Commercial property development company, Heartwood Properties, has revealed a 30% increase in their portfolio value, and a 29% increase in net asset value at the end of their first year as a listed company on the 4AX (4 Africa Exchange).
This comes after a successful capital raise, which took place towards the end of 2018. 4.5 million new ordinary shares were issued to participants, resulting in Heartwood Properties’ shareholder base increasing materially. An amount of R500 000.00 was also received from a new shareholder whose shares were issued in March 2019.
Heartwood Properties were the first property company to list on the exchange in March 2018, listing with a portfolio value of R121 million with its shares priced at 66 cents. A year later, the portfolio value has risen to R157 million with the share price increasing by 11% now listing at 73 cents. The net asset value is up from R66 million to R85 million and the loan to value ratio has decreased from 47% to 45%.
CEO, John Whall says: “Despite a tough economy where the sentiment is very negative, the results are very encouraging. We’ve managed to find pockets of value for our specific development market by remaining extremely focused on our particular asset class. After many years of being in the business we understand our market and especially the tenants we serve. We are seeing entrepreneurial businesses in the IT industry as well as foreign companies who are investing in South Africa looking for office space. On the warehouse side there is an ongoing demand for good space, although rentals are under pressure from the tenants in this market.”
The company is in the process of administering their next capital raise to ready themselves for any unforeseen opportunities that might present in the market, especially on land prices where some sellers are prepared to sell at lower prices than before.
“We aim to grow our total assets to R500 million within the next three years and ensure a minimum return of investment of 20% for each new development. We are also developing a co-working strategy to align to the office development portfolio and continue to pursue tenant backed deals with long leases. In order to meet this goal, we need to conclude two to three development deals of about R30-R50m per year.”
Future developments include the soon to be completed 2560m2 Soleil Office Development in Bryanston, which aims to produce returns of 30% within the first year. Other planned developments include Quartz Hill Park in Northriding, a new flagship Buildit for the Western Cape, and an office and several warehouse/showroom deals in the Western Cape. This current development pipeline is valued at R187, 5m.
To date, Heartwood’s assets include five completed developments, all of which are fully tenanted. Willow Wood Office Block A (2500m2); Willow Wood Office Block B (825m2); Willow Wood Block C (4 320m2) all in Broadacres, Jhb; Lanseria Corporate Estate in Jhb (1592m2); Office & Warehouse in Lanseria, Jhb (1 321m2).
In the short to medium term Whall’s outlook is positive. He urges investors to be ready to act as soon as the market turns.
“The most promising deals will not be found in a time where closing good business deals are easy and everyone is doing well. It is in times like these that the expertise and agility of experienced investors can unlock exceptional value. And we are in a unique position to have the liquidity to take advantage of this. It is also the right time for savvy entrepreneurs to edge in and position themselves for when the economic climate improves.” he concludes.