Delta Property Fund earnings decline as vacancies increase due to tough economy


CFO Shaneel Maharaj says that the tough economic environment led to a loss of tenants.

Delta Property Fund has announced its financial results for the year ended 29 February 2020, reporting a full-year distributable earnings decline of 38.1 percent to 45.69 cents per share, “primarily due to rental reversions on leases renewed, increased vacancies within a challenging economy and corporate tax payable on earnings retained”. 

The results included: 

  • Full-year distributable earnings of 45.69 cents per share
  • Cash generated from operations of R452.7 million
  • Disposal of non-core assets totalling R153.5 million
  • Extended R3.8 billion in expiring debt facilities
  • Renewed 211 764m2 expiring leases
  • Concluded 17 344m2 new leases

“Getting traction from the government in concluding leases has been challenging, which further compounds the effect when extending debt facilities at albeit higher rates and fees,” says Delta Property Fund CFO Shaneel Maharaj

He adds that the tough economic environment also led to loss of tenants, which increased the company’s vacancy profile. 

“The overall effect was pressure on earnings and reduced dividend payout,” he says. “Reversion on leases renewed and increased vacancies also had a negative impact on property valuations, which pressurises the loan to value ratio of the business.” 

The company’s net property income decreased by 9.6 percent and the increased vacancies contributed to certain fixed costs not being recoverable. This increased the gross cost to income and net cost to income ratio to 34.8 percent and 20.7 percent respectively.

As for opportunities, Shaneel says they were difficult to come by, especially within the property sector. “However, we did embark on merger initiatives which did not materialise.”

According to the results, significant effort was focused on renewing leases instead. 

“Despite the current and future market uncertainty and a challenging economic environment, management will continue with its disposal programme relating to the existing R1.3 billion non-current assets held for sale."


While the reporting period closed before Covid-19 impacted South Africa, the Delta board of directors decided not to declare a final dividend for the six months ended 29 February after carefully considering the forecast solvency and liquidity requirements of the group in light of market uncertainty and contractual capital expenditure. 

Shaneel says reporting during Covid-19 has, surprisingly, not been that challenging. “The use of electronic mediums supplemented the process very effectively, like Dropbox for information sharing and Microsoft teams for effective engagement.” 

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