Success in the city

Posted On Tuesday, 10 August 2004 02:00 Published by eProp Commercial Property News
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Where other property companies have run away from the city, ApexHi has made a success of it.

Gerald LeissnerThey recorded a rise in net profit to R323,1m for 2004 - up from R247,1m in 2003. On the line is CEO Gerald Leissner

GERALD LEISSNER: Well, ApexHi was formed in 2001 - and it really purchased... a set of CBD properties from the old Apex Property Trust, and then it bought some properties from the portfolios of Anglo American... when they pulled out of property. And again... mainly CBD properties. So it started in 2001 - with 15 properties - worth about R15m - and the management company owned a little piece of land that we were selling.

LINDSAY WILLIAMS: So, you had a vision that the CBD would start to be revitalized?

GERALD LEISSNER: Well, look, to be fair - we were left with a rump of properties in the old Anglo portfolio - mainly CB properties. We took the view that there was a niche in high yielding properties, and that tended to be CBD offices to start off with - and our office portfolio is still essentially... 65% of our office portfolio is still in the three main CBDs.

LINDSAY WILLIAMS: And what is your view of the Johannesburg CBD? I'm sitting here, now, in Braamfontein - and every day I see the traffic getting busier and busier. Is that a reflection of a shift back from the northern suburbs - back into Johannesburg?

GERALD LEISSNER: No, I don't think so. I think what's happening in the CBD... the CBD is becoming a market for certain specific elements and - in the main - it's very, very strong from a retail point of view - and it's becoming more and more residential. Some of the banks that are there are still standing, and you've got regional government. Commercial offices... is really a very difficult market.

LINDSAY WILLIAMS: And what sort of trends are you seeing in your area? You talk about Joburg CBD being revitalized? From a residential point of view?

What about areas like Sandton - that seem to be over-broked, and over supplied?

GERALD LEISSNER: We have a tendency in South Africa, during various cycles, to over-develop. But there's no doubt that most of the market, during the last five years, had a major surplus of accommodation - and that would include Sandton, and all the areas north of Johannesburg. But, it would appear that the market is tightening up a bit. With the economy growing, there is a demand for space - and slowly that supply is being taken up - with the consequent slowly-rising rentals.

LINDSAY WILLIAMS: And your company itself - how many properties are you managing, and where are they mainly situated?

GERALD LEISSNER: We now have 235 properties, spread all over the country - mainly in Gauteng, Johannesburg, Pretoria and Germiston. We've got a big shopping center, we've got some properties in Randburg. We've also got properties in Polokwane, Richards Bay and Newcastle - a big portfolio in Durban. So we're really spread all over the country. But as I said, it's a particular niche. It's high-yielding properties, and it's a niche that nobody seems to want to be in.

LINDSAY WILLIAMS: Are you going to stay with that niche, or are you going to expand?

GERALD LEISSNER: No, we're not going to change our model.

LINDSAY WILLIAMS: So, you're going to stay exactly in that niche that you're in now?

GERALD LEISSNER: We're going to stay in that niche - buy properties the way we've done it... keep our gearing relatively low, and produce income.

LINDSAY WILLIAMS: And is it easy to buy and sell your shares?

GERALD LEISSNER: Very much so. Our A units, 60% of our A units traded in the

12 months to June, and 59% of our B units - which is really exceptional.

LINDSAY WILLIAMS: You're going to have to explain that to me - what's the difference between the A and B units?

GERALD LEISSNER: What we did is - because we were in a particularly high yielding niche, and our units were trading at units of up to 25% - we split into A and B units. The A units - it's the first R1,02 in distribution, and this year we paid R2,12 and three quarters. The balance goes to the B units.

Now, what that means is that the B units are very much more volatile - they get any uplifts in income, and they also suffer in income going down. The A units are almost like a bond, almost like a bond... There is a stage when the As will start to participate as well. Now, what this seems to have done for our units is price both the As and the Bs on a very, very much stronger footing. So both the As and Bs are trading very well. Easy to buy, and easy to sell.

Last modified on Wednesday, 14 May 2014 11:44

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