CAPE TOWN - Delta Property Fund said on Monday that its R10.6 billion portfolio proved defensive during the lockdown, with more than 80 percent of monthly rentals collected for April and May despite the country’s coronavirus (Covid-19) lockdown. The group said government departments led the way.
It said June collections were also tracking normally and that a further 10 percent was expected once sovereign tenants returned to work.
Chief executive Sandile Nomvete, said the group's exposure to retail and non-government tenants represented only 9 percent of monthly billings.
Nomvete said the group was engaging with tenants requiring rental assistance.
In the year to end February, Delta’s distributable earnings plunged 38.1percent to 45.69 cents a share, due to economic headwinds, rising vacancies and the expected rebasing of government leases.
However, “we are at the tail end of bruising negotiations, to be honest,” said Nomvete. The rebasing of leases had resulted in a R744 million write-down in the valuation of the properties.
The renegotiation of mainly 10-year leases with the government had been the main focus for the year, he said.
“A record number of leases totalling 211764m² were renewed and 17344m² of new leases were concluded during these challenging times.”
He said most of the leases had rebased in line with market guidance, and the longer lease terms and higher quality of earnings would improve Delta’s credit profile.
Net asset value fell 11 percent to R8.28 a share and was negatively affected by the fair value adjustment to investment properties.
A final dividend was not declared for the six months in the interests of the solvency and liquidity, in light of market uncertainty as a result of the pandemic, and contractual capital expenditure.
Covid-19 would have an impact on the business at least in the short-term, he said.
“However, we expect to conclude longer-term funding facilities at reduced pricing, which will improve cash flows and the health of the balance sheet,” said Nomvete.
Headway was being made on renewing the remaining three bulk leases totalling 83 134m², and an update to the market was expected shortly.
The remaining 45293m² of bulk leases had exit clauses that effectively rendered them three-month leases.
Delta Property shares declined 12.50percent on the JSE on Monday to close at R0.49.