Despite the challenges faced by the property sector, Heartwood has reported net asset growth.
Despite the property sector having faced major challenges in 2020, and even in 2021, Heartwood Properties has reported a net asset growth per share of 25 percent for the year ending February 2021. Since first listing on the stock exchange in March 2018, it is grown its net
assets by a total of 93 percent.
CFO Koba Dumas (pictured) says that she is proud that the group has been showing consistent growth in its portfolio since listing on the 4Africa Exchange in March 2018, “despite tough economic circumstances over the past few years”.
With commercial property under the most pressure in this sector, these figures are a welcome relief for Koba and the rest of the leadership team at Heartwood Properties. “We’ve had to endure a lot this past year,” says CEO John Whall.
Heartwood has offered rental relief of R2.5 million in the form of rental reductions because people have been unable to either pay rent because of the Covid-19 hard lockdown in 2020 or because of people not being able to use their offices due to work-from-home policies in place to stop the spread of the virus.
Koba explains that the negative economic impact was felt by the group’s tenants and that Heartwood had to work closely with them in order to provide rental deferrals or concessions where necessary. “We continue to engage with tenants individually in order to maintain an understanding of the ongoing impact on their business and ours,” she adds.
However, the company is now back on track with tenants all paying rent as per their lease agreements.
“The biggest impact on our revenue was from the completion of a new commercial development in Bryanston, which provided an uplift in the fair value of the portfolio as well as expanded our tenant base and rental income potential,” says Koba.
Heartwood is also on track to complete the construction for Buildit’s flagship plus development in the Western Cape on 30 June 2021, as well as the Sunvlei office development in Somerset West at the end of 2022.
The company reported that vacancies are at three percent of its lettable area. With these vacancies of B- and C-grade offices at an all-time high in Cape Town’s CBD and in Sandton, the company’s A-grade offices have been making up most of their office portfolio and managed to hold its value during the pandemic.
Heartwood also specialises in the warehousing sector, building warehousing for successful
entrepreneurs who have the option to buy back their building at a later stage. According to the results, there has been an increase in enquiries in this sector, from mini units to massive logistics facilities. “Even though vacancy levels are still low, this is a sector worth watching out for, while older industrial buildings continue to experience pressure in this market,” John says.
Koba says it is important that Heartwood’s property valuations are based on current market conditions and use sound assumptions. “This is why 100 percent of the portfolio is independently valued at the end of each year by an appropriately qualified independent valuer,” she concludes.
