<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
SIMON BROWN: I\u2019m chatting with Ben Pierre Malherbe. He is CEO at Calgro M3. A disclaimer up front \u2014 I hold shares in Calgro M3.<\/p>\n
The results for six months ending August 2026. Revenue up 1.2%, Heps down 4.6%.<\/p>\n
Ben Pierre, we\u2019ve been chatting \u2013 a transitional period to a degree for Calgro. Part of that is disposing of non-core assets. That\u2019s a key strategic priority. It\u2019s going to take some time, though. Talk us through how that\u2019s going.<\/p>\n
BEN PIERRE MALHERBE: Thank you, Simon. I think there are two sides to that.<\/p>\n
Firstly, it is the sale of the non-core assets, but hand-in-hand with that is trading out the non-core projects. So there are two sides of this equation.<\/p>\n
The selling off of the non-core assets will take a little longer. We said we\u2019ll take a five-year view. We know the value of these projects. We don\u2019t want to give them away. We know what they\u2019re worth.<\/p>\n
But the trading out of non-core projects \u2013 we\u2019re making good progress with that, although you can\u2019t see it in the numbers as yet, looking forward to the full-year results.<\/p>\n
Read:
Calgro M3\u2019s interim results reflect ongoing housing market pressures
Calgro M3 results, business confidence, and cash withdrawal fees<\/p>\n
SIMON BROWN: The trading out \u2013 you say you\u2019ve stock in excess of what, around 1\u00a0500? You are sort of doing sell-down construction. But this is a tough economy to be selling property. Fuel, inflation, interest rates \u2013 this is not an easy time to be to be operating and doing even lower-cost housing.<\/p>\n
BEN PIERRE MALHERBE: No, you are 100% right, Simon. It\u2019s not an easy operating environment. And what have seen is that consumers are under pressure, and we expect them to be under pressure for a while still.<\/p>\n
But the rental market recovered quite a lot faster than that market, and currently we\u2019re leaning towards those what we call \u2018bulk sales\u2019, where we sell them off to people specialising in the rental market \u2013 and that market has been good to us in the six months.<\/p>\n
Read:
Office property recovery continues, multi-family residential on the up
Infrastructure investment weighs on Calgro M3\u2019s profit<\/p>\n
SIMON BROWN: Got you, got you. And that solves, as you say, the problem particularly around banks and the like. The key strategic shift here \u2013 and you talk around it in these results as well \u2013 concerns five large-scale developments, geographic diversification in the Western Cape and Gauteng \u2013 and you can kind of see this starting to come into play.<\/p>\n
You do mention you\u2019re looking for a Western Cape project, perhaps.<\/p>\n
BEN PIERRE MALHERBE: Yes, Simon, definitely. The Western Cape was extremely good to us in the six months \u2013 actually the last 12 months. There\u2019s a lot of uncertainty in the Gauteng environment and working with the city, and we said we\u2019re not going to chase Heps at all costs.<\/p>\n
We don\u2019t want to build for the sake of building. It doesn\u2019t make sense building units if you\u2019re not sure where they\u2019re going.<\/p>\n
So, as I said, we\u2019re focusing on these bigger take-off agreements. We\u2019re carrying about 1\u00a0500 units under construction or in stock.<\/p>\n
We\u2019ve enough service opportunities, so we didn\u2019t feel pressure to just build for the sake of building.<\/p>\n
SIMON BROWN: We have an election next month. I know \u2013 in the previous five-year-ago election, I think it was \u2013 you had some real challenges with sites being occupied and the like. That was under your predecessor.<\/p>\n
Is that a concern for this election, or is the concern more that there\u2019s going to be a changing of the guard, and we don\u2019t know who\u2019s going to be the person to speak to come the 5th of November?<\/p>\n
BEN PIERRE MALHERBE: Yes, I think that is the challenge we\u2019re currently facing. There will be a change of guard \u2013 whether it\u2019s internal or external doesn\u2019t make a difference. With the change of guard the one thing that we must just keep in mind is that the election is not that golden wand that fixes everything.<\/p>\n
It\u2019s a transition period we\u2019re going into and \u2013 listening to some of the interviews, what happened in Cape Town with a changing of the guard there \u2013 it takes longer than you think.<\/p>\n
We are comfortable that we have sufficient service opportunities. That means services in the ground that will allow us to build. We\u2019ve sufficient stock to sell.<\/p>\n
So we\u2019re taking a view on investing in strategic infrastructure like the Bankenveld District City project, where we are currently putting in big road infrastructure.<\/p>\n
Calgro M3 breaks ground on flagship Bankenveld mega development
Calgro M3 se Bankenveld-ontwikkeling begin rigting kry
Calgro M3 profits dip as it pours capital into Bankenveld District City<\/p>\n
That\u2019s a long-term investment because one thing we must be very careful of: just trading out of non-core projects or just selling these projects is not the solution. We need to balance that trading out of the non-core with investing in our core business.<\/p>\n
We need to keep on going in core business, and we\u2019ve selected that the bulk infrastructure, those big strategic infrastructures, are where we prefer to spend our money currently.<\/p>\n
Read: Housing group shifts focus from non-core projects in strategic overhaul<\/p>\n
SIMON BROWN: And that is, \u00a0as you said, the Bankenveld District City project up here in Gauteng. So it will be plus-20\u00a0000 units when it\u2019s complete way down the line.<\/p>\n
And you\u2019re busy doing that, the bulk infrastructure, the link infrastructure. A lot of work, a lot of spend, but nothing until you can get it done.<\/p>\n
Is that on track? If I recall, it was [for] Q1 financial year \u201928 \u2013 which is kind of middle of next year?<\/p>\n
BEN PIERRE MALHERBE: Yes. So, Q1 next year we\u2019ll be able to complete the bulk-and-link requirements for the first phase, and I think we\u2019re breaking it into bite-sized chunks, if you can call 5 900 bite-sized. But we\u2019re not going to try and install all the infrastructure there for the next 10, 15 years.<\/p>\n
So the requirement currently is to say by April next year we\u2019ll be in a position where we can start with the internal infrastructure and the building of units on 5\u00a0900 opportunities. And I think that\u2019s our first target.<\/p>\n
We\u2019re not looking at the bigger picture, the full 20\u00a0000. Let\u2019s just start because we need to start recovering. Currently it\u2019s a one-way. We invest quite heavily in the project, but we\u2019re not able to get anything back as yet \u2013 \u00a0and that\u2019s putting a whole lot of ratios under pressure.<\/p>\n
Read\/Listen:
Eerste graaf in die grond vir Calgro M3 se 20 000-eenheid projek
Bankenveld District City will be Calgro M3\u2019s single biggest project
Calgro announces new Bankenveld District City development<\/p>\n
SIMON BROWN: Yes, absolutely. And it\u2019s building that infrastructure which you need. What sort of price targets are you looking for with Bankenveld? Who\u2019s going to be your sort of customer?<\/p>\n
BEN PIERRE MALHERBE: We\u2019re definitely looking at the lower end of the market, and that\u2019s why it was so important to wait for the City of Johannesburg. That is our preferred partner \u2013 not the Province or the National Department of Human Settlements.<\/p>\n
It\u2019s because we need to get into the market, and the more assistance we get through the City of Johannesburg, the lower we come into the market.<\/p>\n
So, if the city is refunding us for the big road infrastructure, I don\u2019t have to put that onto \u2018per unit\u2019 as I sell them on the stand.<\/p>\n
The intention is still to play in this integrated market, and the first-time home finance social housing and partially subsidised market.<\/p>\n
SIMON BROWN: Yes. And a giant market. I mean, 5\u00a0900 is a lot of units, but I think in scope of demand it\u2019s a drop in the bucket.<\/p>\n
Your Memorial Parks continues to tick along. It\u2019s doing well. And the one stat that really jumped out at me was that in the new Rustenburg one, I think, 60% was lay-by. The lay-by really is going strong, and Memorial Parks going strong.<\/p>\n
BEN PIERRE MALHERBE: Memorial Parks is going strong; there\u2019s no question about it. I think the contribution in the group can\u2019t be understated. Memorial Parks is currently allowing us to grow into these big projects.<\/p>\n
We can start to spend money on these projects with a longer-term view. We\u2019re not under pressure to get inflows back immediately, so it\u2019s a great business to have currently.<\/p>\n
Saying that, because our exposure to the public sector is not as high leading up into these elections, we held back a little \u2013 and that also distorted the numbers a little, reflecting a bigger contribution than it is.<\/p>\n
Read: Calgro M3 is digging deep into infrastructure and memorial parks<\/p>\n
As soon as Bankenveld is contributing and the money starts coming back, that 10% contribution will probably come back a little, and then we\u2019ll grow it from there.<\/p>\n
So I think we must just put into perspective where the development business is currently finding itself.<\/p>\n
SIMON BROWN: That\u2019s a great point. And it\u2019s not because Memorial Parks goes backwards, but because the developments sort of leap forward as you start selling units.<\/p>\n
Ben Pierre Malherbe, CEO of Calgro\u00a0M3, always appreciate the time.<\/p>\n
#Calgros #shifting #asset #portfolio #housing #developments<\/p>\n","protected":false},"excerpt":{"rendered":"
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