Delta Property Fund is to sell five properties for R63.6m and use the proceeds to reduce debt and cut vacancy levels.
The properties, which are no longer deemed strategic to the company, are situated in Boksburg, Silverton, Marshalltown, Mbombela and Durban.
As part of the company’s business and portfolio strategy of optimisation, it was agreed to dispose of assets that were no longer strategic. In keeping with that strategy, the company had decided to exit noncore properties within its portfolio, it said on Monday.
All of the properties fell into the classification of “noncore properties” and were disposed of via auction, it said.
That sale method was selected primarily for the purpose of achieving an efficient disposal outcome on the properties, which collectively comprise a sub-set of the company’s portfolio that is significantly underperforming and diluting the overall portfolio performance.
This underperformance was due to a prolonged and high combined vacancy rate, with limited prospects of significant improvement in the short to medium term due to prevailing market conditions.
The disposals will reduce vacancy levels by 2% to 31.4%. The company further expected to reduce and minimise annual operating costs as a result of the disposals, thereby directly enhancing the company’s return on investment, it said.
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