Collins Property Group converts to REIT, doubles profit during FY2024

Otto Volek Road , Pinetown.

Collins Property Group has published its financial results for the year ended February 2024, doubling its profit from continuing operations from R516.9 million during 2023 to R1.21 billion.

The company converted to a REIT during the reporting period, declaring a final dividend of 50 cents per ordinary share and bringing its total distribution for the year to 90 cents per ordinary share – an increase of 50% over 2023’s 60 cents.

The Group came into being following an extensive restructuring of what was previously Tradehold Limited, and it is currently one of the two industrial REITs listed on the JSE.

Commenting on the Group’s results, CEO Friederich Esterhuyse, says that although finance costs increased by R70 million due to higher interest rates, its revenue increased by 6.3% to R1 231 million. Tax accruals on future capital gains of R677 million were written back post its conversion to a REIT.

Esterhuyse says the results achieved were largely due to the defensive nature of Collins’s South African property portfolio of some 1.4 million square metres. Of this, 81% consists of large warehouses and distribution centres leased to major national clients on a long-term basis.

Due to this client base, which represents 86% of total rental income, we were able to collect 98.3% of all income due. The vacancy rate of 3.9% is well below the industry average, while the weighted average lease expiry date remained above four years.”

Convenience retail properties, which constitute some 13% of its South African portfolio, also performed well. New developments during the year were mainly in this sector and coincided with management’s decision to prioritise growth in the Western Cape.

One of the Group’s priorities is to grow its overseas portfolio. During the year, Collins acquired, as a member of a consortium, four properties in the Netherlands at an average yield of 8.9% with the six properties that the Group owns in Austria continuing to provide a secure income.

A senior member of Collins’ staff has relocated to the Netherlands to grow the Group’s portfolio in Europe. “To fund this growth, we are continuing to sell non-core assets. Of these eight were sold during the year while another eight are in various stages of transfer to their new owners,” he concludes.

Collins’ loan-to-value (LTV) ratio currently sits at 51% in terms of SA REIT Best Practice.