Freedom Property Fund, a real estate development specialist, has surprisingly sold off a recently acquired slab of industrial land in Stellenbosch for R49m, it was announced last month. The Stellenbosch industrial property – a sizeable warehousing facility located on George Blake Street in the sought after Plankenburg Industrial – was only acquired by Freedom in 2013 for R49m. This seems a tough sale for Freedom – not only was no capital gain profit registered on the sale, but the property was independently valued at R59,5m with annual rental income of R4,3m. Freedom said the disposal would be used to settle the existing bond on the property and the remaining proceeds would be applied to specific approved future developments.
The sale of the Stellenbosch industrial property coincided with the resignation of Freedom’s chairman, Patrick Burton, a well known and well regarded Western Cape businessman. CBN wonders whether the sale of the industrial property in Stellenboch is to give Freedom some breathing room with its residential developments – of which a significant chunk is located in the Western Cape.
At the release of Freedom’s financial results in May this year, CEO Tyrone Govender said the company was moving in the right direction.
“Even dealing with a few unexpected dynamics, we are on track with all our projects.”
He argued Freedom had made substantial operational progress, successfully driving the implementation of its strategies and unlocking value for its shareholders.
Freedom’s total revenue of R42,8m was significantly up on its forecast of R28,3m due to
higher than expected sales of its stock of services stands. But future growth might hinge on the success of residential developments, and at least the news here looks somewhat encouraging.
Govender contended Freedom’s mixed-use Langebaan Beach Resort in the Western Cape, bordering Saldanha, was ideally positioned to benefit from Transnet’s proposed R10bn harbour expansion. It comprises some 312,000m2 of zoned residential land, 427,000m2 of unzoned residential land, 8,000m2 of commercial zoned land and 21,700m2 for institutional use. He said Freedom was “well progressed” on plans to develop 7,000m2 of commercial space, pending finalisation of leases for the property.
At Miami Village, adjacent to Shelley Point in the St Helena Bay area in the Western Cape, Freedom has also entered into an agreement to sell 130 stands for a combined revenue of R14,2m against a cost of sales of R5m.
“The balance of 131 stands are expected to be sold rapidly too.”
At Gevonden, on the high-demand urban edge of Stellenbosch (bordering the successful Welgevonden Estate) preparations by Freedom for the development of 43 residential units for the mid-market were proceeding well.
Govender noted that although Freedom had a huge pipeline to deliver on and develop, raising equity for these projects was a challenge.
“While we have successfully concluded our term funding as we promised the market, we will continue to raise funding where we can. However, we are also taking an innovative approach to funding.”
In the case of Gevonden, Freedom is finalising a deal for a successful local developer to undertake the development and finance it on a turnkey basis. Govender said that on completion, ownership of the units would be split based on input costs, leaving Freedom with ungeared, popular rentable units, and the option to acquire more. Plus, he added, this was a low-risk approach to funding.
“We don’t speculate; our developments are always demand driven.”
By Jenni McCann