Exemplar REIT Delivers Strong Growth in Rental Income and Net Asset Value Despite Earnings Decline

Exemplar continues to make significant strides in the retail sector. The company focuses on providing retail services to under-serviced regions, managing 26 retail assets with a combined Gross Lettable Area (GLA) of 414,530 m² across five provinces. This article delves into Exemplar’s financial performance for the year ending 29 February 2024, offering insights into key metrics, distributions, and the company’s strategic direction.

Key Financial Metrics

Rental and Recovery Income

Exemplar’s rental and recovery income increased by 16.4% to R1,219,692,000 in FY2024. This growth reflects the company’s robust asset management and strategic focus on expanding its retail footprint.

Net Property Income

Net property income for the year rose by 13.2%, reaching R784,148,000. Before operating lease equalisation, net property income was R774,502,000, marking an 18.9% increase.

Earnings Per Share

Despite revenue growth, earnings per share (EPS) saw a decline. Basic EPS fell by 27.3% to 213.27 cents, while diluted EPS dropped by 28.2% to 207.16 cents. Headline EPS and diluted headline EPS also decreased, by 19.8% and 20.7% respectively.

Distribution and Dividends

Total Distribution Per Share

For FY2024, Exemplar declared a total distribution of 138.93645 cents per share, a 1.5% decrease from the previous year. This distribution includes an interim dividend and a final distribution.

Interim and Final Dividends

The interim dividend per share was 64.27220 cents, down 6.5% from the previous year. The final distribution per share was 74.66425 cents, comprising a dividend of 57.03275 cents and a return of contributed tax capital of 17.63150 cents.

Illustration: Dividend Breakdown

PeriodDistribution (cents)Change (%)
Interim Dividend64.27220-6.5
Final Dividend57.03275
Return of Capital17.63150
Total138.93645-1.5

Net Asset Value and Loan-to-Value Ratio

Net Asset Value (NAV) Per Share

Exemplar’s NAV per share increased by 7.4%, reaching R14.75. This rise indicates solid asset management and property valuation improvements.

Loan-to-Value Ratio

The loan-to-value (LTV) ratio stands at 36.5%. This moderate level of debt reflects a balanced approach to leverage, ensuring financial stability and flexibility.

Strategic Focus and Future Outlook

Asset Management and Expansion

Exemplar’s core strategy focuses on expanding and enhancing its retail property portfolio. The company targets under-serviced regions, providing essential retail services and driving local economic growth.

Financial Performance Analysis

Despite a decline in earnings per share, Exemplar shows strong rental income growth. The decline in EPS can be attributed to higher expenses or non-recurring items impacting profitability.

Illustration: Key Financial Metrics Comparison

MetricFY2024FY2023Change (%)
Rental and Recovery Income (R’000)1,219,6921,047,49516.4
Net Property Income (R’000)784,148692,53713.2
Basic Earnings per Share (cents)213.27293.52-27.3
Headline Earnings per Share (cents)113.50141.53-19.8
Diluted Earnings per Share (cents)207.16288.46-28.2
Diluted Headline Earnings per Share (cents)110.25139.09-20.7
Net Asset Value per Share (Rand)14.7513.747.4
Total Distribution per Share (cents)138.93645141.12192-1.5

Governance and Management

Board of Directors

Exemplar’s board comprises experienced professionals, including Jason McCormick (CEO), DA Church (CFO), and John McCormick. Non-executive directors include FM Berkeley (Chairman) and PJ Katzenellenbogen (Lead Independent Director).

Corporate Governance

Strong governance practices underpin Exemplar’s operations. The company maintains transparency, accountability, and compliance with JSE regulations.

Conclusion

Exemplar REIT’s financial performance for FY2024 highlights the company’s resilience and strategic focus. While earnings per share declined, the growth in rental income and net property income underscores robust asset management. Exemplar’s commitment to serving under-serviced regions, combined with prudent financial practices, positions the company well for future growth.