Balwin announces 4 544 rental apartment deal, Unique design & architecture to disrupt rental market

Posted On Wednesday, 20 February 2019 19:03 Published by
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JSE listed Balwin Properties, South Africa’s largest turnkey sectional-title developer, today announced a rental transaction that will see Balwin Rentals (Pty) Ltd retain a right of first refusal to acquire 4 544 rental apartments to be developed by Balwin Properties.

Stephen_Brookes_Balwin_Properties

In terms of the agreement, Balwin Rentals (Pty) Ltd has already exercised its right to acquire and entered into a sale agreement for 96 residential rental apartments in the Greenpark development for a total consideration of R57 139 200.

Balwin Chief Executive, Steve Brookes comments:

“Our ambition has always been to develop and retain a rental model that would ensure annuity income for the Company.

“We believe that the rental model initiative in its current form provides us with significant value-unlocking opportunities without any cashflow implications. We will continue with our current model of developing, selling and handing over developments in phases to mitigate risk.

“It is defensive, as rentals are more popular in a higher interest rate environment, whilst prospective clients opt to buy when interest rates are low. This allows us to not only perform through the cycle, but we anticipate that the annuity income derived from the rentals will smooth our cash flow in the longer term.

“We are also able to unlock our 12-year land bank much quicker, expediting revenue contribution from fibre-to-home and solar energy installations as we achieve critical mass.”

In terms of the rental agreement, the 4 544 rental apartments will be sold in phases to Balwin Rentals (Pty) Ltd at an approximate 30% margin. Balwin will retain a 25% interest in Balwin Rentals (Pty) Ltd, providing the Company with annuity income. Proceeds from the sale of these rental apartments will be reinvested into the existing development pipeline of Balwin.

“Our award winning lifestyle centres are part of Balwin’s signature development and a key differentiator in our market. Tenants will enjoy these state of the art amenities which include clubhouses, swimming pools, gyms, laundromats, restaurants and concierge services,” added Brookes.

Leases will range from R4 500 to R9 000 per month and provide tenants with access to unique lifestyle features associated with the Balwin brand, such as  a clubhouse, restaurants, gym and concierge.

“Strong emphasis has been placed on reducing our carbon footprint and solar panels, gas geysers and other green initiatives such as water reticulation on the estate formed a key part of our objectives.

“We worked very closely with the architects to develop a high-quality product that will disrupt the market in terms of rentals charged and yields achieved,” concluded Brookes.

  • Agreed right of first refusal with Balwin Rentals to acquire 4 544 green brand units
  • Balwin Rentals already exercised right to acquire 96 rental units for R57 million
  • Balwin Properties to retain a 25% stake in Balwin Rentals generating annuity income
  • Defensive strategy in an increasing interest rate cycle
  • Rental units differentiated by aesthetic design and specification level; retaining Balwin quality and signature lifestyle offering
  • Disrupting rental market by offering sustainable rentals of R4 500 – R9 000/month while delivering an above average yield

 

Last modified on Wednesday, 20 February 2019 19:17

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