Delta Property Fund, which has a mostly government tenant base, is at an advanced stage of negotiations to sell 29 of its properties, as part of its strategy to improve the company by selling selected properties, reducing debt, improving costs and lowering the vacancies.
The company, valued at about R171m on the JSE, said on Tuesday in its results for the six months to end-August that it is looking to offload 43 noncore assets, valued at R2.2bn, including the 29 that are in advanced stages of talks, and five properties, valued at R124.5m, expected to be sold in the next six months.
“It’s a common misperception in the market that we are forced sellers of our assets. This is evident from the number of opportunistic offers received or offers on assets that are not for sale,” CEO Bongi Masinga said.
“Properties that are expected to transfer in the short term have all been disposed of at a minimal discount to book value, or, in some instances, at a slight premium to book value,” she added.
Delta’s property portfolio, valued at R6.9bn, includes 91 properties with a gross lettable area of 837,956m², about the size of 117 soccer pitches.
In the reporting period, one property was sold for R44m and another one subsequently for R5.4m, with the proceeds going to paying off the group’s debt.
Delta’s plan is to become a smaller, but more sustainable, real-estate investment trust over the medium term, according to Masinga, with core properties of about R4.7bn.
The group’s rental income declined 9.2% to R573.8m, property operating expenses 8.4% to R219.4m and net operating profit 7.8% to R311.9m.
Funds from operations (FFO) per share was down 11.1% to 8.1c, and the weighted average rental went from R125.33/m² to R114.64/m².
Over the past six months, its loan-to-value ratio improved by 1.4 percentage points to 60% and average rental collections 0.5 percentage points to 101.5%.
The company decided against declaring an interim dividend because of lower revenue and higher interest rates.
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