June 11 2026 16:40
JOHANNESBURG, SOUTH AFRICA
Delta Property Fund said it returned to profitability in the year to end-February 2026 and that group would remain a going concern. It reported a 221.9% net profit increase to R127m for the reporting period compared with the 2025 financial year’s net loss of R104.2m.
The real estate investment trust (Reit)’s total revenue, excluding straight-line rental accruals, increased 0.9% to R1.15bn because of contractual escalations and recoveries of R226.2m. The group said the revenue was achieved despite a reduced portfolio following disposals, vacancies, and rental reversions.
Delta’s net operating income decreased 6.4% to R674.9m million from R721.4m a year before, because of higher property operating costs which increased to R473m for the period.
For the 2026 financial year, the Reit’s portfolio comprised 72 assets (FY2025: 83) valued at R6.3bn and spanning 718 328m2 GLA across eight provinces. Delta’s office space is primarily let to government departments, state-owned-enterprise, and private sector tenants. A problem has been that these government landlords have not resigned leases which has meant they’ve paid billions in rands more than they should have.
Delta renewed leases representing 139 666m2 of GLA during the period at a weighted average lease term of 1.3 years. Its team also concluded new leases of 20 881m2 with a weighted average lease term of 1.4 years.
The portfolio vacancies improved to 27.3% from 31.9% in FY2025, driven by property disposals and the conclusion of new leases with the WALE having decreased from 14.7 months to 12.9 months.
Delta’s average collection rate improved to 99.8% of billings from 95.1% in the 2025 financial year, with a total R39.7m provision for bad debts versus FY2025’s R61m.
The Reit disposed of 11 properties (64 077m2 GLA) for gross proceeds of R186.1m. One asset (2 812m2 GLA) was transferred post year end for R19m.
Four properties sold, with a combined GLA of 45 221m², were expected to transfer before the end of the current financial year for total gross proceeds of R112.6m. In early November 2025, Delta also disposed of its entire holding in Grit Real Estate, or 14.87- million shares for 5.45 pence per share.
Delta’s total interest-bearing debt decreased to R3.6bn during the reporting period (FY2025: R3.9bn) and renewed maturing debt facilities with funders. Nedbank had lent R2.4bn. This amount and and three Investec facilities were consolidated into a single facility, were renewed to March 2027. Post year end, Standard Bank renewed its debt facility which expires in May 2026. The Group also increased revolving credit facilities from R64.3m to R82m of which R56.5m had been drawn at the close of the period.
Delta’s finance costs decreased to R412.4m (FY2025: R463m) becasuse of its reduced debt levels following disposal proceeds with expected credit losses having increased to R27.4 million, driven by higher trade receivables.
The group’s SA Reit funds from operations (FFO) per share amounted to 17.3 cents compared with 15.1 cents for FY2025 with its Board resolving not to declare a dividend. This is problematic as Reits are supposed to pay at least 75% of their distributable income each financial year.
The group’s ICR improved to 1.5 times with its loan-to-value (LTV) ratio decreasing from a very high 59.5% to 56.7%. It might be time for Delta Property Fund to delist. The listings costs hurt the company.
alistair@propertyflash.co.za
