The Stellendale Village, a massive residential property development for the middle income market in Cape Town, is coming to trade on the JSE. Kind off!
Packaged inside a national expansionery vision, Stellendale Village is coming to pillar a new listing on the JSE’s alternative exchange AltX. The developers going by the name Visual International Holdings are bringing their vehicle to the market to raise capital to jumpstart the development and attendant vision to claim a larger stake in South Africa’s massive middle income housing market.
In a statement released today Visual International said it will enter AltX in February and is promising a big bonanza for investors.
The company said it provides to investors a unique opportunity to share the benefits of an investment in developing mixed-use residential suburbs for the middle-income market. This market, said the company, is conceivably the fastest growing residential property market segment in South Africa.
Visual International CEO Charles Robertson said “Demand for quality housing from the growing middle-income market in South Africa is strong. Our model of developing mixed-use suburbs on suitable land near jobs and infrastructure, meets this demand.”
He added that “Listing Visual International will provide the capital needed to pick up the pace of development, as well as reproduce our successful model in other high-growth nodes around South Africa”.
Visual International was astablished in 1993 and boast as asset base of around R126,5m. The company said its net asset value is around R60m and comes out of some 80 000sqm of developable bulk that is ultimately expected to produce real estate investment of around R2 billion.
The company said it intends to raise R33 million prior to listing on the AltX, through the issue of 66,000,000 new shares at 50c per share. This, said the company, will unlock the next chapter of its growth path. The capital raised will be applied to fast-tracking its residential development plans at its flagship Stellendale Village over the next two years.
The Stellendale Village development is a 22 hectare mixed-use residential suburb just off the Stellenbosch Arterial in Kuils River, Cape Town. The development is planned to ultimately provide some 1 500 homes to middle-income households when completed.
The company said it has already developed 440 homes at Stellendale Village, with a further 63 under construction and plans to unlock further phases of development. It will also acquire about 15% of the apartments in the precinct and make them available to rent.
The upshot of all this, said the company, is a two-year long-term earnings per share growth forecast of 33,5% for Visual International. The company said it is a long term play focused on capital growth and as such plans to reinvest all profits for its first five years after listing without paying dividends. It will introduce dividends thereafter. “We’ve set our sights on a JSE main board listing at the right time,” said Robertson.
Visual International develops homes for the South Africa’s growing middle-income bracket, priced from R400,000 to R700,000. “Historically, South Africa consisted of ‘haves’ and ‘have-nots’ but in recent years a new, growing middle market has emerged and will continue to develop even further,” says Robertson.
“This market is driving performance in many sectors of the economy and the success of businesses like Shoprite and Pep. It is also supporting higher car sales figures and growing numbers of restaurant and fast food outlets. However, middle-income people are poorly served with suitable residential opportunities and are in need of quality apartments and homes to live in.”
This is the important need that Stellendale Village is meeting and why Visual International sees excellent prospects for its business model, not only in the Western Cape, but also in Gauteng. According to South Africa’s latest population statistics, both provinces are showing higher population growth than the national average and other South African provinces.”
The new shares to be issued in Visual International’s capital raising equate to 26% of the shares in the company, with 74% held by its executive team and a Kuils River empowerment initiative they have established. This aligns management interests strongly with those of investors.
Visual International said it is led by a skilled and experienced executive team with more than 70 years of combined experience in all aspects of the property development sector. Robertson is a property developer with 30 years experience, including projects like N1 City. Projects Director Peter Grobbelaar has extensive experience in both the construction and property development industries, including the V&A Waterfront Marina Residential Development and High Cape. Financial Director Grant Noble has extensive experience in financial management and administration of private security estates.
The company said the oulook for residential property for the middle market is undoubtedly positive. “We’re seeing renewed interest in residential property in South Africa and potential for good strong capital growth. Many residential developers fell victim to the effects of the global economic crisis and there have been few new builds in recent years and many abandoned projects. As recovery steadily enters the marketplace, we see many opportunities for more developments like Stellendale Village and joint ventures.”
Visual International has already secured a pipeline of future developments and is establishing strategic development partnerships in Gauteng.