<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
SIMON BROWN: I\u2019m chatting with Steve Brookes, CEO at Balwin Properties. We had results for the year-end in February. Revenue up 21%, recurring Heps [headline earnings per share] up 41%. Steve, I appreciate the time. The recurring Heps \u2013 my sense really is accounting treatment. You had some land sale transactions, some fair value adjustments, some write offs, et cetera, hence the difference between the two.<\/p>\n
STEVE BROOKES: Yes, thanks very much. You\u2019re spot on, correct, 100%.<\/p>\n
SIMON BROWN: Let\u2019s move to the dividend. The dividend has been skipped again. Not really a comment in the balance sheet. Just perhaps more just about this was to end of February, and frankly warning on uncertainty, inflation, interest rates. Hence no dividend. Is that thinking around the distribution?<\/p>\n
Read:
Balwin Properties boosts revenue 21% as apartment sales rebound
Sarb errs on the side of caution, holds rates steady<\/p>\n
STEVE BROOKES: Yes, 100%.The two wars on the go at the moment in the world are tricky and inflation is definitely going up. Could interest rates be going up? We pray not. But we\u2019ve got to guard our cash. We\u2019ve got to guard it, and also we\u2019ve got a big, big plan for debt reduction in the long term \u2013 short term and long term.<\/p>\n
SIMON BROWN: How about sales? We haven\u2019t seen inflation up, although we haven\u2019t got the data. We\u2019ve seen fuel prices up \u2013 that has hit the pocket. What have sales been like post the period end?<\/p>\n
STEVE BROOKES: In the Western Cape we\u2019re shooting the lights out. That\u2019s a great story, the Western Cape. In Natal and Gauteng it\u2019s a bit more difficult. Natal is starting to improve because of tremendous work by Rodney Gray and Kyle Gallagher, my general manager with the council. We\u2019re starting to get away from that whole era of corruption in the councils. So they\u2019re starting to work, trying to help us.<\/p>\n
Gauteng is still struggling. We need our mayor to start really putting his shoulder to the wheel with infrastructure.<\/p>\n
SIMON BROWN: You mentioned KZN, Umhlanga, Ballito, Westown. Those are the three top of mind for me. You mentioned municipal services dependency. You do rely on the municipalities a lot, whether it be up here in Johannesburg or down in KZN, eThekwini.<\/p>\n
STEVE BROOKES: We \u00a0are relying on them; we need to work with them. There needs to be a team effort. As I said, Rodney Gray, our managing director, has made big headway in Natal where he has actually gone and seen them himself, and they\u2019ve reciprocated and said, \u2018Let\u2019s get on with it\u2019 \u2013 which is a fantastic attitude.<\/p>\n
I personally went to Gauteng, to Johannesburg, to the municipality, and they received me \u2013 absolutely outstanding. I dealt with the JRA [Johannesburg Road Agency], and I dealt with Building Control. They were brilliant and that\u2019s a big, big turnaround.<\/p>\n
Read:
Godongwana\u2019s letter to CoJ sparks fears around property valuations
Balwin faces court challenge as Airbnb-type letting divides residential estates
City of Joburg\u2019s property error causes havoc for homeowners<\/p>\n
SIMON BROWN: You mentioned the Western Cape. A question to you. The Western Cape is a little over half of the business, but your pipeline is you\u2019ve some 14\u00a0000-odd in Tshwane, \u00a0Johannesburg. KZN almost 6\u00a0000. Western Cape only 8\u00a0000. You ran out of stock there. Are you looking for new development space in the Western Cape?<\/p>\n
STEVE BROOKES: As they say, God doesn\u2019t build land, so we need to find land. We have got one big one that I\u2019ve been on with hunting for a long time. Hopefully that comes to fruition. But we definitely need to look at more land in the Western Cape. You\u2019re spot on.<\/p>\n
Read:
FNB funds R800m for R3.5bn Durban North coastal estate
R1bn Cape Town luxury property development gets financial backing from FNB<\/p>\n
SIMON BROWN: Sales for the period. Apartments were up 17% to just over 2\u00a0000, but forward sales up 57% at 1\u00a0200 and change. You\u2019re getting momentum, and that\u2019s an important point.<\/p>\n
STEVE BROOKES: Yes, we like to keep our sales going. Sales is an important part of our business. We\u2019ve got everybody highly focused on the business to it. And as long as we keep delivering good-quality apartments to our clients at an affordable price \u2013 I repeat, at an affordable price \u2013 we mustn\u2019t get too big-headed and start pushing the prices. We need to be very, very conservative.<\/p>\n
SIMON BROWN: And you\u2019re still in that sweet spot of pricing.<\/p>\n
STEVE BROOKES: Correct. We will continue trying to be innovative and stay in that sweet spot.<\/p>\n
Read:
Balwin pivots to rental model as sales struggle
Balwin boosts profitability, despite fewer apartment sales<\/p>\n
SIMON BROWN: Balwin Annuity \u2013 I remember when this was sort of a glint in your eye, just starting. It\u2019s now over R200 [million] revenue. It\u2019s really a good margin business. And, of course, if you sell 2 000 apartments a year, over a decade that\u2019s 20 000. Your Annuity grows 10X. I mean, it is that simple. It is a great little business you\u2019ve got there.<\/p>\n
STEVE BROOKES: A very wise young man \u2013 I won\u2019t say his name because he doesn\u2019t like it \u2013 gave me the hint a few years ago. He\u2019s been our partner for a long time, and it really sparked us off into annuity income as long as we always remember that the client must benefit from it.<\/p>\n
So we worked very hard to make sure that our clients benefit from our annuity income as well.<\/p>\n
SIMON BROWN: It\u2019s simple stuff. It\u2019s fibre to the home, it\u2019s solar. To your point things I\u2019d need and frankly want.<\/p>\n
STEVE BROOKES: Correct. And we\u2019re always looking at better, more honest approaches for our annuity business. We\u2019ve a great team there and we\u2019re looking to grow it. I think there\u2019s a great trajectory going forward.<\/p>\n
SIMON BROWN: Your rental strategy is relatively new. How\u2019s that going?<\/p>\n
STEVE BROOKES: We should have started that many years ago \u2013 as my exco says, but\u00a0 we didn\u2019t. Now we are going for it. We\u2019ve got four projects which are starting at the moment. Our goal is to get up to 7\u00a0000 rental apartments.<\/p>\n
Our chairman, Hilton Saven, gave me some invaluable advice on the gross and the net profit, and we\u2019ve stuck to that very good advice and we\u2019re achieving the numbers that we like. We are \u00a0getting there with the numbers. And our portfolio is very, very well received by the public.<\/p>\n
Read:
Balwin Properties to boost rental portfolio to 7 300 apartments
Balwin\u2019s profit plunges with almost 900 fewer apartment sales last year<\/p>\n
SIMON BROWN: A last question. You had 2 000 units in the past year. What is your sort of operational feasibility at current levels in terms of units a year that you could build for sale?<\/p>\n
STEVE BROOKES: On our build-to-sell we can easily ramp it up for between 4\u00a0500 and 5\u00a0000 with our current infrastructure. So there\u2019s big headroom for our ability, but obviously with the macroeconomics and world economics, we\u2019ve got to watch it; we\u2019ve got to watch it.<\/p>\n
SIMON BROWN: Yes. It has been the cornerstone of Balwin \u2013 you build to demand. You don\u2019t build and then hope.<\/p>\n
We\u2019ll leave it there. Steve Brooks, CEO of Balwin, always appreciate the time.<\/p>\n
#Balwin #delivers #strong #fullyear #results #dividend<\/p>\n","protected":false},"excerpt":{"rendered":"
You can also listen to this podcast on iono.fm here. SIMON BROWN: I\u2019m chatting with…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[11771,1372,186,3428,1044,573],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6112"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6112"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/6112\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6112"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6112"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6112"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}