2019.
At the end of August, Delta reported that finance costs had increased 19.3% because of higher interest rates and fees incurred on debt facilities. During the period, the company had extended R2.8bn in expiring debt facilities.
The company’s loan-to-value (LTV) stood at 44.3% at the end of the period, and it said it wanted to reduce this to 40% or below. Most fund managers want property counters to have LTVs of 30%-35%.
Delta, which has assets under management worth R11.3bn, expects its distributable earnings for its year to end-February 2020 to fall by 12%-15%.
The company is in merger talks with Rebosis Property Fund with Nomvete saying a marriage of the two groups would lead to a large, liquid diversified company with exposure to retail and office assets.
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