Will Calulo reverse urban blight?

Posted On Wednesday, 04 May 2005 02:00 Published by Commercial Property News
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New listed property company Calulo Property Fund is currently talking to the government with a view to acquiring certain government properties

 Richard Harman

Presenter: Lindsay Williams Guest(s): Richard Harman

New listed property company Calulo Property Fund is currently talking to the government with a view to acquiring certain government properties that are on the market in South African city central business districts. With Calulo chief executive Richard Harman

LINDSAY WILLIAMS: Give us a brief background to Calulo?

RICHARD HARMAN: Calulo Property Fund has its origins in the previously listed Annuity Property Fund that changed its name in November to Calulo.

LINDSAY WILLIAMS: So you reverse listed - is that the case?

RICHARD HARMAN: That’s correct, yes.

LINDSAY WILLIAMS: What about the interest in the government properties - what specifically are they?

RICHARD HARMAN: They’re a number of properties that have parastatals as tenants in the various CBDs, where the existing owners are perhaps having difficulty in renegotiating those leases - given that government is in the process of trying to identify the best way of getting those properties into the hands of black owners. As a consequence - being an empowered fund - we are trying to assist them in sorting out their policy towards those disposals, and hopefully in the process look to pick up one or two of them ourselves.

LINDSAY WILLIAMS: Is this a trend, do you think, that government is going to have to look more to the private sector companies like yourself - to help them out in this regard?

RICHARD HARMAN: Yes, I think so. I think it’s looking to the expertise in the market, in order to be able to establish and formalise its own disposal policies.

LINDSAY WILLIAMS: Who owns the properties at the moment?

RICHARD HARMAN: There are a number of properties owned by both the Department of Public Works, and private investors.

LINDSAY WILLIAMS: What are you going to do with them - if you are successful in your bid?

RICHARD HARMAN: We see them as a core part of our portfolio going forward - long term government leases, with very strong parastatal tenants, we think represent a pool of assets which the other funds haven’t been able to get hold yet. In a very tight market - we think that’s a pool of assets we should be looking to target.

LINDSAY WILLIAMS: So the same tenants will stay in - government, or parastatal organisations - you’ll just make them more efficient?

RICHARD HARMAN: That’s correct, yes.

LINDSAY WILLIAMS: How will you do that? What’s going wrong at the moment, that Calulo can set right?

RICHARD HARMAN: I think a number of the private owners, in particular, are uncertain as to what government’s intentions are going forward. As a consequence, some of those buildings have run down a little bit. They need constant supervision, and constant work that is not necessarily taking place at the moment. Government feels that the quality of accommodation they have is not in keeping with the standards that they would like to see.

LINDSAY WILLIAMS: What will you have to do? Will you have to make a substantial investment in the properties concerned - in order to upgrade them? At the same time - will you therefore raise the rents, as the new landlord?

RICHARD HARMAN: Yes, I think it’s a double-edged sword. We will be working with them to establish what quality of accommodation they’re looking for - and refurbish to their requirements. Naturally, that would normally result in an increase in rentals.

LINDSAY WILLIAMS: If this is a success - with one or two properties, or however many it is that you’re looking at - do you think this will set a precedent, or rather be a model for the government and other parastatals going forward to do similar things to what is presumably a vast portfolio?

RICHARD HARMAN: We would like to think so. We would like to think we have the expertise to be able add value to their properties, and to assist them in the disposal process.

LINDSAY WILLIAMS: You’re obviously in discussions with the parties concerned - how far down the line are you?

RICHARD HARMAN: We’re at an advanced negotiation stage on one or two properties, but there also discussions taking place with one or two of the departments - in terms of us contracting with them, or certain of our staff contracting with them to be able to help them formalise their policies with disposal in mind.

LINDSAY WILLIAMS: Is there any competition for these assets?

RICHARD HARMAN: Yes there is. There’s always competition, and competition is healthy. We certainly expect to see a number of black owners themselves looking to throw their hats into the ring shortly.

LINDSAY WILLIAMS: Do you think you’re at the forefront - because of your BEE credentials?

RICHARD HARMAN: I think we’re a player, as a result of our BEE credentials, but I’m not certain that we’re necessarily at the forefront.

Publisher: Business Day
Source: Business Day

Last modified on Saturday, 08 June 2013 21:13

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