Distributable earnings of R180.5 million was achieved for the six months, translating into a 40.01 cent per linked unit distribution, up 23.1% on the comparative period.

Delta CEO, Sandile Nomvete commented: "I'm very pleased with the results. Following our decision not to proceed with the tripartite merger in June this year, the team refocused on delivering against its high-growth mandate.

"We actively managed our debt by renegotiating funding margins and further diversified the Fund through a R501 million US Dollar linked investment in Delta International."

During the review period, Delta internalised its management team on a cost recovery basis. This lead to a saving from 2.5% to 1.8% across the portfolio.

"The decision to in-source our management team resulted in a cost saving as we are able to negotiate from a position of strength on service contracts such as security and facilities management on a national basis and to deal with our government relationship from a fund perspective.

"The team increased the overall portfolio occupancy from 94.7% to 95.3% during the period, whilst renegotiating lease renewals on 6.5% of the portfolio's GLA at a weighted average escalation rate of 8.0%," Nomvete explained.

Delta has remained consistent in its strategy to operate as a predominantly government tenanted fund with 63% of gross rental income being derived from the government office sector. The remaining 37% is split between other offices (28%), retail (6.1%) and industrial (2.9%).

During the review period, Delta further diversified its portfolio by investing R501 million in Delta International Property Holdings Limited ("Delta International"). Delta International is the JSE's first property fund to offer real estate investors direct access to immediate high growth opportunities on the African continent, outside of South Africa.

"This investment will allow Delta to access a dollar based investment at an attractive forward yield of 7.8%," commented Bronwyn Corbett, CFO and COO for Delta.

"What is equally significant is that we've been able to attract US Dollar funding for this investment at a very attractive rate of LIBOR plus 350 basis points," she added.

The Fund maintained its A2(ZA) short-term credit rating from Global Credit Ratings, on which Corbett commented:

"Since listing in 2012 we maintained our growth trajectory. Today the portfolio is valued at R7.3 billion, compared to R2.1 billion at listing. Going forward, our aim is to reduce the loan to value ratio to more comfortable levels in the medium term to provide us with headroom for further growth.

"During the period, we issued R340 million in commercial paper through our DMTN programme, at an average rate of 6.68%. Total drawn facilities are R3.66 billion at a weighted average interest rate of 6.68%.

"Our weighted average cost of funding is 8.07% after negotiating funding margins down and we fixed 70% of the debt for a weighted average period of 3.04 years."

Nomvete remarked that the South African property market finds itself in a challenging position, with low economic growth and rising costs.

"Despite this, we are confident that our continued focus on fundamentals such as maintaining the defensive nature of our portfolio and a long-term lease expiry profile combined with the active management of re-financing and interest rate risks, will position us well to achieve double digit distribution growth going forward," he concluded.