Collins Property increases distributable income as it ramps up Netherlands investment 

Collins Property Group has reported higher distributable income in the first half as it continued to sell down noncore properties and invest in opportunities in the Netherlands.

For the six months ended August, distributable income rose to R206.9m from R177.1m a year ago while net profit grew 81% to R218.1m.

Distributable income per share rose to 63c from 54c before an interim dividend of 52c per share was declared.

The group said local operations remained strong with the vacancy rate at just 1.6% and the collection rate at 99%. The company said it continued to sell shorter leases in SA to focus on long-term income in Europe.

Collins said the investment environment was challenging with global conflicts, trade tensions, domestic political uncertainty, high real interest rates and rising electricity costs making capital allocation difficult. In SA, while inflation appears under control, economic growth remained sluggish.

The company added that technological changes, particularly the rise of AI, were likely to reduce tenants’ space needs over time. Collins said this underscored the importance of future-proofing its properties, focusing on flexible, adaptable spaces rather than highly tenant-specific buildings.

“As we head into the last six months of this financial year we do so with a sense of optimism. We have spent years selling down our noncore assets to free up equity for reinvestment and we are now reinvesting that equity,” it said.

“Our geographical and currency diversification into the Western Cape and mainland Europe is gaining momentum and we are seeing more and more deal flow. This diversification is expected to improve our security of income over the longer term. As we enhance the quality of the portfolio it will enable us to focus on the cost of debt, which, with falling interest rates bodes well for enhancing long-term returns for shareholders.”

Collins said properties valued at R125m were transferred in the first half and a further R960m worth of properties have been sold and were awaiting transfer.

It has reinvested the net proceeds from the disposals into properties in the Netherlands. The acquisitions, which entailed the purchase of eight properties, occurred on October 1.

It said that 95% of the properties were occupied by Intergamma, the third-largest hardware operator in the Netherlands, on new triple net leases with average terms of 14 years.

“We are continually looking to reinvest in Europe and our physical presence there is now starting to pay off,” it said.

Collins said the move into Europe would diversify its portfolio as well as reduce risk and strengthen future income.