Delta Property Fund grew its distribution per share 8% in the year to Februaryâ€š and managed to renew 80% of its 2015 expiring leases.
The black managed JSE listed real estate investment (Reit) is focussed on long-term sovereign underpinned properties. The company also acquired R1.2bn of government tenanted assets from Redefine Properties.
Delta entered into an agreement with Redefine for the acquisition of its government property portfolio consisting of 15 properties and a total gross leasable area of 191â€š668 mÂ² for R1.25bn at a property yield of 13.27%.
It issued 155-million shares valued at R1.2bn to Redefine in April. A remaining 7-million shares will be issued once the conditions precedent for the purchase of a final property have been met.
â€œContractual rental income increased 29.8%â€š benefiting as much 7.8% from weighted average rate escalations and 13.5% from new acquisitions.
"Net cost-to-income ratio was impacted by new acquisitionsâ€š increasing from 10.2% to 12.2%â€š and is expected to normalise during the new financial year once Delta takes over the management of these assets and undertakes the redevelopment work on the Free State portfolioâ€šâ€ Delta said.
Delta CEO Sandile Nomvete said its government tenanted properties were performing well. Delta has declared a full year distribution of 90.79c per share for the financial period to end-Februaryâ€š representing an increase of 8% over the prior year.
He expected more government tenants to move into B grade offices.
â€œWhile the domestic economy continues to face increasing headwinds and low economic growthâ€š the board and management remain positive that Delta's defensive sovereign portfolio is well positioned for any downturn.
â€œDelta's portfolio will not be impacted by the market conditions which impact B grade office portfoliosâ€š due to the need for government to occupy buildings in the major CBD nodes and Delta's majority sovereign underpin.
â€œWe believe that Delta's Level 2 B-BBEE status will support our efforts and ability to negotiate favourable longer lease terms both with government and other empowerment sensitive tenantsâ€šâ€ said Nomvete.