Delta Property Fund (DLT) H1 2025 earnings summary

Executive summary

• Portfolio consists of 86 properties valued at R6.6bn, with 75% sovereign office tenants, and is being reduced through ongoing disposals of non-core assets.

• Achieved progress in turnaround strategy despite macroeconomic headwinds and high interest rates, with signs of economic recovery and reduced vacancies.

• Strategy centers on debt reduction, cost containment, and evolving into a smaller, more sustainable REIT.

• Net operating income rose 4.3% to R365.8m, driven by portfolio optimisation, cost control, and lease renewals.

• No interim dividend declared for the period.

Financial highlights

• Rental income increased by R10m to R584m; net operating income up by R15m to R366m compared to the prior period.

• Profit for the period declined to R29m from R56m, mainly due to fair value losses on Grit Real Estate investment.

• Revenue rose 1.7% to R586.2m; property operating expenses increased 0.5%.

• Funds from operations per share stable at 8.1 cents; net asset value per share increased to R3.6.

• Finance costs decreased to R237.4m due to capital repayments.

Outlook and guidance

• Focus on further debt reduction via property disposals and cost containment, with a medium-term goal to return to regular distributions, contingent on disposal program success and lender consent.

• Anticipates further reduction in vacancies and improved property valuations as market recovers in 2025.

• Interest rate cuts expected to save about R20m annually in finance costs.

• Office sector shows signs of stabilisation, but B-grade demand remains subdued due to oversupply and competition.