Christo Wiese-chaired Tradehold, a property investment group that has about half its assets in SA, says while it continues to benefit from a high-quality tenant base and strong collections, it is looking to sell off its UK interests for £102.5m (R2bn) to simplify its structure.
The group said on Monday, along with its results to end-February, it has plans to sell subsidiary Moorgarth Property to an entity that counts five Tradehold directors as shareholders, including Wiese, in a related-party transaction. The group said it considered its structure unnecessarily complex.
“It is therefore envisaged that, after the implementation of the proposed disposal, the company will assume South African tax residency, change its reporting currency to rand, and will be able to reduce its head office overheads and costs through a simplified, SA-based group structure,” it said.
The group’s UK business has underperformed during Covid-19, accounting for £33m of the £44.5m in devaluations in its 2021 year.
The group, however, reported collections remain robust and its total asset value had picked up 1.6% to £830m in 2022.
In the UK, Tradehold remains under pressure, and while Moorgarth managed to collect more than 90% of all rent due across the portfolio, better than the market average, it suffered £1.4m in devaluation losses in 2022.
With shopping centres having proven particularly vulnerable to changes in global retail trends, Moorgarth has continued its efforts to reduce its exposure to retail, now representing 51% of the total value of the portfolio including joint ventures. The balance comprises mostly commercial properties, it said.
Tradehold reported a £20.3m profit for 2022, from a net loss of £39.7m previously, and that it had also benefited from the non-recurrence of costs incurred when refinancing some of its debt.
Tradehold holds 74.3% of Collins Property in SA, the primary focus of which is on industrial space and distribution centres that together account for more than three-quarters of its gross lettable area.
Of local income 69% is derived from tenants listed on the JSE, and it received 98.8% of all income due in 2022.
In 2021, the company’s results were adversely affected by a one-off Collins breakage and refinance cost of £10.7m on the unwinding of fixed-interest borrowings and their renewal at a lower interest rate, which was not Covid-19 related.
This debt restructure had assisted in reducing the interest cost on total borrowings from an average of 11.3% to 8.4%.
By the JSE’s close on Monday, Tradehold’s share price was up 7.93% to R10.75, its biggest gain in more than a month. The shares are up 1.9% in the year to date, but have fallen just over 10% since the beginning of 2020.
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