CBS Property announces sterling maiden results

Posted On Friday, 15 December 2006 02:00 Published by eProp Commercial Property News
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CBS Property Portfolio has completed a remarkably successful maiden year as a JSE-listed property loan stock investment and holding company.

Derek GreenbergCBS today announced that its distributable earnings for the year to 31 October 2006 skyrocketed by over 366% to R90,5 million, while market capitalisation soared by some 320% to R1.22 billion and property assets doubled from R1 billion to R2 billion.

CBS’s final distribution was declared at 40 cents per linked unit for the six-month period from 1 May 2006, bringing the total distribution to 72 cents per linked unit, which represents an increase of 11.6% on the previous year’s amount of 64.5 cents, and is 2 cents ahead of the forecast of 69.9 cents for the year.

This is the inaugural set of results for CBS, which listed on the main board of the JSE limited on 2 November 2005. “We are delighted to reward unitholder confidence in CBS by exceeding our forecast and believe that the company will sustain strong earnings growth into 2007 and continue to provide unitholders with good capital appreciation, provided market conditions remain stable,” notes CBS financial director Sean Mackay.

CBS executive director Derek Greenberg explains that this outstanding set of results can be attributed to the hands-on approach of CBS’ wholly owned property management division in reducing vacancies and containing operating costs within the portfolio, as well as the superior property acquisitions which CBS secured this year.

“It was an exciting year for CBS with the company successfully acquiring a number of premium grade properties without diluting earnings, which will ensure long-term sustainable growth in distributions and offer growth in capital over the medium- to long-term,” notes Greenberg.

The Net Asset Value per CBS linked unit is R8.30 at year end, after allowing for 14,5% deferred tax, and the liquidity of CBS units has been very encouraging with 32% of its weighted average number of linked units having traded during the year.

The company’s weighted average cost of finance is a favourable 9,6%. At the close of the financial year, CBS’ total borrowings amounting to R627 million represent 31% of the value of the property portfolio.

CBS furthermore enhanced its intellectual capital by introducing property heavyweight Richard Harman to the group as executive director, a powerful addition to an already talented and energetic team. Harman spent the previous two years as CEO of Calulo Property Fund, South Africa’s first fully-fledged BEE property fund, which was recently sold to the Pangbourne Group.

CBS purchased 22 properties for some R814 million during the financial year, which has substantially improved the overall quality of the portfolio. These properties include landmark buildings such as Bristol-Myers Squibb in Bedfordview, Sun International in Sandton and the UUNet headquarters in Woodmead, to name a few.

“The acquisition of these properties has enhanced the quality of the existing CBS property portfolio and furthered our objective to maintain exposure to a sectorally well-balanced and geographically diversified property portfolio,” says CBS executive director Martin Ettin.

“Based on the total gross lettable area of 276,000m2 the vacancy in the portfolio at 31 October was 2.9%, a reduction of 41% on the previous year.  This is a result of a cohesive and committed team effort on the part of CBS Property Management,” praises CBS executive director Gary Fisher. “We consider our team to be the company’s most valuable asset, and place emphasis on training and motivating each individual.”

CBS is actively pursuing various opportunities to grow the property portfolio and income stream by unlocking value in its existing properties. Material upgrades have commenced at both Buitengracht Centre and Matador Centre in the Cape Town CBD.

CBS also cemented a development agreement with Zenprop Property Holdings earlier this year. The deal secured CBS the first right of refusal for an agreed period, on certain properties, which Zenprop elects to offer for sale to the market. Accordingly, for the same period, Zenprop acquires the first right of refusal to the re-development of properties in the CBS portfolio.

“The strategic alliance with Zenprop will bear fruit in the new year and has already resulted in the post balance sheet acquisition of the T-Systems Building and the Siemens Building, located in Midrand, Johannesburg, for a purchase consideration of R302 million,” says Fisher. 

Both properties are occupied by single tenants, on triple net leases. The properties are expected to be transferred in April 2007.

Pursuant to the close of the financial year, CBS announced its involvement in a new property initiative, African Capital Property Portfolio Limited, which aims to establish the largest black-owned and managed unlisted commercial property portfolio in South Africa.  The controlling shareholder of African Capital is a consortium led by well known businessman Zwelakhe Sisulu and includes black professionals and broad-based women’s groups from Gauteng, KwaZulu-Natal and the Western Cape.

CBS has also recently placed 15,000,000 new linked units, in a ‘shares for cash’ transaction with the Public Investment Corporation. The PIC has close ties with CBS and this issue will increase their holding in CBS to approximately 15%. The proceeds from the sale will be used to fund further acquisitions and to repay debt.

Growth will continue to be a focus for CBS in the coming year and the company is well positioned to take its place as a market leader in the short term.

Last modified on Monday, 28 April 2014 10:29

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