A year after black-managed property loan stock company, the Delta Property Fund, listed on the JSE, it has posted distributable earnings of R116.7-million for the six months ended August 31, and accrued a distribution per linked unit of 32.51c – in line with the fund's forecast.

Reminding shareholders in its results statement that a direct comparison to the previous interim period could not be drawn as a result of the company’s listing over the period, Delta reported rental income of R242.8-million from its portfolio of 49 high-grade properties, the value of which exceeded R4.8-billion.

During the six months under review, the rental property-focused fund, which describes itself as catering chiefly for government and other “empowerment sensitive tenants”, completed the transfer of 29 properties valued at R2.7-billion.

The most costly of these were the R318-million Hallmark Building, in Gauteng, the R294-million Hensa Towers, in Limpopo, and the R239-million Embassy Heights, in KwaZulu-Natal, all of which are government offices.

The weighted average rentals per square meter per sector for the properties acquired were R104.90 for government offices, R82.97 for other offices, R60.91 for retail and R22.64 for industrial lets.

“Significantly, the lease expiry profile for the properties acquired shows 94% of the lease agreements only expire beyond February 28, 2018,” said the company.

In addition, Delta took transfer of a further five properties at a cost of R548-million subsequent to the end of August, taking the total portfolio value to R5.3-billion with a weighted average rental for these acquisitions of R132.95/m2.

This came as property expenses remained stable at 23.4% of contractual rental income, compared with 23.6% at February 28, while the weighted average escalation rate across the portfolio was 8.3% at the end of the six months under review.

An increase in vacancies in the Delta portfolio from 4.4% of gross lettable area at February 28 to 5.3% at August 31, was attributed to the vacancy acquired at the Embassy building, but which Delta believed would increase the forward yield of the fund once tenanted.

Looking to the company’s debt, Delta's net borrowings of R1.9-billion equated to a gearing ratio of 41%, with interest rates for 61.5% of borrowings as at August 31 having been fixed for a weighted average period of 3.5 years.

The group completed its debut commercial paper issuance in July off a newly established R2-billion domestic medium-term note programme registered with the JSE.

Looking ahead, the board expected a similar performance for the second half of the year, anticipating that the forecast year-end distribution per linked unit of R72.50 would be achieved.

“We will continue to focus on our strategy of growing the fund with yield-enhancing assets without compromising on quality. A key focus area of the executive management is to bed down all new acquisitions to ensure the optimal performance of the portfolio,” the company held.