Distribution growth of 45.93 cents per share was declared for the six months, up 7.1% compared to the same period last year.

Delta Chief Executive, Sandile Nomvete commented: “These results are indicative of our ongoing focus on doing the basics right. During the reporting period we successfully reduced Delta’s loan-to-value ratio to 41.0% from 47.2% at year-end, we settled or refinanced R832 million of debt and managed to renew leases to the extent of almost 60 000m2.

“Going forward, our primary effort remains focused on lease renewals, renewing debt facilities and further lowering gearing to below 40%.”

84.1% of the Fund’s debt is fixed through a combination of swaps and fixed rate loans over an average period of 2.1 years. The Group successfully refinanced or settled debt worth R832 million and continues with its strategy of disposing of non-core assets worth at R1.2 billion at 31 Aug 2016.

During the period the disposal and transfer of Tembisa Megamart for R206.0 million was concluded, with sale agreements for a further 10 properties currently underway. The net proceeds from the disposals will be used to reduce gearing and for investment in higher yielding strategically located assets.

Delta’s property portfolio as at 31 August 2016 is valued at R11.4 billion (including non-current assets held for sale) and consists of 115 properties with a total gross lettable area (GLA) of 1 003 028m2 . (This number excludes Delta’s 23.9% holding valued at R459 million in Mara Delta Property Holdings Limited, taking the overall investment portfolio to R11.80 billion.) A total of 17 properties, valued at R1.3 billion and a GLA of 199 355m2 , were acquired in the prior year and transferred in the reporting period. No new acquisitions were concluded during the six months under review.

Delta successfully renewed leases consisting of 59 815m2 and signed new leases for 10 860m2 . Vacancies remained relatively stable at 9.2% of GLA (2016:9.0%) and is expected to reduce to 8.0% after the conclusion of the 10 assets subject to signed sale agreements. This compares favourably with the SAPOA national average of 10.5%. The weighted average escalation in force at half-year was 7.1% with a weighted average rental per square metre of R102.69. Concluded Nomvete: “Our track record, the quality and strategic location of our assets and our industry leading Level 2 B-BBEE empowerment credentials positions Delta well to take advantage of the new government leasing framework proposed by the DPW’s Property Management Trading Entity.

“Highlights of the framework in its current format include occupancy of appropriate space at market related rentals, longer term rentals for empowered landlords on a sliding scale, the standardisation of lease agreements and office specifications as well as the roll-out of an automated payment system to increase efficiencies.”

The Company said that it expects property market macro-conditions to remain challenging, compounded by low economic growth and a volatile interest rate outlook. Management however remains positive that its defensive sovereign underpinned portfolio is well positioned to deliver stable distribution growth.

The Company indicated that it is confident of achieving a full year distribution growth of between 7% and 7.5%, based on a continuation in the current trading conditions.