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Disposal of Fort Drury, Katleho, Cna building and WB Centre properties
DELTA PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
JSE share code: DLT
ISIN: ZAE000194049
(Approved as a REIT by the JSE)
("Delta" or the “Company”)
DISPOSAL OF FORT DRURY, KATLEHO, CNA BUILDING AND WB CENTRE PROPERTIES
1. Introduction
Delta shareholders are hereby advised that the Company (“Seller”) has entered into separate agreements (“Agreements”)
with DMFT Property Developers (Pty) Ltd (“DMFT"), Mr Qianghua Huang and Red Caviar Holdings (Pty) Ltd (“Red Caviar”)
(collectively the “Purchasers”), to dispose of four of its properties (“Disposals”) as detailed below:
1.1 the disposal to DMFT of the property situated at the corner of Markgraaff and St Andrews Streets, Bloemfontein,
together with all buildings and improvements thereon, as more commonly known as “Fort Drury”, for a cash
consideration of R51.5 million;
1.2 the disposal to DMFT of the property situated at the corner of Selborne and Markgraaff Streets, Bloemfontein, together
with all buildings and improvements thereon, as more commonly known as “Katleho” building, for a cash consideration
of R12.5 million;
1.3 the disposal to Mr Qianghu Huang of the property situated at 62 Charlotte Maxeke Street, Bloemfontein, together with
all buildings and improvements thereon, as more commonly known as the “CNA building”, for a cash consideration of
R3.8 million; and
1.4 the disposal to Red Caviar of the property situated at 48-54 Chapel Street, Kimberley, together with all buildings and
improvements thereon, as more commonly known as “WB Centre”, for a cash consideration of R31 million,
collectively the “Properties” for a cumulative cash consideration of R98.8 million (“Disposal Considerations”).
2. Rationale and use of proceeds
The Delta board of directors (“Board”) continues to confirm the strategy for the Company as being underpinned by the
Sovereign, with a more refined approach to the definition of Sovereign. As part of the strategy, and the optimisation of the
portfolio, it was agreed that the disposal of assets which were no longer strategic to the Company would be undertaken.
Fort Drury, Katleho, CNA building and WB Centre are considered as such assets.
The WB Centre is being sold at a discount to its book value due to the latest valuation undertaken, being a desktop
valuation, that was based on substantially lower vacancies. In addition, subsequent to the valuation, there has been a
further deterioration of the market. The current vacancy rate amounts to 47,2% following Woolworths’ decision to vacate
the WB Centre.
The CNA building is currently vacant and in need of refurbishment and an upgrade in order to bring it to a lettable state.
The Katleho building is currently completely vacant. The combined vacancy rate between the Fort Drury and Katleho
buildings, which are being sold as a package as they are notarially tied, amounts to 67.9%.
The Disposal Considerations will be utilised by the Company to reduce debt (thereby reducing its Loan to Value (LTV) and
interest payments). This will have the effect of reducing LTV by 0.5% and reducing vacancy levels by 0.6% from 31.3% (at
28 February 2022) to 30.7%.
3. Terms and conditions of the Disposals
3.1 Purchasers
The ultimate beneficial shareholders of:
• DMFT are Mr David Mabilu and his family; and
• Red Caviar are Ms Jade Jezhua and Anita Muller, Messrs Suleman and Yusuf Bemath, and Messrs Dawood,
Suleman and Haroon Bemat.
None of these Purchasers are ‘related parties’ in terms of the JSE Limited Listings Requirements.
3.2 Sale
The Seller has agreed to sell, and the Purchasers have agreed to purchase the Properties, with effect from, and
inclusive, of the date on which the registration of transfer of the Properties into the names of the Purchasers is
effected. The Company anticipates the date of transfer of the Properties to be on or about 31 October 2022.
3.3 Disposal Considerations
The Disposal Considerations payable for the Properties by the Purchasers is R98.8 million (exclusive of VAT), payable
in cash on the date of registration of the transfers.
3.4 Conditions precedent
The Disposals are conditional on the fulfilment of the conditions precedent that signed resolutions be provided by
both the Seller’s and Purchasers’ boards and/or investment committees approving the Disposals.
3.5 Representations and warranties
The Agreements contain representations and warranties by the parties in favour of one another which are standard
for transactions of this nature.
4. Financial and property-related information in respect of the Properties
Fort Drury and Katleho1 CNA building WB Centre Total
Location: Corner Markgraaff and St 62 Charlotte Maxeke 48-54 Chapel Street,
Andrews Streets, Bloemfontein Street, Bloemfontein Kimberley
Corner Selborne and Markgraaff
Streets, Bloemfontein
Gross lettable area: 16 386m2 2 489m2 7 639m2 26 514m2
Weighted average rental R72,5/m2 R45,2/m2 R109,6/m2 R80.6/m2
as at 28 February 2022:
Net operating R7,4 million (R0,9 million) R0,9 million R7.4 million
income/(loss)2:
Effective date of the On or about 31 October 2022, On or about 31 October On or about 31
Disposal: being the anticipated transfer 2022, being the anticipated October 2022, being
date of the Property into the transfer date of the the anticipated
name of the Purchaser Property into the name of transfer date of the
the Purchaser Property into the
name of the
Purchaser
Vacancy rate as at 28 47.6% 73,3% 47,2% 49.9%
February 2022:
Vacancy rate at date of 67.9% 100.0% 47.2% 64.9%
this SENS announcement:
Value of the Property as R71.5 million R5.7 million R73.7 million R150.9 million
at 28 February 2022:
Disposal Consideration R64.05 million R3.75 million R31 million R98.8 million
(exclusive of VAT):
Discount to market value: (10,0%) (34,7%) (58,0%) (34.5%)
Sector: Office Office Office
Notes:
1. Although Fort Drury and Katleho operate independently, the two buildings are notarially tied and therefore being
sold as one.
2. The net operating income in respect of the Properties has been extracted from the Company’s results for the year
ended 28 February 2022, which were prepared in terms of International Financial Reporting Standards.
3. The valuations were performed as at 28 February 2022 by Real Insight, CBRE and Realworx Property Valuations who
are independent from the Company and registered as a professional valuers in terms of the Property Valuers
Profession Act, No. 47 of 2000.
4. The financial information in this announcement is the responsibility of the Board and has not been reported on or
reviewed by Delta’s auditors or a reporting accountant.
5. Categorisation
The Disposals for Fort Drury and Katleho, and the WB Centre are each classified as Category 2 transactions in terms of the
JSE Listings Requirements. Accordingly, they are not subject to shareholder approval.
Johannesburg
05 August 2022
Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Date: 05-08-2022 01:00:00
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