In an industry first, the new asset management company will be wholly-owned by a trust to be established for the benefit of its black employees. The new asset management company (named Delta Property Asset Management (Pty) Limited) also employs the staff of the previous incumbent.   

“It was very important to the board that the new asset manager retains the corporate memory required to manage Delta’s growing asset portfolio, and to provide job certainty for staff,” commented Nooraya Khan, lead independent non-executive director of Delta.  

“We are very encouraged by our shareholders’ overwhelming support of this unique structure that supports our vision of being a leader as far as empowerment and transformation in the property industry is concerned,” Khan continued.   

Shareholders of MPI Property Asset Management Proprietary Limited (the previous incumbent) who are also shareholders of Delta were advised that, given the nature of the transaction, they would be deemed conflicted and should abstain from voting. Subsequently, Messrs JB Magwaza, SN Nomvete and J Mriga recused themselves from voting.  

Since none of the existing shareholders of the current service provider will be beneficiaries of the trust, Delta has engaged with the Department of Public Works to ensure that the new asset management company trust complies with the Department’s requirements for purposes of its leases with the Fund.   

“I want to stress that the terms of the agreement are no less favourable to Delta than the current agreement, which includes the monthly asset management fee of one twelfth of 0.35% of Delta’s enterprise value. We see this opportunity as a unique way to incentivise and retain staff, whilst maintaining and improving the standard of Delta’s overall portfolio,” Khan concluded.   

In February 2014 Delta announced its intention to action the termination clause in the existing asset management agreement, following ongoing differences among the shareholders of the appointed asset manager which the board believed were not serving the best interests of Delta’s shareholders.  

In terms of the existing asset management agreement, Delta is entitled to cancel the contract, subject to shareholder approval. Based on the methodology set out in the existing asset management agreement, the termination fee is not anticipated to exceed approximately R5 million.