Sectional title homebuilder to list on JSE main board

Balwin won the Residential category (Africa and Middle East) of the International Property Awards (2014/15) for its De Velde development in Somerset West

Balwin Properties Limited, South Africa’s largest homebuilder focusing on large scale sectional-title residential estates in high-growth, high-density metropolitan nodes in South Africa’s major cities, today announced its intention to list on the main board of the JSE, subject to requisite approvals.

Since establishment in 1996, Balwin has successfully developed, marketed and sold over 70 prominent residential estates comprising some 13,500 residential units, the bulk of which were delivered since large scale operations began in 2005. Balwin controls and manages the entire development process, from land identification, acquisition and zoning to pre-sales and marketing, construction and construction management, sourcing of materials and fittings, safety and quality assurance, and the final handover to homebuyers.

Stephen Brookes, Chief Executive Officer and founder of Balwin said: “Our listing is an exciting and important next phase in the evolution of Balwin. Listing on the JSE will grant us access to the capital markets and enhance our profile. It will also support our strong development pipeline and geographical expansion.

“Our developments appeal to a cross-section of buyers offering secure, high-quality spacious and environmentally friendly one, two and three bedroom residential apartments conveniently located in key nodes with on-site lifestyle amenities including restaurants, a club-house, sport and entertainment facilities.”

Apartments, normally in the price range of R599,900 to R1,699,900, are targeted at the middle income population category , which typically include first time, move-up, active adults, young professionals, families, retirees and buy-to-let investors. Each estate averages between 500 and 1000 units and offers secure, affordable, high-quality and competitively priced one, two and three bedroom apartments ranging in size from 45m2 to 120m2. Recently, Balwin won the Residential category (Africa and Middle East) of the International Property Awards (2014/15) for its De Velde development in Cape Town.

“Balwin offers an investment opportunity with excellent growth prospects backed by a significant pipeline and land-bank, leading market position, strong cash generating ability and the scalability to mitigate macro-economic impacts, including an exciting strategic initiative to develop, retain and manage a portion of future developments as a rental portfolio, growing to around 2000 to 3000 units by 2020,” Brookes added.

The high market demand for quality housing in the target price range is supported by robust structural market fundamentals. This, combined with excellent project management capabilities, will see Balwin sell over 1600 units this year and deliver an after tax profit of around R550 million for the financial year to
29 February 2016 (excluding once-off listing costs).

“The demand for new smaller-sized, higher density apartments and townhouses remains robust, accounting for more than 70% of new housing built in South Africa over the past 20 years. This trend is in line with similar emerging economies and is driven by factors such as urbanisation, growing population and growing middle class, land scarcity, building costs, housing affordability, property costs such as rates, taxes and levies, safety concerns with stand alone housing, as well as lifestyle changes, especially in the metropolitan areas of the country,” Brookes concluded.

Balwin has a secured project pipeline of approximately 8 years which, together with continually identified land acquisitions is expected to drive future growth. The Company is also currently negotiating the acquisition of an additional land parcel in the Kyalami node, on which a further ±15,000 sectional-title residential units may be developed.

Balwin is currently owned 70% by management and 30% by its private equity partner, Buffet Investments.

Investec Bank has been appointed as book runner in relation to the proposed listing.