Land parcels for the first six build-to-rent developments have been identified in Johannesburg East, Tshwane East, and the Western Cape o Comprising up to 7 300 apartments in aggregate o to be developed over the next 8 to 10 years
· This represents approximately 20% of the Company’s unused land portfolio o Allows Balwin to expedite the development of its land bank to generate returns on otherwise inactive land
· Estates will be developed exclusively for rental purposes, none of the rental apartments will be available for sale on the open market
· The rental portfolio will target market rentals of between R6 000 and R13 000 per month o Retaining EDGE Advanced certification and certain lifestyle elements such as solar, high-speed fibre connectivity, and facial recognition access control
· The rental developments are expected to generate above market-related yields and will increasingly contribute to Balwin’s annuity income and net asset value growth over the medium term
· Balwin Rentals will leverage technology to manage the rental portfolio and ensure smooth and efficient onboarding and collection of rental income, reducing the need for an aggressive headcount increase
· Roll-out of the rental portfolio will generate approximately 39 000 direct and indirect job opportunities over time o Will act as a catalyst for important construction skills retention · Balwin Rentals introduces a more defensive asset class that will further diversify the Group’s revenue streams and complement the cyclical nature of its build-to-sell development business.
24 July 2024. Johannesburg. JSE listed Balwin Properties (“Balwin” or “the Group”), a developer that cares about environmentally responsible building practices and the delivery of high-quality apartments to its valued clients, today announced that it is expanding its rental portfolio with a vision to develop up to 7 300 apartments for rental over the next 8 to 10 years.
Steve Brookes, CEO of Balwin Properties commented:
“We are very excited about the launch of our rental portfolio, which will be complementary to our current build-to-sell model. Having a substantial rental portfolio will serve as an incubator, enabling tenants to progress up the property ladder by eventually buying their own Balwin apartment.
“At the same time, it allows us to unlock our landbank a lot quicker, as the first phase of 7 300 apartments represent approximately 20% of our land bank.
“Balwin Rentals introduces a more defensive asset class that will further diversify our revenue streams and complement the cyclical nature of our build-to-sell development business.”
Land parcels for the first six build-to-rent developments have been identified in Johannesburg East, Tshwane East, and the Western Cape, and will be rolled out over the next eight to 10 years. Estates will be developed exclusively for rental purposes, and none of the rental apartments will be available for sale on the open market.
“Over the past few years, we have steadily expanded our capacity, skills, technology, and systems, and we’re now in a position to roll out a scalable and efficient rental portfolio without detracting from our existing build-to-sell model,” Brookes added.
The rental portfolio will target market rentals of between R6 000 and R13 000 per month for one-, two- and three-bedroom apartments, while retaining quality and certain lifestyle elements such as solar, high-speed fibre connectivity, and facial recognition access control. The rental developments will also maintain the EDGE Advanced certification synonymous with Balwin’s build-to-sell model.
These developments have been sufficiently cost-engineered to feasibly generate above market-related yields. Although the Group expects Balwin Rentals’ initial revenue contribution to be negligible for the financial year to 28 February 2025, it will increasingly contribute to the Group’s annuity income and net asset value growth over the medium term.
Balwin Rentals will have full control over the rental estates, allowing Balwin to optimally manage costs. The management of the rental portfolio will be internalised and as far as possible, be tech-driven to reduce operating costs and enhance yield performance. The use of technology will further ensure smooth and efficient onboarding and collection of rental income, reducing the need for an aggressive headcount increase as the business is scaled.
Moreover, Balwin Rentals envisages raising long-term debt finance from commercial lending and Development Finance Institutions at preferential interest rates to fund the development. As with Balwin’s build-to-sell model, developments will be constructed and tenanted in phases to minimise risk.
The first six rental developments are expected to create approximately 39 000 direct and indirect job opportunities over the next eight to 10 years. Importantly, it will also act as a catalyst to retain important construction skills, as developments will be on a similar rotational basis as with Balwin’s build-to-sell model.
