Delta Property Fund has struck a R19m deal to sell a Parkmore office property as it presses ahead with efforts to streamline its portfolio and reduce debt.
The asset, located on Fourth Street in Parkmore, Sandton, was sold to Afrocentric Intellectual Property, owned by Luvo Gwiliza, in a transaction that would result in Delta banking a premium on its most recent R18.1m valuation, the group said in a Sens announcement.
The deal is the latest in a series of disposals as Delta grapples with weak demand in the commercial office market, ballooning vacancies, and pressure to deleverage. The property, with a gross lettable area of 2,812m² and a high 57% vacancy rate, had long been flagged as noncore.
According to the group’s recent results, the property generated a net operating income of just more than R250,000, with average rentals at about R47/m².
The transaction, which is not subject to shareholder approval, includes a R1.9m non-refundable deposit that has already been paid, with the R17.1m balance secured by guarantees payable on transfer, expected in about January.
Delta also confirmed the successful transfer of two previously announced disposals: the Du Toitspan property in Kimberley and the Pine Parkade leasehold.
“Proceeds from all three disposals have been earmarked for debt reduction, as the group continues cutting loss-making or underutilised assets from its portfolio,” it said.
Delta, which primarily leases property to government departments and state-owned enterprises, reported a net loss of R104.2m for the year to end-February. The loss was largely driven by increased expected credit losses and higher taxation charges.
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