Delta eyes stake in Delta International

Delta Property Fund CEO, Sandile Nomvete said this acquisition offers us immediate access to a US Dollar based investment, providing a Rand hedge.

Delta Property Fund, which recently sold all of its Ascension shares to Rebosis Property Fund, yesterday announced its intention to acquire 25% of Delta International Property Holdings Limited (Delta International).

The black empowerment property fund, Delta plans to participate in a private placement to invited investors by Delta International.

In terms of the private placement, Delta will acquire approximately 14.7-million shares in Delta International at a price of US$2.00 per common share for an aggregate purchase consideration of US$29 429 256 or R312 273 830 as Delta will settle the purchase consideration in Rand.

Delta has secured US Dollar based debt facilities at interest rates of 4% per annum to fund the acquisition, resulting in a yield enhancing acquisition within the fund.

Delta’s CEO, Sandile Nomvete said this acquisition offers us immediate access to a US Dollar based investment, providing a Rand hedge.

In February, a merger between three broad-based black economic empowerment (BEE) property groups — Delta, Rebosis and Ascension was proposed the companies, considering capital available to smaller market capitalisation REITs was increasingly constrained, driving consolidation and corporate activity to best serve the interests of the REITs’ linked unitholders and tenants.

However, the pontential merger was called off last month with the companies citing timing problems. Going foward, Delta decided to pursue opportunities in Africa by establishing a new sub-Saharan Africa Real Estate Fund on the JSE.

Delta International, formerly OSIRIS Properties International Limited and which has a primary listing on the Bermuda Stock Exchange, will be the first outright Africa property listing on the JSE.

Delta Property Fund also updated the market on its forecast distribution for the year ending 28 February 2015 and anticipates a distribution per linked unit of between 83 and 84 cents per linked unit, translating to distribution growth of between 14% and 15% over the prior comparable period.

“Although we remain committed to achieving double digit distribution growth going forward, economic conditions are increasingly weighing on the market as it struggles to absorb low growth and higher rates and utility costs,” he concluded.