Delta International's Africa trek gains traction

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Delta International CE Bronwyn Corbett says the idea is to grow the company's assets from the current US220m to around $1bn within the next three to five years. Delta International CE Bronwyn Corbett says the idea is to grow the company's assets from the current US220m to around $1bn within the next three to five years.

While Africa is still being punted as the world’s next big growth story, making a successful entry into the continent’s real estate markets is proving easier said than done.

Delta International, the JSE’s first pure African property play, can certainly attest to this.

The counter, which offers US dollar-based returns from Morocco and Mozambique, has had a tough 12 months. The company’s share price has slid by 27% since listing on the AltX in July last year.

Investor sentiment has been dented by a number of issues, including problems in setting up debt funding structures outside SA, delays in property transfers, currency movements, the unexpected departure of former CE Louis Schnetler earlier this year and the move to the JSE’s main board taking longer than expected.

“Though the investment case for Delta International is compelling, the company simply wasn’t able to deliver on all its prelisting promises,” says Keillen Ndlovu, head of listed property funds at Stanlib

However, it appears that management has dealt with most of the teething problems and is ready to take the company to its next growth phase.

Uncertainty around the structure has also been addressed with last week’s appointment of Bronwyn Corbett as the new CE. The 34-year old chartered accountant is a founder member of Delta International, along with entrepreneur Sandile Nomvete. Corbett is also a significant investor in the company in her private capacity.

Delta International, soon to be renamed Delta Africa, migrated to the JSE’s main board last month. The company is dual listed on the Stock Exchange of Mauritius.

Ndlovu believes a rerating is likely over the next few months as management continues to bed down initial acquisitions and adds more properties to the portfolio.

Currently, Delta International’s portfolio comprises one retail and four office buildings in Mozambique’s Maputo and only one building in Morocco, the 30711m² Anfa Place shopping centre behind the main swimming beach of a prime area which locals refer to as Casablanca’s Beverly Hills.

Though Casablanca is not as popular a tourist hotspot as Marrakesh or Fes, it is regarded as the country’s business hub and seen by European and UK retailers as a gateway into Africa.

Says Ndlovu: “We like the quality of Delta International’s assets acquired to date. The potential to unlock value offered by refurbishment and retenanting opportunities at Anfa Place is particularly attractive. And the opening of the five-star Four Seasons hotel adjacent to the mall in September should boost footfall and turnovers.”

Anfa Place will soon undergo a R150m refurbishment that will add some 3000m² of rentable space through the more efficient use of the existing food court area on the top floor of the three-storey mall. The centre is anchored by French supermarket chain Carrefour, Marks & Spencer, Swedish fashion brand H&M and Virgin Megastore.

Fast food outlet McDonald’s was recently signed up to complement existing food and beverage outlets including Burger King, Starbucks, KFC and Cinnabon. Management also hopes to lure more high-end international fashion retailers to the mall, such as LC Waikiki, Zara and Massimo Dutti.

Corbett said on an investor tour in Morocco last month that Delta International was in the process of negotiating a deal to acquire four more retail centres in the country in a joint venture with Carrefour associate Label’Vie.

The deal, which comprises centres sized between 5000m² and 28000m², is worth around R1bn and will allow Delta International to extend its Moroccan footprint from Casablanca to Marrakesh and Rabat.

“It’s a very attractive acquisition because we can buy these properties at yields of around 9% and partly fund the deal locally at interest rates of around 5%. It also provides a strategic partnership with one of the largest supermarket groups in the world.”

Corbett says the idea is to grow assets from the current US220m to around $1bn within the next three to five years. “Our immediate focus will be to grow our portfolio in Morocco and Mozambique but we are also considering Mauritius as our next jurisdiction.”

Delta International is currently trading at a forward yield exceeding 12%. That’s an attractive discount to the sector’s average 6,5% yield and has clearly not gone unnoticed by large asset managers such as the Public Investment Corp, which last month acquired a 25,87% stake in the company.


Read more on:

South Africa Property Market  |  Morocco Property Market  |  Louis Schnetler  |  Delta Africa Property Fund  |  Mauritius Property Market  |  Sandile Nomvete  |  Casablanca  |  Mozambique Property Market  |  Keillen Ndlovu  |  Bronwyn Corbett

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