“I think that we have bought over Phamog Properties at a very attractive yield which is fantastic for the firm [Delta],” Sandile Nomvete, Chief Executive Officer of Delta Property Fund told CNBC Africa on Wednesday.
The deal entails Delta Property Fund (Delta) acquiring full ownership of Phamogo’s Phamoko Towers and Temo Towers; both situated in Limpopo and worth 241 million rand and 135 million rand respectively.
Nomvete stated that these are A-grade properties and the tenants, which are mostly provincial government, are low risk and have signed long term leases.
“Delta is a sovereign fund and our tenants are predominantly provincial and national government as well as the South African Revenue Services,” he said.
He added that Delta has generally had a very good experience with government departments as they recognise that the lease agreements are binding legal documents and they usually stick to thier commitments.
“Government departments also want to be in good quality properties. The days of people going into poorly built government buildings are over,” Nomvete exclaimed.
According to reports, Delta’s tenants at the newly acquired Phamoko Towers are paying rental rates at about 140 rand per square meter while the tenants at Temo Towers are paying R160 per square meter.
Nomvete explained that Delta’s rates are much lower than the prescribed rates of the property research firm, Rode and Associates, Rode Report which are at 170 rand per square meter for A-grade space.
He added that Delta ensures that they do not over pay for assets that they acquire and even though there is a lot of competition in the property sector for good quality assets, Delta was fortunate enough to have worked with Phamoga Properties previously.
“We have previously dealt with the sellers of Phamoko before so this is almost repeat business for us,” he said.
“From a management perspective, we are quite pleased that we are continuously picking up the best assets in Polokwane, which obviously strengthens our standing in that city.”