PRETORIA – Balwin Properties, the listed home builder, has engaged with strategic partners to explore the unlocking of annuity opportunities, including renewable solar energy and fibre infrastructure within the company’s estates.
The company in May this year reported that it had launched an initiative to secure annuity income, with this plan including the establishment of a residential rental real estate investment trust that it would list on the JSE.
Steve Brookes, the chief executive of Balwin, said yesterday they were developing a rent-to-buy product, where it would secure lease agreements for these apartments before selling them to a strategic partner.
Brookes said these apartments would be developed in phases based on demand and would have a distinctive architecture, but would retain the quality and innovativeness for which Balwin was known, while not competing with Balwin’s build-to-sell model.
He added that the rent-to-buy model could further act as a catalyst for the accelerated development of Balwin’s land bank.
The group has a secured pipeline of 40 461 apartments across 23 locations in key target nodes with an about 12-year development horizon.
It is currently active with 11 build-to-sell developments, the majority of which were at the early stages of the project.
It currently develops and sells between 2 000 and 3 500 sectional title residential apartments a year but based on its existing infrastructure and development pipeline, has the ability to increase this capacity to about 5 000 apartments a year.
Brookes said Balwin reported strong growth in the six months to August, despite tough economic conditions and an increase in the VAT rate. He attributed this growth largely to continued demand for Balwin’s unique product and lifestyle offering. Brookes said a total of 1 058 apartments were handed over and recognised as revenue in the reporting period.
This resulted in revenue growth of 33 percent to R1.19 billion from R894.1 million.
The average selling price a unit remained consistent at R1 125 488 compared to R1 218 089 in the prior period.
Brookes said the group targeted sales of about 30 to 35 apartments per location a month across developments in Gauteng, the Western Cape and KwaZulu-Natal.
Operating profit increased by 12 percent to R246.4m from R216.8m. Headline earnings a share grew by 8.6 percent to 38 cents from 35c.
A dividend was not declared.