By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

COLINA Real Estate Fund’s president yesterday said he was aiming to grow its asset base by up to $5 million, or more than 40 per cent, over the next five years as its moves to expand its property portfolio and diversify rental income streams.

Ken Donathan told Tribune Business that Colina Insurance Company’s purchase of a controlling interest in the former RND Holdings had given him the ability to pursue “some opportunities” by producing a $35,000 monthly cash flow swing into positive territory.

Speaking after Colina Real Estate Fund unveiled its results for the year to end-December 2011, Mr Donathan said that while the real estate investment trust (REIT) was “trending in the right direction”, the failure to -date to dispose of its Abaco property remained “an achilles heel”.

And while its RND Plaza On Nassau’s JFK Drive remained 100 per cent leased, Mr Donathan said the 2012 results would reflect the loss of a major tenant, the Sav-Mor pharmacy, at its Freeport shopping plaza.

With the restructuring of the former RND Holdings’ debt by its new majority shareholder taking Colina Real Estate Fund from a $5,000 negative monthly cash flow to a position that was $30,000 into positive territory, Mr Donathan said: “My cash flow is there, and we’re looking to expand in the future to diversify the type of rental income we get now.

“We’re always looking for opportunities. With a $30,000 per month positive cash flow, it gives me cash where I can do some things other than hold my head above water.”

Asked by Tribune Business about Colina Real Estate Fund’s future targets, Mr Donathan told this newspaper: “More so than anything financially, we want to expand our book and expand the type of income

“I want to grow my asset base anywhere from $2-$5 million. That’s not next year; that’s over three-five years, the short-medium terms.”

Given that Colina Real Estate Fund’s total assets stood at $12.1 million at year-end 2011, the bulk of this being its $11.559 million in real estate assets, the company is eyeing a potential 41 per cent increase in its asset base.

Emphasising that he was seeking “quality”, Mr Donathan added: “I’m not looking for prolific growth. I want natural growth. We’ve been down the prolific growth road before.”

The Colina Real Estate Fund president declined to specify the growth opportunities he was eyeing, although Tribune Business understands it might involve a diversification away from the company’s retail mall focus towards involvement in the multi-family dwellings market.

Elsewhere, Mr Donathan said he was still trying to sell the property that housed Abaco’s former RND cinema, although it was not acting as a drag on Colina Real Estate Fund’s performance.

“I’m still trying to divest myself of the Abaco property,” he told Tribune Business. “That’s still an achilles heel for me.

“We have people nibbling at it, but with this type of economy we’re in I don’t think anybody wants to take on a challenge, although Abaco is anomaly because it’s still doing well.

“I’m still actively marketing the property. There’s a few inquiries out there, and I’m waiting for them to come back to me. I’m still actively trying to divest myself of the property.”

Both Colina Real Estate Fund’s Nassau and Grand Bahama plazas are anchored by Galleria Cinemas, a major driver of consumer traffic to the sites.

“I’m fully leased in Nassau,” Mr Donathan said, “but this will not be reflected in the 2011 results, although it will be seen in 2012, where we lost a substantial tenant in Grand Bahama.

“We’re making moves to ensure we get back to full tenancy up there. If there’s one good thing about my property in Freeport, it is a premier destination. It’s almost like a through road, my plaza, as it borders East Mall Drive and one of the areas that’s heavily inhabited.”

Mr Donathan said the lost tenant was Sav-Mor, which after 10 years of leasing relocated to its own building. He added that Colina Real Estate Fund was selective in choosing its tenants, ensuring the likes of banks, food and drug stores complemented each other.

Following the acquisition of a majority stake in the former RND Holdings from its chairman, now-Cabinet minister Jerome Fitzgerald, Colina Insurance Company restructured the company’s debt, paying out the former credit lines extended by CIBC FirstCaribbean International Bank (Bahamas).

Mr Donathan said that prior to this, while the now-Colina Real Estate Fund was profitable, the company has suffered “tremendous cash flow difficulties with the way the debt was structured”.

“We needed some relief to take my back off the wall in terms of the debt,” he told Tribune Business.

“The one thing we needed was the restructuring of the debt. They restructured my debt for me, putting me from negative cash flow of $5,000 per month to $30,000 positive cash flow per month. So far, it’s been a very positive move that we’ve made.”

Mr Donathan said the one-time waiver of a net $117,933 in various charges for 2010 was related to the forgiveness of accrued interest penalties, after Colina Real Estate Fund brought real property tax and business licence fee arrears current.

He added that Colina Real Estate Fund saw a $50,000 increase in maintenance costs in 2011 as it spruced up the appearance of its Nassau plaza, and said: “We have to keep them as being premier destinations.”