Delta Property Fund: Navigating Challenges, Unveiling Resilience in South Africa’s Real Estate

  • Resilient Financials: Delta Property Fund's interim results showcase resilient financial performance despite a challenging economic environment.
  • Strategic Initiatives Pay Off: Implementation of portfolio optimization, debt reduction, and cost management strategies contributes to Delta's positive outcomes.
  • Optimistic Outlook: Delta remains optimistic about achieving positive outcomes, securing new leases, and divesting non-core properties amid market conditions.
By Lethabo Ntsoane

Delta Property Fund Limited has reported its unaudited condensed consolidated interim results for the period ending August 31, 2023. The financials reveal a resilient performance despite the persistently challenging economic environment. Delta, guided by a reinvigorated executive team, is strategically focusing on achieving maximum total return on capital while maintaining alignment with a diversified, risk-managed real estate investment portfolio.

Salient Features Showcase Strategic Improvements

Delta’s strategic initiatives are reflected in key salient features that underscore the company’s commitment to financial resilience and long-term sustainability. The following highlights define Delta’s current financial landscape:

Lease and Debt Metrics

  • Weighted Average Lease Expiry: The weighted average lease expiry has increased to 15.8 months, showcasing a strategic extension from the 13.2 months reported in February 2023.
  • Weighted Average Debt Maturity: Delta has successfully extended the weighted average debt maturity to 10.9 months, demonstrating a substantial improvement from 6.3 months in February 2023.

Financial Ratios

  • SA REIT Loan to Value: Delta has maintained a healthy Loan to Value (LTV) ratio of 60.0%, showcasing prudent financial management compared to 61.4% in February 2023.
  • SA REIT Cost to Income: The Cost to Income ratio has decreased to 45.4%, signaling efficient cost management in contrast to the 47.4% reported in August 2022.
  • Interest Cover Ratio: Although slightly reduced to 1.3 times from 1.4 times in February 2023, the Interest Cover Ratio remains solid.

Rental Performance

  • Average Rental Collections: Rental collections have remained robust at 101.5%, reflecting the company’s effectiveness in managing tenant arrears.
  • Rental Income: Despite a 9.2% decrease from R631.7 million to R573.8 million, the decline is attributed to rental reversions and a marginal increase in vacancies.

Financial Metrics

  • SA REIT Net Asset Value (NAV) per Share: The NAV per share stands at R3.7, exhibiting a positive trajectory from R3.6 in February 2023.
  • Profit for the Period: Delta has rebounded with a profit of R56.4 million, a significant improvement from the loss of R305.6 million reported in the same period last year.
  • Earnings per Share: Basic and diluted earnings per share have turned positive at 9.5 cents, a notable improvement from -43.0 cents in the previous period.

Strategic Moves Pay Off Amid Challenging Economic Conditions

The positive financial performance is attributed to Delta’s meticulous implementation of its strategy, which encompasses portfolio optimization, debt reduction, cost optimization, lease renewals, and reducing vacancies. Despite the persistently challenging economic environment, Delta has successfully navigated through these headwinds.

Portfolio Optimization and Disposals

Delta’s focus on portfolio optimization through the disposal of selected properties has contributed to the positive financial outcomes. Notably, the company reported a fair value gain of R12.5 million, primarily from its investment in Grit Real Estate Income Group (“Grit”). Dividend income of R5.8 million was received from the Grit investment.

Debt Refinancing and Disposals

Delta has undertaken significant debt refinancing efforts, renewing debt totalling R3.1 billion, positively impacting the weighted average debt maturity by 73.0%. Additionally, the company successfully concluded a revolving credit facility of R37.5 million with Nedbank, earmarked for working capital, capital expenditure, and tenant installations.

Property disposals have been a key part of Delta’s strategy, with one property transferred for R44 million during the reviewed period. Post the interim period, an additional property was sold for a gross consideration of R5.4 million. Four properties contracted with conditions precedent are expected to transfer within the next six months for a total consideration of R118.6 million. The proceeds from these disposals will be utilized to reduce the Group’s debt facilities.

Leasing and Vacancies

Delta renewed 23 leases totaling 97,045m² and concluded 5,526m² of new leases. This strategic move has improved the weighted average lease expiry to 15.8 months. However, vacancies increased from 32.9% to 34.5%, mainly due to a reduction in the CMH property GLA upon remeasurement.

Rental Metrics

The weighted average rental across the portfolio decreased from R125.33/m² to R114.64/m² compared to the prior period, primarily due to rental reversions, particularly in the Limpopo portfolio. Despite this, Delta’s average rental collections against billing remained high at 101.5% for the review period.

Financial Outlook and Prospects

Delta’s financial outlook is optimistic, with the company actively implementing its strategic initiatives. Positive stakeholder engagements nationwide have resulted in negotiations for both lease renewals and new leases. The company anticipates securing new leases for currently vacant properties and continuing lease renewals, contributing to an improvement in the weighted average lease expiry and sustained positive cash generation.

The prospects paragraph in the announcement emphasizes that the Group is on the right trajectory to achieve positive outcomes, and there is measured progress in divesting non-core properties, considering prevailing market conditions. It’s important to note that the prospects paragraph has not been audited, reviewed, or reported on by the Group’s independent external auditors.


Delta Property Fund’s robust performance amid economic challenges underscores the effectiveness of its strategic initiatives. The company’s focus on portfolio optimization, debt reduction, and efficient cost management has contributed to positive financial outcomes. As Delta continues to navigate the dynamic real estate landscape, its commitment to stakeholder engagement, lease renewals, and strategic disposals positions the company for sustained growth in the South African real estate market. Investors and stakeholders are encouraged to review the full announcement for a comprehensive understanding of Delta’s financial performance.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: Twitter: @NtsoaneLethabo