Delta Property banks on South African govt ties
It is planning to sell 350m rand of 3-year secured debt
[JOHANNESBURG] South African government connections are paying off for Delta Property Fund Ltd's borrowing costs.
The company, which rents office space to the government, plans to sell 350 million rand (S$42.3 million) of three-year secured debt by the end of the month, chief financial officer Bronwyn Corbett said in an Oct 29 interview. Delta is seeking a yield of 6.9 per cent, compared with 7.5 per cent for its bank loans, she said. That would narrow the gap with South Africa's second-biggest real estate company, Redefine Properties Ltd, which sold 425 million rand of similar-maturity notes at 6.5 per cent in March.
Office demand from state-owned companies including utility Eskom Holdings SOC Ltd and Transnet SOC Ltd, the ports and rail operator, will help Delta grow faster than South Africa's gross domestic product, forecast to expand 2.1 per cent this year, Ms Corbett said. Government leases extending until at least 2018 accounted for 64 per cent of revenue for the six months ended August, she said.
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