Collins Property Group published its audited consolidated financial statements for the year ended 29 February 2024, highlighting a year of significant restructuring and robust performance despite challenging economic conditions.
The listed company recently rebranded from Tradehold and was approved as a Real Estate Investment Trust (REIT).
During the year under review an extensive restructuring of the business was successfully implemented
both in South Africa and beyond its borders, in order to convert Collins to a REIT.
The company's property portfolio boasts a gross lettable area of approximately 1.5 million square meters, with 50% located in Gauteng, 40% in KwaZulu-Natal, and the remaining in the Cape.
Of the Group's South African ("SA") portfolio of just over 1.4 million square metres of lettable area, 81%
consists of industrial warehouses and distribution centres.
"This is a sought-after asset class in difficult economic times because of its defensive nature as a result of being linked mainly to long-term leases entered into with national tenants."
The balance of the SA portfolio is made up of convenience retail properties (13%), an increasingly popular asset class, and offices (6%).
The portfolio's strength is underscored by its large national tenants, which generate 78% of the income. Major tenants include Massmart, Unilever, Pepkor, Nampak, Aveng, and Sasol.
Operational Performance
The restructuring to convert into an industrial REIT involved significant changes, including a swap-up ratio with a minority shareholder in the South African business and converting debt to interest-only profiles.
This restructuring aimed to enhance efficiency and tax effectiveness. The company's assets are diversified, with 83% in South Africa, 6% in Namibia, 7% in Austria and the Netherlands, and 4% in other parts of Africa.
Key financial metrics for the year include:
Distributable income per ordinary share (DIPS) of 94 cents (105 cents pre-tax).
A final dividend of 50 cents per share, bringing the total annual dividend to 90 cents per share, up from 60 cents the previous year.
A low vacancy rate of 3.9%.
Weighted average lease expiry (WALE) of 4.2 years.
A high collection rate of 98.3%.
Loan-to-value ratio of 51%.
An all-in cost-to-income ratio of 18%.
Revenue increased by 6.3% compared to the previous year, reaching R564 million before tax. However, profit before tax decreased to R564 million from R734 million, mainly due to increased finance costs and a lower fair value adjustment to investment property.
The conversion to a REIT also led to a significant deferred tax write-back, resulting in a net profit of R1.14 billion, a substantial increase from the prior year's R158.5 million.
Strategic Developments
Collins Property Group has focused on growing and upgrading its portfolio by divesting non-core assets to free up capital for future growth, particularly offshore.
The group sold eight properties for R65.6 million and is in the process of transferring five more properties valued at R150 million.
The Namibian portfolio strategy is under review, with announcements expected soon. The company has also completed the sale of its last properties in Zambia and is selling its remaining properties in Mozambique.
Future Outlook
Looking ahead, the group said that despite the uncertain political landscape and challenging economic environment, the group's predominantly industrial property portfolio offers a defensive advantage.
Shares in the group are up 9% over the past year.
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