CAPE TOWN – Delta Property Fund’s distributable earnings plunged 38.1 percent to 45.69 cents per share for the year to end February 29, due mainly to economic headwinds, increased vacancies and the expected rebasing of government leases.
Net asset value for the specialist, black-managed and substantially black-owned real estate investment trust fell 11 percent to R8.28 a share and was negatively affected by the fair value adjustment to investment properties.
The board decided not to declare a final dividend for the six months ended February 29, 2020, in the interests of the solvency and liquidity requirements of the group in light of market uncertainty as a result of the Covid-19 pandemic, and the contractual capital expenditure.
“Our focus this past year was mainly on the successful renegotiation of leases. I am therefore pleased to report a record number of existing leases totalling 211 764 square metres were renewed and 17 344 square of new leases concluded during exceptionally challenging times,” said chief executive Sandile Nomvete.
“Most of these leases have rebased in line with our market guidance and the secured longer lease terms and higher quality of earnings will improve Delta’s credit profile,” he said.
The impact of Covid-19 would have an impact on the business at least in the short-term.
“However, we expect to conclude longer-term funding facilities at reduced pricing, which will improve both cash flows of the business and the health of the balance sheet in the medium term,” said Nomvete.
Headway was being made on renewing the remaining three bulk leases totalling 83 134 square metres and the group expected to be able to update the market on this shortly.
The remaining 45 293 square metres of bulk leases had exit clauses that effectively render them three-month leases.
“We continue to engage with the Department of Public Works to remove this clause in order for us to finalise these renewals,” Nomvete said.