Delta Property Fund (DLT) H2 2025 earnings summary

Executive summary

• Portfolio of 83 properties valued at ZAR 6.4 billion, mainly government and SOE tenants, with a focus on lease renewals, disposals, and compliance with debt covenants.

• Emphasis on separating core and non-core portfolios, disposing of non-core assets, and optimizing costs.

• Strategic initiatives included debt reduction, lease renewals, and improving rental collections.

• Gradual improvement in business sentiment and cautious optimism for medium-term operational and financial performance.

• Key priorities remain debt covenant compliance, lease renewals, and rental income collection.

Financial highlights

• Rental income declined 1.9% to ZAR 1.14 billion, while net operating income increased by 10.3% to ZAR 721.5 million due to cost optimization and disposals.

• Portfolio value at ZAR 6.4 billion, down 3% from ZAR 6.7 billion; property disposals of ZAR 405.8 million (including pending transfers).

• Vacancy rate improved to 31.9%, with core portfolio vacancies at 18.4%.

• Net loss of ZAR 104.2 million, up from ZAR 77.6 million, mainly due to fair value losses, higher ECL, and increased taxation.

• Net asset value per share at ZAR 3.40, down from ZAR 3.50.

Outlook and guidance

• Sector fundamentals are strengthening, with anticipated medium-term operational and financial improvement.

• Expectation for loan-to-value to stabilize between 40-50% and interest cover to improve to around 2x.

• Ongoing cost pressures from municipal rates, electricity tariffs, and utility supply inconsistencies.

• Continued focus on non-core property disposals, cost optimization, and lease renewals to strengthen the balance sheet.

• Anticipate recommencement of distributions after further disposals and improved interest savings.