Delta Property Fund conclude R500m yield enhancing acquisitions

Posted On Wednesday, 03 June 2015 10:10 Published by
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Delta Property Fund concludes agreements to acquire 15 property letting enterprises from Orthotouch Limited for R507 000 000.

Delta Property Fund

The Acquisition is in line with Delta’s strategy of actively pursuing yield accretive investment opportunities and leveraging its expertise as a sovereign underpinned REIT.

Delta has an existing portfolio of three smaller assets located in the Bloemfontein central business node. The Acquisition provides an opportunity to further diversify Delta’s geographic spread into Bloemfontein and offers redevelopment and letting opportunities which may lead to further value extraction for Delta shareholders.

The Acquisition supports Delta’s strategy of bulking up in regions where it has existing asset management and property management representation. The majority of the Properties are leased on a month-to-month basis to predominantly national and provincial government tenants at below market rentals and this has been confirmed through a due diligence process.

The board of directors of Delta are of the opinion that, following refurbishments and upgrades to the assets, longer term leases at market related rates can be negotiated. During the refurbishment of the properties Delta intends to make use of local contractors, sub-contractors and labour in order to support local employment creation. The Acquisition is yield accretive at 11.4% based on actual income and excludes any existing vacancies in the Properties.

Delta is of the opinion that it will be able to take advantage of this significant upside potential by filling these vacancies at market related rates. The Acquisition culminates two years of extensive negotiations, including financial and legal due diligences, conducted by independent 3rd party advisers. 

Last modified on Wednesday, 03 June 2015 14:01

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