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Across: Lion taming is easier

Posted On Wednesday, 04 July 2007 02:00 Published by
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A banker becoming a property developer is a bit like the accountant who wanted to become a lion tamer in a skit by British comedy team Monty Python ("Accounting is boring, boring, boring")

But that's what Wilf Robinson (51) did last year when he retired as head of Absa Private Bank and became CEO of land developer Acc-Ross.

Acc-Ross was an assembly of development properties placed into the company by their owners at what now appear to be highly optimistic values in exchange for shares. The shares were listed on the JSE's AltX in February at 100c and quickly plunged to as little as 13c. Very few free-floating shares, whose proceeds were to provide vital cash for developing the properties, were taken up.

Robinson readily admits he took the CEO's job in June last year "out of ignorance". But he has piled in to the company, reducing its mixed bag of development properties from about a dozen to four large townships, and shed its empowerment partners Abalengani.

He also had to take big losses on the chin as he cleaned out the balance sheet. He ended up last month reporting a R17,8m loss for the year to February against a profit of R11,9m in 2006. He starts the new financial year with a profit of just under R40m from the sale of property. He has also nursed the share price back over 60c.

"Our focus is now on large resort and leisure developments of a minimum of 1 000 saleable opportunities," he says. "We have a small team with development and marketing skills and we will outsource the design, project work, construction and management."

The developments are the Gardner Ross golf estate in Centurion, which is currently the sole supplier of income and is selling its final phase of residential stands; the 700 ha Lizard Point on the Vaal Dam, which will eventually have 2 700 residences plus conference and boating facilities, shops and other commercial properties; the 76 ha Blue Horizon Bay on the Jeffreys Bay beachfront; and Welvergenoegd in Durbanville near Cape Town, a development similar to Gardner Ross.

A good start, but any competent banker could have done that. Now the hard part of making the developments work starts for Robinson. Not only must they be profitable and keep their cash flowing, but the developments must also produce a steady stream of income payouts to shareholders.

Robinson says Acc-Ross will build annuity income by holding properties in each development that will generate business or earn rent. For instance, Lizard Point will have a conference centre and hotel, provide boating services and also have a retail component at the water's edge with restaurants and shops.

Robinson admits Acc-Ross doesn't have experience in these businesses but says he will outsource their development and management.

Acc-Ross's properties are well located and its strategy for success and steady income is certainly do-able.

Publisher: Financial Mail
Source: Financial Mail
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