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Johannesburg - Black-managed Delta Property Fund is on track to meeting its full year distribution, said CEO Sandile Nomvete in an interview with Fin24.
The group posted a 23% increase in distribution and improved its portfolio value to R7.2bn for the six months ended August 2014.
Distributable earnings of R180.5m were achieved for the six months, translating into a 40.01 cent per linked unit distribution, up 23.1% on the comparative period, the group reported recently.
“I’m very pleased with the results," Nomvete said.
He explained to Fin24 in a video interview that the group focused on efficiencies during the period under review.
"The cost-to-income ratio has obviously been that the board and management have managed very very strongly."
Nomvete said during the period, the group in-sourced its property management unit, which was previously externalised.
"This is expected to yield some cost savings for the fund, where historically we have run the property management cost at 2.5% of the rental income and this is expected to operate at 1.85% going forward and obviously the saving going through to unit holders."
Watch the full interview
The group also maintained its A2(ZA) short-term credit rating from Global Credit Ratings (GCR).
"We are proud to have maintained the A2 credit rating from GCR, which obviously shows the underlining risk factors in Delta is still solid."
The occupancy rate has also ticked up slightly to 95.3% from 94.7%.
Nomvete said this indicates a good performance from the fund, given that the property sector, particularly in the office market has been going through a very tough period.
"This for us shows the resilience of the sovereign underpin and I think bodes well for the fund going forward."
He said the sovereign underpin is still very much intact, adding that the split between government and non-government is sitting at a percentage of 54% to 46%.
"This is slightly below our stated maximum operating percentage of 60% sovereign underpin and 40% other. So there is room to bring in a slightly more government properties going forward."
Delta is confident of meeting its stated guidance for the full year distribution, said Nomvete.
"At this stage we are slightly ahead of that, but we don't want to state too much what those numbers would be - we are within range," he concluded.
- Fin24
