Castleview Property Fund’s 3,338% Revenue Surge and Strategic Moves: A Real Estate Triumph Unveiled

  • Financial Resilience: Castleview Property Fund reports robust performance despite market challenges, with a staggering 3,338.58% increase in revenue.
  • Strategic Shift: The company successfully shifts its financial year-end, and the acquisition of the I Group portfolio strengthens its position.
  • Dividend Commitment: Castleview declares an interim dividend of 10.67600 cents per share, reflecting its commitment to shareholder value.
By Lethabo Ntsoane

Castleview Property Fund Limited, a prominent property holding and investment company listed as a Real Estate Investment Trust (REIT) on the AltX of the JSE, has released its unaudited condensed consolidated interim financial statements for the six months ended 30 September 2023. Despite facing market challenges, the company has demonstrated resilience and maintained a robust performance during this period.

Financial Highlights

The financial results reveal a significant surge in revenue, reaching Rand 1.04 billion, marking an extraordinary increase of 3,338.58% compared to the prior period. However, the headline earnings per share saw a decline of 182.80%, recording a figure of -18.53 cents. Earnings per share also experienced a dip, down by 107.25%, resulting in -14.44 cents. Remarkably, the distribution per share stood at 10.67600 cents, a substantial increase of 100.00%.

Financial Metrics30 September 202331 August 2022% Change
Revenue (Rand 000’s)1,040,13530,2493,338.58%
Headline Earnings per Share (cents)-18.5322.38-182.80%
Earnings per Share (cents)-14.44199.21-107.25%
Distribution per Share (cents)10.67600100.00%

The net asset value per share exhibited a positive trend, increasing by 37.69%, reaching 840.11 cents compared to 610.13 cents in the prior period.

Change in Financial Year-End

Shareholders are reminded of the company’s shift in its financial year-end from 28 February to 31 March, as previously announced on 15 December 2022. Consequently, the figures for the six months ended 30 September 2023 are compared to those for the six months ended 31 August 2022.

Nature of the Business

Castleview Property Fund focuses on direct and indirect property investments, aiming to maximize returns for shareholders. The acquisition of the I Group portfolio in September 2022 strategically positioned the company as a mid-tier REIT, with a net asset value exceeding R8 billion and total assets surpassing R22 billion.

Trading Performance

The Group’s total assets decreased marginally to R21.7 billion during the reporting period, with a corresponding decrease in debt funding to R10.2 billion. Notably, the successful disposal of Enyuka played a significant role in this reduction. The market capitalisation at the reporting date was R8.4 billion, with a net asset value of R8.3 billion, translating to R8.40 per share.

The loan-to-value ratio, net of cash, was reported at 48.4%, demonstrating a prudent financial approach.

During the reporting period, the revenue remained steady at R1.0 billion, including income derived from equity accounted investments of R229.0 million, which included income from Enyuka up to 20 July 2023.

Finance costs experienced a substantial increase, reaching R573.5 million, attributed to the business’s growth and rising borrowing costs across the portfolio due to interest rate increases in South Africa and Europe. The Group actively manages its interest rate risk through fixed-rate debt or interest rate derivatives.

Despite an expected credit loss of R267.9 million on the investment into Inani, held through Emira, the Group’s operational performance remained robust, delivering an SA REIT FFO of R186.5 million. An accounting loss for the year of R67.0 million was realized, compared to a gain of R78.0 million in 2022.

Dividend Declaration

The board approved an interim gross dividend of 10.67600 cents per share for the period 1 April 2023 to 30 September 2023. This dividend, totaling R105.1 million, underscores the company’s commitment to delivering value to its shareholders.

Future Outlook

Castleview Property Fund’s resilience in navigating market challenges and sustaining positive financial performance in a dynamic economic landscape positions it well for the future. The company’s strategic acquisitions and prudent financial management contribute to its status as a key player in the South African property market.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo