Good morning, ladies and gentlemen, and welcome to Delta Property Fund's pre-recorded results presentation for the financial year ended 28 February 2026. A live question-and-answer session will follow directly after this presentation.

You are welcome to submit your questions at any time during the webcast using the Q&A function below the logo on the top left-hand side of your screen. Today's presentation will be led by Delta's Chief Executive Officer, Ms.

Bongi Masinga, and Chief Financial Officer, Mr. Fikile Mhlontlo.

I will now hand you over to Bongi to begin the presentation. Over to you, Bongi.

Good morning, ladies and gentlemen, and thank you for joining us this morning. Our theme this year is Creating Sustainable Value.

This follows the work we set out last year under Focusing on Fundamentals. Financial year 2026 was an important year for Delta.

It was a year in which the business moved from stabilization towards sustainability, with measurable progress in profitability, collections, vacancies, debt reduction, refinancing, and the continued execution of our non-core program. I am sure by now you will have had time to digest the results released last week.

Notwithstanding the encouraging results, our immediate priorities remain focused on improving vacancies, renegotiating key leases on longer terms, and continued cost-saving measures combined with strong collections, all with the view of curing the covenant metrics in due course. The direction of travel has improved, and we believe it can be sustained, assuming no major macroeconomic shocks.

We are a stronger, leaner, and more focused business than we were a year ago. I will begin with the business overview before moving into the operational performance and the progress we have made on the turnaround strategy.

Fikile will then take you through the financial results, including our income statement, balance sheet, debt position, liquidity, and SA REIT funds from operations. I will return to the end to cover the conclusion and the way forward, after which we will open the floor for questions.

Financial year 2026 marks a turning point for Delta. The business delivered financial, operational, and strategic progress across several areas that matter directly to long-term sustainability.

We exited our listed share exposure in Grit Real Estate Income Group, simplifying the portfolio and applying the proceeds to debt reduction. We recorded positive valuation gains for the first time in more than five years.

We also returned to profitability with net profit of R127 million compared with a loss of R104 million in financial year '25. We have ensured that our tenants have water backup, especially in water crisis areas, improving tenant experience.

We also reduced the overall vacancy rate to below 30% for the first time in five years. That is an important operational marker as it shows that the portfolio optimization and leasing strategy are starting to translate into measurable improvement.

Taken together, financial year 2026 was a year of recovery, resilience, and renewed momentum. This slide summarizes the shift in the business.

The first theme is earnings recovery. Delta moved from a R104.2 million loss to a R127 million profit, a R231.2 million improvement supported by a positive fair value movement, strong cash generating generation, and materially strong collections.

The second theme is balance sheet resilience. We successfully refinanced material facilities with Nedbank and Standard Bank, improved our covenant metrics, and extended the maturity profile of our debt.

This reduces refinancing risk and gives management greater scope to execute the turnaround plan. The third theme is unlocking shareholder value.

The disposal strategy is progressing and the pipeline remains material at approximately R1 billion. Our objective here remains clear: recycle capital out of weaker, higher-vacancy, non-core assets and apply proceeds to deleveraging.

The foundations are stronger than they were a year ago. Trajectory is emerging.

Our focus is now disciplined execution and converting the progress made this year into sustainable earnings and sustainable distributions over time. I will now move to the operational overview.

This section covers the operating environment, the year's performance highlights, the split between core and non-core assets, leasing activity, and asset rationalization. We have been consistent throughout the reporting years.

We are managing the business with discipline, with clear separation between assets that support the future of Delta and assets that must be exited. The operating environment has improved in some respects while remaining challenging in others.

Interest rates during the year under review had stabilized compared with the prior period, and this had started to ease pressure on funding costs. Economic growth remains constrained, although the business sentiment and investor engagement across the listed property sector have improved.

Looking forward, the recent shift in the interest rate cycle is expected to constrain the pace of recovery. Geopolitical uncertainty, including potential supply disruption, could add pressure to fuel prices and inflation expectations.

For Delta, that matters because sustained inflationary pressure can delay the rate of relief or contribute to further rate increases. While Delta's income profile is less directly exposed to consumer spending, higher interest rates materially affect our ability to amortize debt.

Leasing pressure in the office market is moderating, although the market remains competitive, particularly in B- and C-grade office space. Tenants remain focused on value, service levels, location, building quality, and operating costs.

Cost pressures remain, such as municipal rates, utilities, electricity reliability, maintenance needs, and security costs continue to require active management. The conclusion is simple: that disciplined execution is critical.

The year's performance shows that strategic execution is translating into financial improvement. Profit increased significantly by 222% year-on-year.

Collections improved to 99.8%, supported by stronger collection efficiencies and focused arrear management. Debt reduced by R291.3 million, supported by non-core property disposals, the disposal of Grit shareholding, and scheduled amortization payments.

Covenant LTV improved to 56.7% from 59.5%, although it remains above 50% covenant threshold. ICR improved to 1.5 times from 1.4 times, although it remains below the 2 times requirement.

The disposal target remains material, with approximately R1 billion of assets remaining to be disposed of. This is central to improving leverage, reducing income drag, and strengthening the balance sheet of a sustainable position where the board will be in a position to consider paying distributions.

This slide gives a clear view of the portfolio split. Delta had 72 properties at year-end, with 48 classified as core and 24 as non-core.

The core portfolio generated approximately R1 billion of rental income compared with R145.3 million from the non-core portfolio. Net operating income, excluding straight-line adjustments, was R641.2 million from the core assets and R36.6 million from the non-core assets.

The difference in quality is clear. Core occupancy was 83.4% compared with only 41% in non-core portfolio.

The core portfolio had a value of R5.3 billion, while the non-core portfolio had a value of R1 billion. This confirms why the strategy is necessary.

We are not simply reducing the We are improving the quality of the business. The long-term Delta must be centered around assets that generate sustainable income and justify further investment.

Leasing remains one of the most important areas of management focus. During the year, we renewed 80 leases covering 139,666 square meters of GLA.

Of this, 65 leases and 126,122 square meters were related to the core portfolio. The average escalation achieved was 6.1%.

Reversions were broadly stable, with a reversion of only 0.3% across the portfolio. Importantly, the core portfolio recorded a positive reversion of 0.4%, while the non-core portfolio recorded a negative reversion of 6.0%.

The renewed weighted average lease was 1.3 years. This reflects the short-term nature of several sovereign renewals, particularly where leases are renewed for 12 months.

Extending lease duration remains a priority because longer lease commitments will improve income predictability, support future valuation stability, and have a direct bearing on our ability to refinance debt over longer periods at better interest rates. Major tenants renewed during the period include DPWI, SARS, and eThekwini.

In addition to renewals, we concluded 44 new leases covering approximately 20,881 square meters of GLA. The core portfolio accounted for 34 of these leases and 8,836 square meters of GLA.

The non-core portfolio accounted for 10 leases and 12,045 square meters of GLA. These leases contributed R11.5 million of signed annual rent, with average escalation of 7% and signed weighted lease expiry of 1.4 years.

The average rate achieved was R120 per square meter. In the core portfolio, the rate was R121.2 per square meter, and in the non-core portfolio it was R114.4 per square meter.

The new lease activity confirms that there is still demand for well-located space where the product, price, and service levels meet tenant requirements. Our task is to convert that demand into lower core vacancies and longer lease commitments.

Post-year-end, we signed the Rosebank we signed with Rosebank College to take up an initial 6,000 square meters of office space in Durban. Asset realization remains central to the turnaround strategy.

During the year, 16 properties were disposed of or transferred, generating property disposal proceeds of R318 million. These assets represented approximately 112,100 square meters of non-core GLA exited from the portfolio.

The quality issue is visible in the vacancy data. Around 70% of the disposed GLA had vacancy above 50%, and the average vacancy of disposed properties was 71%.

These were assets that placed pressure on income quality, cost recovery, management focus, and future capital allocation. By exiting them, Delta reduces operational drag and redirects management attention towards the higher-quality core portfolio.

We also disposed of Grit shareholding, realizing R18.7 million of proceeds. This is disciplined capital recycling.

We are moving from larger non-core portfolio towards a focused core portfolio that can support sustainable value. I will now move to the turnaround strategy.

The strategy has remained as agreed by the board. We are focusing on five key pillars: portfolio and capital optimization, leasing and business development, operational efficiency, people-centered, and rebuilding trust with our stakeholders.

Financial year 2026 shows that the strategy is gaining traction. The pillar of portfolio and capital optimization, this means focusing on core tenanted assets, executing disciplined disposals, applying proceeds to deleveraging, and improving overall portfolio quality.

The second pillar is leasing and business development. Here, the focus is on improving occupancy, renewing leases, enhancing tenant satisfaction, and maintaining service levels that support retention.

The third pillar is operational efficiency. This includes tighter cost controls, improved recoveries, better use of digital tools, and embedding appropriate ESG practices into day-to-day operations.

These pillars are practical and interlinked. They are designed to transform Delta into a resilient, sovereign-anchored REIT with a balance sheet that can support sustainable distribution.

The turnaround also depends on people and trust. On the people side, we are building a performance-driven and accountable workforce.

The business needs employees who are skilled, empowered, and rewarded for delivery. On rebuilding trust, we continue to engage transparently and ethically with funders, tenants, shareholders, employees, and other stakeholders.

This is especially important given Delta's legacy issues and the period of balance sheet pressure the business has experienced. Rebuilding trust is not achieved through messaging; it is achieved through execution.

That means delivering on collections, leasing, tenant installations, capex, disposals, refinancing, and governance commitments year after year. The outcomes achieved during financial year 2026 demonstrate solid progress.

On asset sales, we disposed of R336 million in non-core assets, supporting the reduction in LTV to 56.7% from 61.4% in year in financial year 2023. On debt management, we refinanced R3 billion in loans, lowered funding costs, and extended debt maturities.

On occupancy, the portfolio improved to 72.7%, driven by renewals, new leases, and selective disposals. On cost control, administrative expenses reduced by a further 8% despite inflationary pressures.

We installed water and backup generators to improve operational continuity and reliability. We also maintained our Level 1 B-BBEE rating and continued to strengthen stakeholder relationships.

The strategic benefit is clear: exiting low-growth and high-vacancy assets reduces operational drag, frees up cash flow, and supports lower leverage over time. This slide captures the journey from Delta before, to Delta now, and ultimately to the Delta we are building.

Delta is now a more stable business. Leadership is in place, and we are building a high-performance culture.

The governance framework has been strengthened. Refinancing has been achieved with major lenders.

Covenant metrics has improved. The business has returned to profitability.

Positive valuation movements have been recorded for the first time in more than five years. Core portfolio vacancy has been reduced to below 20%, and collections have recovered strongly.

Future Delta must be built on sustainable covenant compliance, extended debt maturities, lower leverage, a higher-quality core portfolio, stronger recurring cash flows, and the restoration of sustainable distributions. The transition is not complete; the foundations have been laid, and momentum is building.

This slide sets out the target shape of the business. Delta today has an asset portfolio value of R6.3 billion, an ICR of 1.5 times, 72 assets, debt of R3.6 billion, and LTV of 56.7%.

We are now working towards a more focused business, with an asset portfolio value of approximately R5.3 billion, ICR of 2 or better, 48 assets, debt of approximately R2.5 billion, and LTV of 50 or better or lower. The levers are clear: cost optimization, leasing, working capital discipline, and people.

These are the operational actions that will determine whether the financial targets are achieved. The consequences are equally clear: if we execute, Delta becomes a smaller, stronger, and more sustainable business.

That is why management focus remains disciplined and practical. ESG remains part of how we manage the business, particularly given Delta's position as a Black-managed REIT and one of the most empowered funds in the sector.

Three ESG-specific policies have been adopted: an environmental policy, a corporate social responsibility policy, and a sustainable supply chain policy. A risk materiality assessment and its impact has been completed to inform ESG priorities.

Our commitments include environmental efficiency, energy management, transformation and empowerment, and community engagement. For Delta, ESG must be practical and linked to operations.

Energy resilience, resource efficiency, tenant experience, transformation, and ethical supply chain practices all support the long-term sustainability of the business. I will now hand over to Fikile to take us through the financial results.

Thank you, Bongi, and good morning, ladies and gentlemen. I will now take you through the financial performance for the year, including income statement, the statement of financial position, debt management, liquidity, NAV, SA REIT funds from operations.

The key message is that the business delivered a return to profitability, improved collections, reduced debt, lowered cost of funding, and continued to strengthen liquidity management. At the same time, our ICR and LTV remain outside target covenant levels, which means that Delta needs to continue to strengthen its balance sheet.

The financial highlights show improvement across metrics. SA REIT LTV improved to 58.2% from 61.1% in February 2025.

Covenant LTV improved to 56.7% from 59.5%. ICR improved to 1.5 times from 1.4 times.

The weighted average cost of debt reduced to 10.3% from 11.2%. Rental collections improved to 99.8% from 95.1%, reflecting better collection discipline and stronger arrears management.

SA REIT funds from operations per share increased to 17.3 cents from 15.1 cents, and NAV per share increased to R3.60 from R3.40 in the prior year. The renewal of debt facilities during the year was also quite important.

It has it reduced near-term refinancing pressure, demonstrated continued lender support for the strategy. The total revenue, excluding straight-lining, increased by 0.9% to R1.15 billion from R1.140 billion.

This was achieved despite property disposals, vacancies, and continued rental pressure in the office market. Property operating expenses increased to R473 million from R422 million in the prior year, largely reflecting cost cost environment across areas like utilities, municipal charges, repairs, maintenance, and building operations.

As a result, net operating income was R674.9 million compared with R721.4 million in FY 2025. Administration expenses decreased further to R93.9 million from R101.7 million in the prior year.

This reflects the benefit of cost-saving initiatives and our continued focus on operating as a leaner business. The group recorded a fair value gain of R5.1 million compared with a fair value loss of of R222.5 million in the prior year.

This is the first positive valuation movement in more than five years and underscores our transition to a smaller but high-quality, more sustainable portfolio. Expected credit loss was R27.4 million, broadly in line with the prior year.

Net finance costs decreased to net R408 million from R460.4 million in the prior year. This was supported by lower debt and lower average interest rates.

After taxation of R41.16 million, the group reported a net profit of R127 million compared to a net loss of R104.2 million in the prior year in the prior year. This represents a significant improvement in profitability if one looks at the two years.

Turning to the balance sheet, investment property was R5.6 R5.69 billion, while non-current assets held for sale R611 million, combined balance R6.3 billion compared to R6.4 billion in the prior year. This reduction is consistent with the progress made in disposals and positive revaluation of properties during the year.

The investment in listed securities was reduced to zero following the disposal of Grit shareholding in November 2025. Total equity increased to R2.5 billion from R2.4 billion, supported by the profit generated for the year.

Interest-bearing borrowings decreased to R3.6 billion from R3.8 billion in the prior year. This reduction reflects scheduled amortizations, repayments funded from disposals.

The balance sheet is improving, however leverage remains high and a large portion of borrowings remains current. This is why refinancing, covenant management, and asset sales remain core priorities.

This slide shows the balance sheet trajectory over the last five years, and the key point is that the direction of travel is now clearer. Total interest-bearing debt has reduced by approximately R950 million since FY 2022, representing a 21% reduction.

That is meaningful progress, particularly against the operating backdrop of a listed property company in the office sector and sustained pressure from high funding costs. Covenant LTV improved to 56.7% from 59.5% in FY 2025 and 61.4% in FY 2023.

Although it remains above the 50% covenant threshold, it is now at its strongest level in five years. ICR improved to 1.5 times from 1.5 times last year, and is also the strongest ICR level reported in five years.

That improvement is important because because it is achieved with it has been achieved with a weighted average cost of debt that remains materially higher than it was five years ago. The cost of debt was 7.5% in FY 2022, peaked at 11.4% in FY 2024, moderated to 11.2% in FY 2025, and has now reduced to 10.3% in FY 2026.

The cost of debt has started to normalize, LTV and ICR improved, and reflects a strengthening balance sheet. The work ahead remains clear: we need continued deleveraging, improved operational earnings, disciplined cost management, and further execution of the non-core disposal program to move ICR and LTV to sustainable covenant levels.

Our capital management focus is designed to reduce balance sheet risk, strengthen covenant resilience, and position the group for long-term value creation. The group's debt funding remains concentrated and refinancing diversification remains a priority.

Nedbank represents 66% of debt funding, Standard Bank 16%, Investec 14%, State Bank of India 3%, Bank of China 1%. Our relationship with funders remains supportive, amicable, and positive.

Renewals during the period have been successful. This lender support is important because it gives the business time to execute the disposal and deleveraging strategy.

The Bank of China facility is expected to fully settle by December 2026 through monthly amortization. Over time, the objective is to improve maturity spread, reduce concentration risk, and create greater funding flexibility.

The debt maturity profiles remain an area of active management. R2.4 billion Nedbank facility, which represented the largest near-term exposure, has been renewed to April 2027.

R555 million Standard Bank facility has been renewed to November 2028. The R51 million Bank of China facility, as I stated above, is expected to be fully settled by December 2026 through monthly amortization.

The the renewal process for for R498 million Investec facility is expected to commence in the last quarter of FY 2027, and R94 million State Bank of India renewal process is expected to to commence in the first quarter of FY 2028. Our focus is to maintain constructive engagement with lenders, reduce refinancing risk, and align debt maturities with asset disposals and operational cash generation.

This this bridge shows the movement in debt during the financial year. Opening debt was R3.8 billion.

During the year, the group had advances of R15 million, capitalized fees R15.8 million, net interest accrual impact R1.4 million. Amortization payments reduced debt by R103.1 million, repayments from disposals reduced debt by R188.2 million.

The closing debt balance was R3.5 rounded up to R3.6 billion. The key point is that debt reduction came from two sources: operational cash generation and capital recycling.

Both are necessary. Scheduled amortization demonstrates that the business remains cash-generative, while disposal proceeds accelerate deleveraging.

Liquidity and cash management was in place throughout the year. Collections were maintained near historical levels, with a collection rate of 99.8%.

Strong collections are critical because they support cash conversion, reduce credit risk, and improve working capital stability. The priorities remain working capital management, cost control, preserving liquidity flexibility, and maintaining constructive lender engagement.

This slide sets out cash movement for the year. Total cash collections were R1.3 billion.

Sources included rental collections, revolving facility amounts that have been accessed, disposal proceeds, and other inflows. Uses of cash totaled R1.1 R1.3 billion.

Operating costs amounted to R684.9 million, finance costs R408 million, taxation R31.8 million, capex R80.4 million, and debt amortization of R103.1 million. The group maintained R36 million of undrawn facilities.

The cash flow profile reinforces the importance of collections and cost control. The business is operationally cash-generative, although finance costs and debt repayments continue to absorb a significant portion of cash generated.

The NAV bridge shows the movement from FY 2025 to FY 2026. Opening NAV, R2.4 billion.

Net operating income contributed R674 million, and other income contributed R18.7 million. Fair value adjustment added R5.1 million.

These positive movements were offset by expected credit losses of R27.4 million, taxation of R41.1 million, administration costs of R93.9 million, and net finance costs of R407.8 million. Closing NAV, R2.5 billion.

The key point is that NAV improved during the year, supported by profitability and positive fair value movement. The drag remains finance costs, which reinforces the need to reduce debt and improve the quality of income.

SA REIT funds from operations increased to R123.3 million from R108 million in FY 2025. On a per-share basis, SA REIT funds from operations increased to 17.3 cents from 15.1 cents.

The number of shares in issue remained unchanged at 714.2 million. The calculation starts with IFRS profit attributable to the parent of R127 million, after accounting for specific adjustments, adjustments for fair value, foreign exchange, and hedging activities, and income of a capital nature.

SA REIT FFO result is R123 million. This improvement is encouraging.

However, the restoration of distributions remains dependent on sustainable covenant compliance, lender alignment, continued debt reduction, and recurring cash flow stability. I will now hand back to Bongi for the conclusion and the way forward.

Thank you, Fikile. As we close, I want to return to the central message of this presentation.

FY 2026 was a year of meaningful progress. Delta returned to profitability, improved collections, reduced vacancies, lowered debt, refinanced key facilities, and continued to dispose of non-core assets.

The progress is real. The work ahead is equally real.

We remain focused on restoring sustainable covenant compliance and rebuilding the business into a more resilient, sovereign-anchored REIT. As we look ahead, our priorities remain practical and measurable.

The strategy continues to be anchored by the disposal program, moving the group closer to sustainable covenant compliance. Our capital structure must support the next phase of Delta's recovery, the focus being disciplined cost management, strong collections, and tenant retention.

These are the levers that protect cash flow and support the quality of earnings. Our medium-term objective is to restore covenant compliance and resume distributions on a sustainable basis.

Ladies and gentlemen, thank you for your time. This concludes our presentation, and we now open the floor for questions.

Thank you very much, Bongi. Ladies and gentlemen, thank you very much for joining us this morning.

Please remember to send through your questions by clicking on the questions tab at the top left-hand side of your screen. The first question we have is from an X or Twitter follower with the handle JSE Invest.

He's asking, is there a specific trigger, like clearing the 50% LTV covenant, that will unlock debt extensions beyond a year? Then a follow-up question is, LTV is close to 56.7%, once the concluded disposals and Parkmore register, what is the pro forma LTV and when do you expect to hit the sub-50% mark?

Thank you for the question. The timing in which one would expect the LTV to drop beyond or below 50% is really depending on the timing around the execution of disposals, the retention of key tenants, and interest rate environment.

If we then use the last three years as an example and look at how we have performed on those, it's difficult from a management point of view to say exactly when that would be, but it's depending on those kind of factors. Also when you say unlocking the long term in terms of debt funding term is also driven by the WALE.

The WALE is sitting at 12.9% and is really informed by the extent to which we've been securing some leases and what are the terms where applicable in those leases. It's a difficult question to respond to, but the trends are informing that we are in fact moving in the right direction in terms of unlocking the funding term that is acceptable to the organization, but also dealing with overall strategic issues inclusive of disposals.

Thanks. Thank you very much, Fikile.

Second question is from Donald Richardson, a private investor. He's asking how much of the reported net asset value is genuinely realizable?

What is the quality of the R1 billion disposal portfolio?

The earnings number which is informed by FFO, sitting at R123 million, is a genuine number. In our environment, there is a fair amount of amortization repayment, which is in excess of R100 million, that is being paid to the bank.

As much as one would have made or the organization has made that number in terms of distributable earnings, it's not in a position to distribute those, purely because of the sort of funding obligations, which is inclusive of repaying amortizations as a part of the obligation. Of course, we also go above and beyond that number as we use the proceeds to repay debt, proceeds from disposals of non-core assets.

Thanks. Thank you very much.

Then Gerald McIntosh, also private investor, is asking, how durable are the earnings when the weighted average lease expiry is only 13 months?

One could read the way the investor is reading this, but the WALE is informed or has a reason because most of the leases that were concluded were for a 12-month period. Our reading of our environment in terms of our tenants, in terms of how they renew these leases, it is durable.

It's just, contractually, one can't be saying it's durable 100%, but it is indeed durable.

If I may add as well. Thanks, Fikile, for that.

I do agree that because we are overweight sovereign and we all understand what's been happening within sovereign, especially DPWI, some of the things that the minister is trying to align, all they've done is extend leases by 12 months, hence our weighted average will also mimic that or look towards that. However, currently, we are being offered three 3 years, 5 years, some 9 11s.

Definitely we are hoping for this weighted lease expiry to improve.

Thanks. Thank you very much, Bongi.

Thank you, Fikile. Then Daniel Reyneke from Harvard House is saying, "Delta team, congratulations on the progress made this year.

Please may you provide more color on capital expenditure spent throughout the year? Has there been any feedback from tenants after capital expenditure?"

Our capital expenditure at the end of the financial year, I think, sat at R80 million, and a lot of it was spent towards upgrades of the look and feel of the building. Notably, if people have been to Cape Town, they will see that the NPA building looks quite different.

We did a revamp from ground to the top floor of our building that houses the national police in Nelspruit. We have revamped all our military buildings in Nelspruit.

Interestingly, yes, tenants have come back. They're very grateful.

In fact, they've even made us push forward some of the capex that we thought we would have delayed towards, cuz they've seen what's happening in other buildings. Definitely it's paying off.

I think some of the upward valuation also talks to that.

Thanks. Thank you very much.

Donovan Pilligadu from Vader Capital is asking, how soon before Delta pays a dividend? What is the difference between the carrying book value versus the fair value versus the selling price?

He's asking, are the values being written down to fair value before selling, because the sales price per square meter does not approximate the R8,700 per square meter as indicated?

I can take some of it, and some of it will come to you. Definitely in terms of our disposal, it does become a like in any business, willing buyer, and we are always a willing seller, especially we're in our non-core.

We do not adjust our pricing. We use our investment's valuation to market the price.

That's why even though sometimes we do see or we sell at a discount, it's not a discount too far removed from the valuation of that investment. How soon we then pay, Fikile, that's

When it comes to how soon dividends will be paid, it's depending on the timing and the pace of our disposal program. That's one element, because that will allow us to reduce debt substantially.

Some of the loan agreements are inclusive of a clause that says, in the event that you assume distribution, there would have been a consultation with the financial institution, being the funders. It's important that we progress our disposal.

That's a one one one one part of this. Also the second part is the extent to which amortization would have reduced.

They are sitting just over R100 million, which is our annual obligation towards amortization of debt. We are seeing in terms of the plans is that the Bank of China debt will be fully settled by December 2026, thus freeing cash to be available within the business.

Also we are also looking at how to optimize our own capex, given that we've been spending fair amount of capex up until now, which will continue to do so. It's difficult to pinpoint to a specific date, but there are indications that things are coming together, that in the medium term, there would be an indication of how are we addressing this particular question.

I think I must add, Fikile, if you don't mind, is that the biggest pressure that we've had are these amorts. Mm.

The minute we finish or we clear Bank of China, as Fikile had said, end of December this year, Mm. we will be able to see ourselves building up a bit of a cash reserve, Mm.

which now is the plan going forward.

Thanks. Thank you very much.

A follow-up from Donovan is, why was the change in shareholding regarding Sahara Capital's interest not JSE SENSed? Maybe from an investor relations perspective I can answer that.

Yes, please do.

The holding was done under a nominee company, which was based offshore. We subsequently, through the access to information, obtained the details, which was then held under the brokerage, and subsequently engaged with the brokerage.

Sahara Capital is in the process of releasing the necessary TRP documentation, which means we will publish it on SENS as soon as that has been received from the company. Then Trinity Nkgobeni from Anchor Stockbrokers asked several questions.

I'll just run it piece by piece. First one is, congratulations on the evident progress towards the turnaround.

What margins did you achieve on the Nedbank facility that was refinanced in April?

The Nedbank facility continues to be on margin of 3%, which is somewhat expensive relative to other facilities. As we go into the future, as we also do the disposals, we keep engaging with Nedbank in terms of improving pricing.

The relationship has matured and is quite supportive and good. We are hoping that in some future times, our future renewals will get a better margin.

Thank you very much. Then, given the mixed changes during the year, can you indicate what the core portfolio NPI growth was?

The core portfolio in terms of what we call net operating income has stayed relatively flat to almost a small decline of about 1.8% at R641 million. Last year it was R653 million.

The reason for this is really linked to operating expenses, very specific areas where we spent more than in other years improving and repairs and maintenance on HVAC, on lifts, and so those costs were a bit higher. Also inclusive of the municipal costs that tend to increase above inflation.

That has been the impact. We still believe in the core portfolio is the answer in terms of where this business is going.

Then,

are you able to give a high-level indication on who the buyers of your properties were? Do they buy with the intention to convert them into residential properties?

Sure we can. The majority of our buyers, as we are saying, the non-core, and the majority of our non-core properties are 50% vacant, the majority of the buyers have been your non-traditional office buyers, and they are buying for conversions.

Our buildings that we sold in Bloemfontein, I remember way back when we started, they've all been converted into resi or student accommodation, and that is the buyer that we are attracting. We are quite excited because some of the reports are saying the price of constructions have gone up.

To do greenfield in terms of construction is going to scale down a bit, and we are hoping that would benefit our conversion cuz the structure already exists.

Thank you very much, Bongi. Then a follow-up from Daniel from Harvard House is, has there been any significantly higher levels of inquiries from non-sovereign tenants?

Let me say, we did say in the report that we've attracted or we were able to land a very huge corporate client or non-sovereign tenant in terms of Rosebank College. What we've done on top of that, which is getting us that dilution in terms of sovereign, is we are working with API and we are working with Anvil Corporate Brokers, and we are leveraging off their scale and we're leveraging off their what's the word that I'm looking for?

Off their base of client pool, and that will give us that. Definitely we are seeing a lot of inquiries, but we must also bear in mind that our offices are in the CBD.

We are seeing that cuz a lot of the tenants do want access to transport for their employees, etc. It is coming.

We know that the economy is also equally not booming, this 6,000 that we have, the offer from Rosebank College, is great. The other offers that we are seeing are much smaller in terms of corporate.

Though we know over time they will expand in our properties, but a lot of it is also influenced by where these interest rates are going and economic activity.

Thank you, Bongi. Then a last question from Trinity is, it appears that all your debt is now floating.

Does management still have confidence that ICR will improve in the light of the 25 basis point interest rate hike last week and possibly another one in July?

Indeed our debt is floating and we have had comprehensive discussions with the banks in terms of assessing and looking at what's a appropriate strategy in terms of do we now pick up and hedge, given that in the past we were hedged and when those hedges expired, it was at the point when interest rates were coming down. We have seen the interest rate going up by 25 basis points.

We still need to reflect more in terms of the outlook and so that we can then decide what's appropriate strategy going forward. Having said that, the impact of a 25 basis point change is roughly around R7 million in terms of cost, annual cost.

Then we'll further reflect what it means in terms of the ICR, but we don't believe the 25 basis points on its own will have a bigger impact on the ICR. It will of course have an impact of not assist necessarily in terms of improving ICR, but that's what we're sitting with at the moment.

Thank you, Fikile. Then a question from Mr.

Arshad Yousuf. He is making a statement saying that there appears to be cost creep across the board.

He is asking three questions relating to that. The first one is on admin cost management, where he says Delta runs at twice the ratio to revenue as its peers.

What is your long-term target, and what containment strategies are in place pertaining to admin costs? Then would you like to respond to that first before I ask the others?

The the admin cost has over the years been coming down, and I mean if you reflect look at last year it was 101, if you look at the year before that it was 103, we're we're sitting now at 93. We're also doing almost everything possible within the admin to say, if an employee has left, is that position still critical, should it be maintained, should it be done away with, all in an effort to reduce the the admin cost.

The the area where there has been cost creep, it relates to operating costs, but that cost creep is within what was expected in terms of budget, but is of course higher in relation to what it was last year. The elements to this is goes back to repairs and maintenance.

Our repairs and maintenance, us sitting general building sitting at R28 million where as last year it was R24 [million?] , but we also know there are issues of plumbing and various other issues, building issues, given the age of our buildings, that we needed to to spend on.

The the other element was on the lifts, was on HVAC, and and all of all of those and and security. Those are some of the areas.

As we go forward, we'll continue to monitor those costs closely, we'll continue to to negotiate underlying agreements around the SLAs for the with those parties and optimize those costs as much as is possible. Again, that must be appreciated also in the context of the ages of our buildings.

Thank you very much, Fikile. The second part of the question is, on your disposal strategy, are your targets realistic?

You have a R1 billion disposable pipeline with a R1 billion debt reduction, but your disposals appear to be done at a significant discount to book value. What is the timeline on this taking into account a R200 million per annum historical run rate?

The numbers that she was stating are the numbers, they're very factual. We would love to do, if we can do R600 million tomorrow cuz we get an offer, we'll do it.

This is in a market where we review offers, and sometimes we do receive offers, but if the offer is going to erode shareholder value, we will not do that cuz we are very much aware of the fact that we also need to preserve shareholder value. The other flip side of it is these buildings have debt behind it.

If for argument's sake a building is R100 million and I sell it at R30 [million?] , what's going to happen to that R70 [million?]

? It becomes a vicious cycle in terms of how we get out of our debt trap.

Those are things that we have in consideration. Would like to close this book tomorrow if we could.

If there's someone with a big check out there, please come forward and knock at our doors. We are a willing seller.

We are also cautiously optimistic that things may take time.

Is it a fair statement to make that the assets that have been sold to date are the more difficult ones to sell, the ones that require significant capex or high vacancies, etc., which was basically the tail end of the tail end?

For example, there is someone who's interested in our Bloemfontein portfolio. We sold all vacant buildings in Bloemfontein.

What's left now, it's income generating. You are right, we were fortunate enough in some regions to deal with the 100% vacant.

We're out of East London. We've sold all our vacant buildings that were there.

We are getting to the tail end, and that's why we're hoping negotiations will be better, pricing should improve, cuz not all of them that are left are 100% vacant. In Pretoria, we did lodge, and I think it did transfer, Protea Med, as that was a 100% vacant building.

We are getting to the creep where we are looking at partly tenanted buildings.

Right, and then the last question from Arshad is, property expenses grew by over 12% despite a 5% reduction in the GLA. In your disclosure again, then he repeats the statement around cost creep.

Would you like to respond to that, Fikile?

Fikile, let me first hold, Fikile, and then you can answer the question. Part of our property costs and that creep is some of our buildings are partially vacant.

We need security to support our buildings. That amount has gone up in what we've put in.

There's been some vandalization, especially in regions like Durban. We make sure that even at night, we do have some sort of surveillance and some sort of protection of our buildings for the long term.

Fikile? Mm.

As I've indicated earlier on touching on this, yes, there has been cost escalations in as far as operating costs, but in terms of where we had budgeted to come up at is actually lower than that number. We had budgeted for about R490 [million?]

, we've come at R472 [million?] .

Then the R472 [million?] is higher again because repairs and maintenance is higher as a number this year compared to last year.

The HVAC, security, lifts, all of those elements where the money was spent on those. We in actual fact went through a process around lifts in particular to identify a lift company that would help with our lift issues.

Then if we come back to say, and given the level of involvement during this financial year, we believe it will subside. Also included in this is a very specific interventions that are compliance-oriented, whether as fire, and part of the lift is actually part of compliance.

It's been done to bring up our buildings to a particular standard so that we are able to produce the necessary paperwork that the Department of DPWI requires as they renew leases.

Thank you very much, Fikile. Then a final question is from Vandi Smith, who is asking, a retail investor, why should investors believe that distributions can resume, and what are the conditions for this to actually take place?

It's a

tough one.

The distribution is depending on us progressing further the disposal of non-core, and that is quite fundamental if one looks at the way the funders are at in terms of renewing debt, in terms of the clauses that are part of their funding agreements, that we need to engage with them at the time that we are to look at distribution. It's important that we progress the distribution.

Also it's important that we also have some benefits coming out of our capex program, which in turn will then reduce the level of cash that needs to go into capex. It's important also that we make a dent in terms of our amortization, and part of the amortization is what I referred to earlier, that the Bank of China, for example, which is part of what we are paying amortization towards, is actually going to be settled.

It's a combination of various strategic initiatives that will yield a availability of cash, and that cash would then go towards a distribution.

Fantastic, thank you very much. Then one question that came through from Daniel at Harvard House, he is asking, final question from his side, are sovereign tenants aggressively negotiating lower rentals or are they generally happy at these rates per square meter?

Maybe for perspective, Bongi, you mentioned earlier 3 to 9 11 leases being negotiated, to what extent do you think that will impact on your current rate per square meter?

I think we must remember that DPWI or sovereign tenants before were using Rode, and Rode had a particular cap in terms of what it would charge. With the new minister, he's talking market-related.

We are very encouraged that our reversions will be kept, and we should see, look, we will be impacted by reversions as the longer the tenure of that lease, the more they enjoy in terms of the reversion. If they still go for shorter, etc., it should keep our rates the same.

We are looking at market and we're very excited about that.

Thank you very much. Then a final question from Donovan at Vader Capital, who is asking about any outstanding legal matters with some of the former executives?

I think we did state, did we state last year interims, that case was done, concluded, and in varied degrees they were found guilty, and now they've gone for appeal. We're waiting for that appeal to commence.

Thank you very much. Bongi, Fikile, thank you very much for your time.

Ladies and gentlemen, this then concludes our webcast for the day. Please note that the recording of this webcast as well as the results presentation will be up on deltafund.co.za later today.

If there are any additional questions, please do get in touch with us. Many thanks.