Calgro M3 expands its memorial parks
Diversified property developer Calgro M3 is expanding its memorial parks division by acquiring a new property in Rustenburg in the North West province which is set to add an initial 4,500 graves to its portfolio and contribute a steady stream of income.
The JSE-listed company is seeking to geographically diversify its businesses, ensuring competitiveness and providing a buffer for the cyclical nature of its residential property development business.
Subsequently, Calgro has aimed to bolster cash flow from its memorial parks segment to offset monthly group overheads and interest expenses, thereby ensuring greater financial stability and operating efficiency.
“The acquisition in Rustenburg, along with established parks in Gauteng, the Western Cape and the Free State, underscores our commitment to national coverage,” CEO Wikus Lategan said.
“This objective complements the cyclical nature of the residential development business, and coupled with diligent capital allocation used in the current financial year to repurchase shares, offers shareholders a robust balanced investment opportunity and is testament to the strategic planning and capital allocation undertaken by Calgro M3 over the past few years.”
The acquisition of the 20ha park will be complemented with an upgrade into a memorial park with the first phase expected to be completed in August.
A memorial park is a privately owned modern garden of remembrance that uses uniformed markers on landscaped plots to memorialise a grave, rather than the headstones of traditional cemeteries.
About 12ha would be used for burials and the balance for parking, the group said, adding that the park would conservatively yield about 25,000 graves over its lifespan.
The transaction will bolster Calgro’s portfolio of over 120,000 graves while it is expected to achieve cash-flow break-even within two years, further reinforcing Calgro’s robust financial foundation.
The group has advised shareholders to expect a profit jump of as much as a fifth for the year ended February when it releases its final results on May 13.
Calgro said this was due to improved performances in both its developments and memorial parks segments, coupled with a successful share buyback programme of about R73m.
Following the update in February, Chronux Research director Rowan Goeller said the memorial parks business was doing well, with marketing efforts paying off as market share had increased, and expansion plans were well advanced.
“The aim is for the memorial parks to cover group overheads and interest on group debt,” Goeller said in a note.
Lategan said that while the memorial parks segment was gaining momentum, the group remained committed to the housing market, as demonstrated by its new transformative Bankenveld District City project announced two weeks ago.
The project was expected to revolutionise Johannesburg’s northern suburbs by adding up to 30,000 housing units in the area, he said. “It is estimated to double our project pipeline with anticipated revenue in excess of R18bn, heralding socioeconomic upliftment and a focus on sustainable living standards.”
The project, with the potential of generating more than R18bn in revenue, marks a significant milestone, more than doubling Calgro’s existing pipeline.
Calgro’s share price was up 5% to R5.25 at 2.30pm on Tuesday.