Black-owned property group to establish African Real Estate Fund

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Delta Property Fund CEO, Sandile Nomvete says the company under its new guise will move to the JSE’s main board once the capital raising and agreements to acquire the first tranche of properties are concluded. Delta Property Fund CEO, Sandile Nomvete says the company under its new guise will move to the JSE’s main board once the capital raising and agreements to acquire the first tranche of properties are concluded.

South African black-controlled Delta Property Fund plans to establish a new sub-Saharan Africa Real Estate Fund on the JSE in June, as it expects high dividend-paying strategies to become more appealing to investors.

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The fund will allow local and international investors to invest in retail, offices, warehouses and hotels across select sub-Saharan African countries excluding South Africa.

Once a continent that foreign investment shied away from, Africa has become an investment hotspot as more and more investors are attracted by the sub-Saharan region’s Gross Domestic Product (GDP) growth of more than 5% over that last three years.

Delta Property Fund is on a road show to raise R2.2 billion (US220 million) to fund its new African venture.

The plan is to reverse list a mixed portfolio of properties into AltX-listed Osiris Properties International, which has its primary listing on the Bermuda Stock Exchange.

Osiris changed its name to Delta International Property earlier this week. Nomvete says the company under its new guise will move to the JSE’s main board once the capital raising and agreements to acquire the first tranche of properties are concluded. Nomvete expects that to happen in the first week of June.

The fund will offer an initial income yield of 8% (in dollars). “We are primarily an income play. So we are looking to acquire only completed property assets.”

Delta International’s flagship property will be the 30000m² Anfa Place shopping centre in Casablanca, the second-largest mall in Morocco.

“We like the centre because it has a European flavour. It’s anchored by French supermarket giant Carrefour. Other tenants include UK-based Marks & Spencer,” he says.

The initial portfolio will also include two large office buildings in Maputo that house the Mozambique head office of Vodacom and insurer Hollard.

Nomvete says Delta has identified a further pipeline of deals worth $550m in a number of other African countries.

He concedes that the African (excluding SA) real estate space has become very competitive. But he is confident that Delta International Property’s management team, under retail property veteran Paul Simpson, has the knowledge and expertise to grow the fund’s assets to at least $1bn within the next two to three years.

Nomvete has built a reputation for delivering on his growth promises. When Delta Property Fund, which is involved in merger talks with fellow black-managed Rebosis Property Fund and Ascension Properties, was listed in November 2012, Nomvete’s prelisting target was to grow the mostly government-tenanted office portfolio from R2,1bn to R7bn within five years. That target was reached within 15 months.

Analysts welcome the advent of more specialist property counters to the JSE.

“We find fundamentals and opportunities in the rest of the African continent interesting and would love to see more funds with an African focus,” says Keillen Ndlovu, head of listed property at Stanlib.

Other property stocks that offer investors exposure to African countries besides SA, albeit only a small part of their overall portfolios, include Hyprop Investments, Attacq, Resilient Property Income Fund and Rockcastle.

According to the World Bank’s new Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects, economic growth in Sub-Saharan Africa continues to rise from 4.7 percent in 2013 to a forecasted 5.2 percent in 2014.

This performance is boosted by rising investment in natural resources and infrastructure, and strong household spending.

Read more on:

Morocco Property Market  |  Delta Africa Property Fund  |  World Bank  |  Delta Property Fund  |  Sandile Nomvete  |  Casablanca

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