<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
SIMON BROWN: I\u2019m chatting with Ben Pierre Malherbe, CEO Calgro M3. Disclaimer up front \u2013 I hold shares in Calgro M3. We had results ending February 2026. Heps off 8.5%, dividend unchanged. Ben Pierre, appreciate the time.<\/p>\n
You talk in these results around targeting sales in non-core assets. I want to get to your core assets in a moment. But before we do, how much have you got left in non-core to sell, because a big chunk of it in this period was from that non-core portfolio.<\/p>\n
BEN PIERRE MALHERBE: Yes. Thank you, Simon. I think there are \u00a0two components to the non-core assets. The one side is project\u00a0we\u2019ve got no intention of developing over the next five years, a project that we\u2019ve owned for a long time and, for example, at the mid to high segment of the market where we\u2019re not active anymore. So we would like to just trade out, sell them.<\/p>\n
But I think what we saw this year is we had a big focus on trading out projects that are coming to the natural end of life, like Scottsdene. Scottsdene is a project that we\u2019ve had for years, and we have a small exposure in that project.<\/p>\n
But the focus this year was to freeze up the project so we can say we\u2019re done with Scottsdene, \u00a0move on, and unlock some of our capital that can go into new projects like Bankenveld. And that\u2019s not only capital, financial capital, it\u2019s all our resources internally.<\/p>\n
Read: Housing group shifts focus from non-core projects in strategic overhaul<\/p>\n
SIMON BROWN: Yes, human capital at the same time. You mentioned the Bankenveld District City [BDC]; you\u2019ve commenced infrastructure build there. This is sort of top infrastructure, which is really great. But of course you\u2019re now incurring costs. When do you start to build buildings, because that\u2019s when the revenue starts to flow.<\/p>\n
BEN PIERRE MALHERBE: Yes. So the first step was to get the bulk and link infrastructure. That\u2019s the big infrastructure required to make this land developable. We\u2019re currently building big roads and bridges across the Jukskei and the undercarriage under the N3 highway.<\/p>\n
We\u2019re currently doing that bulk and link and that should be completed by February next year, February 2027.<\/p>\n
That will allow us to start internal infrastructure on about 5\u00a0900 opportunities.<\/p>\n
We don\u2019t need to do all 5\u00a0900 opportunities at the same time, but by February next year we can start the internal infrastructure that will lead into the construction about six to 12 months after that.<\/p>\n
SIMON BROWN: What do you expect to spend this year, then, on that bulk and link\u00a0and other top infrastructure, as I said, ahead of the revenue opportunities?<\/p>\n
BEN PIERRE MALHERBE: Okay. The current existing agreement with the contractor on site is about a R280\u00a0million commitment between us and Eris [Property Group]. So it\u2019s quite a substantial amount of money.<\/p>\n
And then once we\u2019ve got the internal or that infrastructure, then we start with the internal infrastructure. Then Calgro will do its own and Eris will do theirs required for the industrial, commercial.<\/p>\n
Read:
Calgro M3 breaks ground on flagship Bankenveld mega development
Calgro M3 profits dip as it pours capital into Bankenveld District City<\/p>\n
SIMON BROWN: The Bankenveld\u00a0 District City is obviously the big unit. This is 20\u00a0000-odd units. What are your other core assets you\u2019re going to be focusing on going forward?<\/p>\n
BEN PIERRE MALHERBE: Fleurhof stays a core asset. Fleurhof is a project of about 16\u00a0000 units that can yield. We\u2019ve completed only about 10\u00a0000 of them. And we own land adjacent to that. That\u2019s a project that will keep on growing. So we will see activity in Fleurhof for another 10 years at least.<\/p>\n
Then we\u2019ve got South Hills, where we\u2019re doing in partnership with the City of Johannesburg, where there are 5\u00a0800 units still available to be constructed.<\/p>\n
So if we look at core assets, the integrated projects of scale, that\u2019s what we\u2019re looking at spending our time on over the next five to 10 years.<\/p>\n
SIMON BROWN: Fleurhof, South Hills and then of course the Bankenveld. I\u2019m going to break this question into two parts. In the period we\u2019re looking at \u2013 \u00a0to end of February \u2013 how was bank lending, and have you seen any sort of change subsequent to that, because of course in the 10 weeks since your period end there have \u00a0been all sorts of challenges in terms of fuel prices and potential inflation.<\/p>\n
BEN PIERRE MALHERBE: Simon, we definitely saw a recovery in the market. The market that recovered first was the rental side. For the man in the street, the interest rates came down so slowly that it was never substantial enough to trigger anything.<\/p>\n
So although the market recovered we saw our focus on sales, looking at people buying bulk. So someone will come in and say we\u2019ll take all 464 units. Construct them for us, and we\u2019ll take it to the rental market. So that recovered a lot faster than the man on the street.<\/p>\n
Obviously February and the war in the Middle East reset a whole lot of things, and I think this recovery in the market is on the whole, as we said, here.<\/p>\n
Listen: Residential market resilience could turn to rate-hike caution, says FNB<\/p>\n
SIMON BROWN: I agree and take your point on that.<\/p>\n
Elections in November. I know we\u2019ve chatted before around elections. A period of perhaps uncertainty is the right word. Probably you\u2019re looking at it the same way as we head up to that election on the 4th of November.<\/p>\n
BEN PIERRE MALHERBE: Yes. Simon, we knew a year ago that we were heading into an election cycle. So during these cycles we try and tend to spend money on infrastructure. We were very fortunate that we could have someone to put infrastructure into and spend money on infrastructure.<\/p>\n
Leading up to the election, there\u2019s always uncertainty and, whether we like it or not, that uncertainty lasts a little past the elections with a change of guard.<\/p>\n
It\u2019s not the first time we\u2019re going through the cycle. We expected that cycle, and we are ready for that. But the uncertainty is there. And I think that\u2019s something we need to deal with.<\/p>\n
Read: Ramaphosa proclaims 4 November for local govt elections<\/p>\n
SIMON BROWN: I take your point. Maybe being prepared is all you can do \u2013 know that it\u2019s coming and have some points \u00a0in place.<\/p>\n
Memorial Parks \u2013 revenue up or 26%, R86\u00a0million. It continues to grow. You\u2019ve got the new one in Rustenburg. You now have \u00a0over 100\u00a0000 potential graves. This goes along nicely.<\/p>\n
BEN PIERRE MALHERBE: Yes, Simon it\u2019s a good business to be involved in, I think, especially where we find ourselves growing into the Bankenveld project.<\/p>\n
The risk profile is completely different. We\u2019re not dependent on a grant fund infrastructure. It\u2019s a different market segment. And this allows us to grow into a project of scale like BDC. We knew we were going to dip deep into cash. We\u2019re going to bleed some capital into it before we turn it around.<\/p>\n
And Memorial Parks at this stage is a different risk profile and a good business to have.<\/p>\n
SIMON BROWN: Yes, different risk margins. As they say, two certainties \u2013 death and taxes.<\/p>\n
We\u2019ll leave it there. That was Ben Pierre Malherbe, CEO of Cobra M3. Appreciate the time.<\/p>\n
#Calgro #digging #deep #infrastructure #memorial #parks<\/p>\n","protected":false},"excerpt":{"rendered":"
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