Delta Property Fund eyes growth amid tough market

Highlights

• Net operating income up 10.34% despite flat revenue and macro headwinds.
• Vacancy rate down to 31.9%, with core portfolio improving to 18.4%.
• Debt maturity extended and cost base cut by 12.8%, reflecting strong financial discipline.

Portfolio Performance & Property Investment Strategy

Delta Property Fund, a Level 1 B-BBEE REIT, operates a portfolio predominantly underpinned by sovereign leases, giving it a degree of stability in an uncertain market.

The fund has made measurable strides in aligning its asset base with its core strategy:

• Core assets now show a much healthier vacancy rate of 18.4%, down from 24.2% a year ago.
• Disposals of non-core properties, six already transferred, four more post-year-end, and eight awaiting transfer are helping Delta streamline operations.
• The Group’s focus has shifted to optimizing a core portfolio valued just over R4 billion, setting the foundation for future growth.

Delta also continues to battle high vacancy rates in the broader B-grade office market, but targeted disposals and lease renewals are steadily improving occupancy and lease term stability.

FY25 Results Highlights

• Net operating income rose 10.34% to R721.4 million.
• Revenue remained largely stable at R1.14 billion, down just 2% year-on-year.
• Net loss widened to R104.2 million due to non-cash fair value losses and higher credit impairments.
• Property operating expenses cut by 12.8%, saving over R60 million.
• Vacancy rate reduced to 31.9% (from 33.4%), with core portfolio vacancies improving to 18.4%.
• Six properties sold for R157.0 million; a further R214.8 million in disposals pending.
• 79 lease renewals (110,723m²) and 22 new leases (22,068m²) concluded.
• Cash from operations of R565.4 million used for finance cost and debt repayments.
• R1 billion in non-core assets still held for sale, signaling further streamlining.

CEO Quote

“Our turnaround strategy continues to gain traction, despite a challenging market. We’ve made meaningful progress in reducing vacancies, managing costs, and simplifying our portfolio. These steps are setting the stage for a leaner, more sustainable Delta in the medium term.” Bongi Masinga, CEO, Delta Property Fund

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Why Invest in Delta Property Fund?

1. Proven Turnaround Strategy: Despite headwinds, Delta has delivered NOI growth, cut costs, and made significant leasing gains.
2. Focused Portfolio Realignment: The fund is actively reshaping its portfolio toward more stable, high-performing core assets.
3. Sovereign Tenant Base: A significant portion of Delta’s portfolio is leased to government tenants, supporting predictable income streams.
4. Improved Liquidity & Debt Management: Renewed and extended debt facilities across major banks improve Delta’s financial flexibility.
5. Commitment to Transformation: As a black-managed, substantially black-owned REIT, Delta is uniquely positioned to benefit from government-aligned property demand and ESG-focused investment mandates.

Outlook

With R1 billion in non-core disposals still in progress and the macro-economic outlook expected to gradually improve, Delta is well-positioned to emerge as a more efficient and focused REIT.

Management expects ongoing efforts in vacancy reduction, lease management, and capital optimisation to support improved performance in the years ahead.

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