Delta Property’s debt reduction efforts gaining traction

Delta CEO Bongi Masinga.

Delta CEO Bongi Masinga.

Published May 31, 2024


Delta Property Fund, a black-owned REIT, in its results for the financial year ended February 29, 2024, gained traction in reducing its debt burden and retuning to profit from operations.

Profit from operations increased significantly from a loss of R226.1 million in the prior financial year to R399.2m for the year under review.

Delta’s SA REIT Funds from operations per share increased by 68.5% to 18.7 cents from 11.1c in the prior financial year. Considering ongoing efforts to reduce debt, the board said it had resolved not to declare a dividend for the year under review.

CEO Bongi Masinga said: “Notwithstanding stagnant economic growth and a higher-for-longer interest rate environment, our consistent focus on cost optimisation, debt reduction, lease renewals and asset recycling continued to gain traction, with a much-improved performance against FY23 key metrics.

“We have a clear flight path to reduced loan-to-value and an improved interest cover ratio, that will reposition Delta for growth and the recommencement of distributions.”

Administrative expenses were reduced by 11.6% from R109.2m to R96.5m, while property operating costs were materially unchanged at R483.9m despite inflationary pressures.

It said: “The group generated strong cash inflow from rental income and the successful collections of outstanding arrears. The cash generated for the year comprised income from operations of R658.9m, interest income of R10.5m, and proceeds from the disposal of properties of R13.5m.”

The cash was utilised to pay finance costs, taxation, net defensive capex, and net debt repayments. As a result of these efforts, SA REIT Funds from operations increased 68.5% to 18.7c per share from 11.1c in the prior financial year, Delta said

Delta successfully disposed of Standard Bank Greyville, Nedbank Building, and Enterprise Park, for a combined amount of R88.4m, of which R73.5m was allocated to debt reduction.

It said it had also earmarked 43 non-core assets valued at R2.2 billion for disposal. Six properties valued at R144.9m were expected to transfer this calendar year.