Tyrone Govender, CEO of Freedom
Freedom Property Fund today announced its maiden half-year results since listing on the JSE Main board on 12 June 2014. While only listed for 11 weeks of its half year period to 31 August 2014, it closed the period with its combined revenues higher than forecast, its development pipeline projects ahead of schedule and its initial funding successfully secured.
Freedom’s performance is measured by growth in net asset value per share (NAVPS). It closed the period with a NAVPS of 123 cents, before taking into account any revaluation of its assets and enhancement of income.
As a unique member of a new generation of South African capital growth funds invested in property, Freedom has a growing R1,5 billion portfolio of income yielding assets diversified across residential, commercial and industrial property, with a strong weighting in the residential sector, and a secured development pipeline of around R10 billion, as well as a long-term development pipeline in decentralised areas throughout South Africa.
Prior to listing, Freedom forecast revenue from its existing property and its development property for its financial year to 28 February 2015 of R19,8 million and R8,5 million respectively. At its half year, it had achieved R12,6 million, or 64%, of its forecast existing property revenue, and R27 million of revenue from the sale of development properties, significantly exceeding expectations.
Tyrone Govender, CEO of Freedom, comments: “We are pleased to report Freedom is well on track to comfortably meet our performance forecasts, and we’re confident that our broad short- to medium-term strategies are well underway to being successfully implemented to unlock value from our portfolio and pipeline”.
By 31 August, Freedom had also commenced or committed to all projects in its listing prospectus.
Govender says: “Our first weeks since listing have been exciting. We’ve set up management structures and systems to manage and implement our acquired projects, to optimise value for all our stakeholders.”
Making a strong contribution to Freedom rental revenue, is its wholly owned industrial asset Steelpoort Industrial, in the rapidly growing mining town of Steelpoort on Limpopo’s platinum belt. Freedom recently announced it is continuing its commitment to develop this property by adding a further seven industrial units to meet market demand, providing more than 8,050sqm of added gross lettable area (GLA). The first of the new units will be completed and delivered by the end of November 2014, with the final units completed by the end of May 2015.
It is also upgrading and expanding existing facilities which will be completed by the end of October 2015. With its new expansion, Steelpoort Industrial will provide over 27,000sqm of GLA. Freedom also anticipates developing a further 36,000sqm of light industrial warehousing, commencing as early as July 2015 for a R240 million construction investment.
Also in Steelpoort, Freedom is initiating its Tweefontein Residential Estate development, which provides Freedom over 4,000 residential development opportunities, which will be rolled out in eight phases over the next six years.
In addition, Freedom, in conjunction with Sasol, has received approval for a storage licence on 16ha of its unused Tweefontein development land. Subject to a long-term lease with Sasol, Freedom will begin construction in January 2015.
It has also started construction on phases of residential units in La Bonne Vie in Montana, Tshwane and Tubatse Residential Estate in Burgersfort, Limpopo. In early 2015, it will begin construction on further phases of the residential estate of Wespark Palms, in Kroonstad. All these units will be held as part of Freedom’s income-generating rental stock.
Govender explains that with a chronic shortage of housing for the lower and mid markets in South Africa, Freedom is excellently placed, with is strategic land holdings, to meet this great need with quality, affordable rental stock.
With the strong demand for its stock of serviced stands surprising on the upside, Freedom sold over 40 stands at Miami Village, which is adjacent to Shelley Point in the St Helena Bay area of the Western Cape. And, prior to launching its serviced stands at Langebaan Beach Resort in the Western Cape, it has already sold two stands.
“These sales provide Freedom with additional cash flows to use for our development,” says Govender. “Before we launch the mixed-use development opportunities at our Langebaan property to market, we will consider opportunities for our own income-generating portfolio, which could maximise value for our investors.”
Last month, Freedom also secured new debt facilities, to unlock further development with a R88 million facility from Nedbank Limited, which will be used for its Steelpoort and Tweefontein Residential developments. While Freedom’s assets are valued around R1,5 billion, its total debt, including its new Nedbank facility, is a mere R120 million.
“Freedom listed on the JSE to offer liquidity for shareholders, to create a platform to raise capital to boost our portfolio of income-producing properties and roll out our developments and secure a growing pipeline of new development, as well as increase our market profile,” says Govender. “In our short time on the bourse, we have already benefitted from remarkable headway in all areas, and we are making excellent progress on our strategy.”