This is the first set of interim results for CBS, which listed on the main board of the JSE limited on 2 November 2005.
"CBS' distribution for the full year ending 31 October 2006 is expected to equate at least to the updated profit forecast of 69.9 cents per linked unit subject to market conditions remaining stable," notes CBS financial director Sean Mackay.
CBS' revenue totalled R70 million for the interim period. The company's weighted average cost of finance is a favourable 9.3%. At the close of the six-month period, CBS' total borrowings amounting to 480 million rand represent 43% of the value of the property portfolio.
During the period CBS acquired seven prime properties for 122 million rand at a combined initial forward yield of 10.38%, including the unique Simonstown Boardwalk Centre which is located at the Simonstown Waterfront and caters specifically for the growing tourist market visiting the area. The other properties comprise six multi-tenanted Gauteng office buildings including Gateway Park, Gate Creek and Green Oaks in Midrand, and Duam Properties, ENK Trust and JH Moselein, in Randburg.
After the period CBS acquired a further 12 properties for 616 million rand, driving CBS' property assets above 1.7 billion rand, with 47 properties covering a gross lettable area (GLA) of 270,842m2.
"The acquisitions will contribute to a growth in income and capital over the medium to long term, resulting from the enhanced quality and critical mass of the company's property portfolio, in addition to contributing to the long-term sustainable growth of the company," points out CBS executive Derek Greenberg.
Five of the 12 properties were purchased from Zenprop Property Holdings. CBS has also undertaken an innovative strategic development alliance with Zenprop, one of the foremost developers of retail, commercial, industrial and residential property in South Africa.
"The deal secures a flow of quality private properties to CBS by way of the first right of refusal, for a period of five years, on certain properties which Zenprop elects to offer for sale to the market," notes CBS executive director Martin Ettin.
Ettin explains that CBS will benefit from Zenprop's development expertise which aligns both CBS' and Zenprop's interests and commercial insight. Accordingly Zenprop acquires the first refusal to the exclusive re-development of properties in the CBS portfolio, during the same period.
Vacancies in the CBS Portfolio currently account for 2.2% of gross lettable area, a historic low for the company. Several large leases have recently been signed in the Cape Town CBD, effectively reducing the vacancy in the area to nil. "This is a fantastic achievement by our in house management team and bodes well for rental growth", says CBS executive director Gary Fisher.
CBS' exposure to commercial property, as a result of the post balance sheet acquisitions, has increased to 61% which positions the company ideally to benefit from increased demand for office premises and correlating upswing in rentals. The company's property portfolio is located nationwide with 56% of CBS' properties situated in Gauteng, 31% in the Western Cape, and 13% in KwaZulu-Natal.
I-Net Bridge
Publisher: I-Net Bridge
Source: I-Net Bridge
