Property giant sells prominent building in South Africa’s capital city for a R10.9 million discount

Delta Property Fund is selling one of its assets in Hatfield, Pretoria, to Nxtgen Student Housing for R35 million.

This asset, Hatfield Forum East, is valued at R45.9 million and will bring Nxtgen’s number of buildings to five.

On Tuesday, 21 July, JSE-listed Delta informed its shareholders that it has entered into a sale of letting enterprise agreement with Nxtgen.

Delta is a listed real estate investment trust that specialises in office accommodation to corporations, the government, and state-owned enterprises in central business district nodes.

The real estate giant has a portfolio of 790,000 m² in strategic nodes that include eThekwini, Pietermaritzburg, Cape Town, Tshwane, Johannesburg, Polokwane, and Mbombela.

Its main clients are the government and parastatals, including the South African Revenue Service, the Department of Home Affairs, and the Department of Public Works and Infrastructure.

In announcing its latest sale agreement, Delta explained that its Hatfield Forum East building in Gauteng is considered a “non-core” asset.

As Delta is undergoing a portfolio optimisation strategy, the company has decided to dispose of such non-core assets. It plans to use the sale proceeds to reduce its debt balance.

Hatfield Forum East is located in Pretoria and boasts 6,390 m² in gross lettable area, with a weighted average rental of R88.01/m².

It is a six-storey multi-tenant office building that currently has retail offerings on its ground floor.

The building’s current net operating income is R6.9 million, though it has a 39% vacancy rate. The asset is valued at R45.9 million.

Nxtgen plans to purchase this property from Delta for R35 million, significantly lower than its current valuation. Nxtgen specialises in student accommodation, and currently has four buildings in Gauteng.

Its student accommodation is located in Hatfield, Jorissen, and Rovere, and boasts 1,200 rooms across Nxtgen’s portfolio. 

These buildings are located near some of South Africa’s top universities, including the University of Pretoria, Wits, the University of Johannesburg, and Unisa.

Delta’s decision to sell Hatfield Forum East follows the completion of the sale of its In2Fruit asset in Ekurhuleni and its 88 Field Street property.

The net proceeds from these sales have been used to settle Delta’s outstanding debt in respect of these two properties.