Delta International Property Holdings, the first JSE-listed property fund to offer investors direct access to high growth opportunities elsewhere in Africa, is targeting properties in Ghana and Nigeria in its “next wave” of acquisitions.
Louis Schnetler, the chief executive designate who will take up the position on August 1, said yesterday that it had identified an acquisition pipeline of more than $200 million (R2.1bn).
In the second phase it would also be looking for acquisitions in Angola, Gabon, Tanzania, Tunisia, Zambia and Zimbabwe.
He said Delta would largely focus on retail and office property acquisitions and to a lesser extent industrial and hotel sites. He added that the company envisaged owning a property portfolio valued at $1bn in the next three to five years but had a focused and not a shotgun approach to acquisitions.
Schnetler said the company would only consider acquisitions in African countries with clear property rights, a huge supply-demand mismatch, sustainable high growth and policy certainty.
He said a second strategy was to target oil-rich countries with huge dollar inflows, stressing that this was not only a commodity but also a consumption story because of the burgeoning middle class in these countries.
Schnetler said the fund currently owned four assets, some of which had been transferred and others that were in progress.
“Our portfolio is located in high-growth nodes in Casablanca, Morocco, and in Maputo, Mozambique. Assets include a modern, dominant shopping mall and new office complexes, tenanted by blue chip multinationals under long-term leases, such as Hennes & Mauritz, Marks & Spencer, Virgin Megastores, BP, KPMG and Hollard Insurance.”
Schnetler said the 30 000m2 Anfa shopping centre in Morocco and the Vodacom Building, one of three office blocks it had acquired in Maputo, had been transferred into the fund’s name.
Delta International listed a total of 43.9 million new shares on the AltX exchange of the JSE in July at an issue price equivalent to $2 a share to raise $87m by way of private placement.
The listing provided South African investors with access to a dollar-hedged investment without having to use their exchange control allowance.
Schnetler said acquisitions made to date had been 50 percent via equity funding with the balance through bank funding. He said future acquisitions would be funded on the same basis and it was planning road shows to raise equity for further acquisitions but the key was to get its first interim financial results published.
“We aim to raise a further $100m in equity. We will be trying to tap more into the international market and will be going on international road shows to the Middle East and Hong Kong.”
JSE-listed Delta Property Fund has a 25 percent shareholding in Delta International, which has a primary listing in Bermuda.
Schnetler said Delta International’s management held just over 10 percent of its shares. Stanlib also had a holding.
“Delta International offers an attractive US dollar based forward yield of 7.8 percent and about 70 percent free float, which should support the stock’s liquidity. We are excited about Delta International’s prospects on the continent. The JSE listing provides a solid platform for growth.”
Sandile Nomvete, the chairman of Delta International, said the company did not assume any development or tenant risk and would generally only acquire assets with secured income streams.
Delta International’s shares dropped 6.38 percent to close at R22 on AltX yesterday.