Spearhead's recipe for success.

Posted On Wednesday, 20 April 2005 02:00 Published by eProp Commercial Property News
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Top performer assigns 30% of shareholding to empowerment groups.

Mike FlaxSpeaking at a "double celebration" to mark Spearhead Property Holdings becoming the top performing real estate company on the JSE Securities Exchange and assigning 30% of its shareholding to black empowerment groups, Mike Flax, Chief Executive of the company spelt out in full a simple plan which he said had guided Spearhead since its listing.

In the drawing up of this plan, said Flax, Spearhead’s Chairman, Monty Kaplan, had encouraged him and his co-directors to focus on five main points and it was this focus, said Flax, that had enabled Spearhead to give a 66% return in 2004 and a 270% return over the last five years, i.e. a compound return of 32% per annum since 2000.

The five point plan, said Flax, had been "elegant in its simplicity". The five points are

  • focus on growing distributions per unit annually and reject the temptation to get bigger for prestige or other extraneous reasons;
  • specialise in the Western Cape by investing only in retail, office and industrial properties within one hour’s drive of central Cape Town;
  • avoid conflicts of interest by managing the company and its properties in house, thereby aligning management’s interests with those of shareholders;
  • cultivate an attitude which sees tenants and brokers as long term customers, partners and friends; and
  • reduce risk through moderate and hedged gearing.

This approach to the property sector, said Flax, had facilitated the forming of good relationships with a number of leading developers including Swish, tau Pride, Faircape, Cavalier, ACSA, Harries Projects and others and it had enabled Spearhead to become involved in R600 million worth of new developments in the last two years, of which 50% is on its own account without partners.

Moving onto the second reason for the celebration, the welcome to new shareholders from previously disadvantaged backgrounds, Flax said that these shareholders will prove vital to the positioning of Spearhead in the new South Africa – and two of their chief executives Lance Manala of Ngatana Properties and Abu Varachhia of Nabaz Properties now have a crucial role to play as Spearhead directors.

The full list of new Spearhead shareholders includes

  • PIC (the Public Investment Commissioners)
  • Nabaz Properties financed by Nedbank Corporate Property Finance and
  • Ngatana Properties, financed by Standard Bank Properties and Prescient Asset Management.

Complementing the move towards a BEE shareholding, Spearhead, said Flax, had committed itself to the empowerment of all associates and employees and is implementing an employment equity project representing a broad cross section of the people of the Cape and "upping" its black management percentages.

Spearhead, he said, is also breaking new ground as regards affirmative procurement and is committed to ongoing development of projects in previously disadvantaged suburbs of the Cape Flats.

Last modified on Friday, 09 May 2014 16:37

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