DELTA Property Fund, the dominant sovereign JSE-listed Real Estate Investment Trust with a portfolio of R7.9 billion, lifted SA REIT funds from operations (previously distributable earnings) by 17 percent to 36.91 cents per share in the year to March 31.
The specialist black-managed and substantially black-owned company, which is on the road to a turnaround, said its taxed loss improved to R149 million from R456m.
Rental collections stood at 112.7 percent (87.03 percent). Some R112.8m in capital expenditure was executed on investment property.
Twenty-six properties with a market value of R787m had been earmarked for disposal.
“This is my maiden set of financial results, having joined Delta in February this year, and I am delighted the turnaround strategy implemented by the board is gaining traction despite serious macro-economic and sectoral headwinds,” chief executive Siyabonga Mbanjwa said.
He said in a telephone interview that the results were the outcome of “much hard work”, internal controls had been enhanced and the staff complement bolstered, which allowed them to focus on the renewal of long outstanding leases and execution on capital expenditure commitments. The BEE status had also improved to a Level 1 B-BBEE contributor.
“Our focus on rebuilding trust with our largest tenant, the Department of Public Works and Infrastructure, and our capex programme yielded positive results.
“We negotiated expired month-to-month leases with 126 233 square metres which concluded shortly after year-end,” said Mbanjwa.
Vacancies increased from 27.2 percent to 31.3 percent. He said the Sapoa industry average for B-grade offices was about 18.8 percent and a number of measures were under way to prevent further increases in vacancies, which were mainly in the non-sovereign segment of their portfolio.
These included bidding for additional tenants, providing rental incentives and the disposals, all of which were expected to reduce vacancies significantly.
Rental income as well as net property income decreased by 4 percent and 8.1 percent respectively, mainly due to negative rental reversions on the lease renewal at Phomoko Towers and the Hensa building, where nine-year, 11-month and five-year leases were secured respectively.
Property operating expenses increased slightly to R571.3m from R556.7m. Administrative expenses fell to R97.8m from R116.4m.
Delta’s portfolio consists of 99 properties with an investment value of R7.9bn and a lettable area of 909 530 square metres.
The portfolio value fell 4.1 percent to R7.9bn due to slow economic growth, exit rates and increased vacancies. Group loan-to-value increased slightly to 57 percent from 56.5 percent.
Delta was targeting a loan to value of 40 percent for the 2024 financial year.
The company did not declare a dividend, but was planning to resume dividend payments in the future based on the success of its turnaround strategy.
Business Report