Delta Property Fund, the JSE-listed government tenant focused landlord, has new hands at the helm, who have a whole bunch of tasks to complete as they try to turn the real estate investment trust (Reit) around.
Around 80% of Delta’s revenue is earned from sovereign tenants renting offices. Delta has historically battled to get these tenants which include many local government departments, to sign long-term leases. The company recently reported that the value of its diversified property portfolio had fallen to R7.5bn at the end of August 2022 from R7.9bn in February 2022. The group has been selling non-core properties as it tries to get to a position where it owns the best sovereign-underpinned portfolio in South Africa.
Delta’s loan-to-value (LTV) sat at 58.2% at the end of August, up slightly from 57.8% at the end of February. Fund managers prefer for listed funds to have LTVs at 40% maximum.
Its funds from operations per share 9.20 cents for the period ended 31 August 2022, down tremendously from 24.86 cents per share at the end of August 2021.
“In performing the Solvency and Liquidity Test conducted in terms of section 46 of the Companies Act, which takes into consideration the working capital cash flow forecast, expected working capital requirements, capital expenditure requirements and contracted tenant installations relating to historic lease renewals, the Board, resolved not to declare an interim dividend for the period ending 31 August 2022, the group said.
CEO Siya Mbanjwa said he was optimistic that Delta would return to paying dividends in the next year.