Another black economic empowerment (BEE) player looks set to explode into the listed property sector of the JSE. Led by Sandile Nomvete Delta Property Fund announced yesterday its intention to float its unit of the Johannesburg bourse.
The group said in a statement it has applied to the JSE to list in the “Real Estate Holdings and Development” sector and was planning to do so through a private placement before the end of 2012.
“Over the last four years we have built Delta into a serious contender in the property space by concentrating on our core competencies such as our ability to refurbish buildings to high grade specifications and identifying scarce prime properties in nodes attractive to government,” said Nomvete.
“The proposed listing is an exciting step forward for Delta. Our portfolio will offer investors stable, resilient cash flows and value creation potential. Management has a long-term view on the business and will manage it for capital growth and the delivery of superior shareholder returns.”
Delta has declared itself “a black-managed and substantially black-owned property loan stock company established by the founding shareholders and incorporated in March 2005”. The Fund’s primary niche and springboard to success has been the ability to strategically identify and secure Government and South African Revenue Services (“SARS”)-leased properties, with the aim of outperforming the market within the context of global market volatility.
On listing, Delta will own a portfolio of 20 well-established, mainly AAA to B grade high-quality office buildings across the country in nodes attractive to various government departments and SARS. The portfolio has been independently valued at R2.1 billion and comprises a total gross lettable area of 203 261 m2, consisting of 92% office space and an 8% retail component. The occupancy rate is 95,2%. Rental collections are managed very tightly and there are no bad debts. The Fund’s B-BBEE credentials positions it well to leverage the advantages of government tenanted buildings, such as single tenant occupancy, long-term leases, fixed lease escalations for the duration of the loan and a sovereign underpin.
Delta is externally managed by a 100% black-owned asset manager, qualifying the Fund for long-term government leases in terms of the provisions of the Department of Public Works. The asset management team has collectively over 75 years of property experience, and has been instrumental in establishing the property portfolio and positioning Delta as a landlord of choice to government and SARS.
The Fund’s management team has a 14 year track record with proven deal-making ability in property and have worked as a team for almost five years. The team offers a good balance of entrepreneurial drive and experience with long-standing working relationships with SARS and government.
The purpose of the listing and capital raising is to reduce Delta’s current gearing levels and provide the Fund with various funding options for future acquisitions. A pre-listing statement providing full details of the offering will be published in