CBS Property Portfolio has enhanced its asset base with the transfer of 12 properties, valued at R616 million, into its property portfolio over the past weeks. This drives CBS’ property assets above R1.7 billion, with 47 properties covering a gross lettable area (GLA) of 270,842m2.

The linked units relating to this transaction have now been issued with CBS directors displaying their confidence in the performance of this company by taking up a number of the newly issued linked units.
 
CBS recently announced that it had exceeded budget for the six-month period ended 30 April 2006, and has confirmed that it is expected to meet its forecast distributions with ease.

Derek Greenberg, CBS director, points out that at the current share price, CBS’ forward yield is in excess of 10%. “This, considered with the quality of the portfolio, which provides growing and sustainable income, should provide an investor an excellent initial yield together with capital growth over the long term,” said Greenberg.

This confidence in its income streams is not surprising when considering that, including its new acquisitions, vacancies across its entire portfolio are at the 2% mark.

“The fact that our Cape CBD properties, comprising a total of 35,000m² are 100% let, bears testimony to the strong demand for office space. All vacancies have been well-let at asking price,” said CBS director Gary Fisher.

CBS director Martin Ettin notes that this is reflective of the strong property fundamentals where vacancies are down and rentals are rising.

“Further interest rate hikes are expected but we have fixed most of our borrowings,” says Ettin. He explains that while the market is cyclical, CBS and its shareholders are long term investors.

Fisher reiterates this sentiment saying that fluctuations in the market only have major implications for speculators. “Property investment is best suited to the medium- to long-term investor, who will enjoy good capital and revenue growth over time,” explains Fisher.

CBS financial director Sean Mackay reveals that the company intends to unlock even further value for its investors through proactive interest rate management of debt funding.

“CBS is actively pursuing the securitisation of a portion of its funding. The first phase of which will finalised within the next few weeks, delivering immediate savings. A much larger phase will be finalised within the next few months, resulting in improved distributions,” says Mackay.

The recently transferred properties also includes five from Zenprop, one of the foremost South African property developers, and secures a five-year strategic development alliance between the two companies. This will ensure a flow of quality private properties to CBS by way of first right of refusal on the properties which Zenprop elects to offer for sale to the market and effectively creates a low-risk ‘development pipeline’ for CBS, providing the enhanced yields achievable on new developments.

~ Ends ~

Issued on behalf of CBS Property Group:

Gary Fisher
T: 021 426 1880       C: 083 450 2222

Martin Ettin
T. 011 215 6440         C. 083 325 1463

Derek Greenberg
T. 011 215 6440       C.082 552 7244

Sean Mackay
T. 021 426 1880       C.083 440 3444