DLT | Calling in reinforcements
Delta Property Fund (DLT) reported HY'18 DPS of 46.4c (+1.0% y/y) which was broadly in line with our forecast and consistent with reaffirmed FY'18 guidance of flat DPS growth. Like for like net property income growth was resilient at 6.8% despite a 210bps increase in vacancies. We view the organic performance during the period as temporary as a large proportion of leases are on a month to month basis and have not rebased to lower market rentals. There are two material events which have weighed on the company over the last year namely the bulk lease negotiation and the potential BEE deal. In the note we provide an update on these pending events, highlight the potential impact from the BEE deal, update our distribution growth forecast and valuation.Delta Property Fund Ltd. Delta Property Fund Limited is a real estate investment trust (REIT) company. The Company's focus is long-term investment in quality, rental generating properties situated in strategic nodes attractive to national government and tenants requiring empowered landlords. The Company operates through five segments: retail, office government, office other, industrial, and administration and corporate costs. The Company's portfolio consists of large assets, single tenanted by national government, provincial government, state-owned enterprises or large blue chip corporates under long leases. The Company's property portfolio is spread across office, retail and industrial sectors with focus on government-tenanted office portfolio. The Company's properties are located in the provinces of Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West and Western Cape. Its properties include Beacon Hill, Broadcast House, Campus Building and Anchor House.
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