JSE-listed property group Balwin is a stock which is closely followed by our community and based on our data analytics is one that receives an above average number of searches on our platform. The company released a Stock Exchange News Service (SENS) announcement which stimulated some discussion in investment circles yesterday.
The company announced via SENS that its rental arm Balwin Rentals would have first right of refusal in purchasing 4544 units from its development arm Balwin Properties.
This comprises the following:
- Greenpark (1 056 units) in Boksburg with an expected completion date of December 2021
- Greenlee (1 728 units) in Linbro Park, Sandton with an expected completion date of March 2024
- Greencreek (1 760 units) in Riverwalk Estate with an expected completion date of March 2025
Balwin Rentals says it will pay up to R57m for these units with the money being reinvested in the Balwin Properties balance sheet.
While this is ostensibly a “shuffling of the cash” inside of Balwin (and Balwin have indicated that their strategy is to maintain a rental portfolio), this seems to be a relatively significant amount of stock that the company is taking out of the market – or phrased differently, the company doesn’t expect to be able to sell these units.
A figure to follow is the breakdown of the various developments and the % of units actually sold. When the company released its interim results in to end August 2018, the picture was not particularly encouraging.
The share rose in Tuesday trade, adding 2%.
The share is down 10.5% year to date, trading on an historic multiple of 2.3% and dividend yield of 12.4% – these figures should be taken with caution as the company has indicated it will be slashing its annual dividend in an attempt to preserve cash.