Silver lining awaits Calgro M3
JSE-listed property and private memorial parks developer Calgro M3 Holdings has secured a four-year option in partnership Eris Property Group for Frankenwald, the last remaining large-scale property in the greater Sandton area, from Wits University.
Wikus Lategan, CEO of Calgro M3, said it anticipates having between 40 000 and 50 000 housing opportunities on the site, next to Alexandra and the Marlboro Gautrain Station.
Lategan said in terms of the equal partnership with Eris, Calgro would take all the residential and Eris the commercial, retail and industrial opportunities.
But no material financial commitments on this project are planned for the next four years while Calgro executes its current pipeline.
Lategan said the property has been secured through a small capital expenditure for the next four years, with R100 million in cash then becoming due as its portion of the purchase price and the balance a percentage of the revenue Calgro generates on transfer when it sells houses it develops on the site.
Calgro reported a 204.2% decline in headline earnings a share, to a loss of 3.24c in the six months to August, from 3.11c profit in the previous corresponding period.
The group’s intense focus on cash-flow generation and cash preservation, resulted in cash from operations increasing to R449.5 million from R3.6 million.
Lategan said it managed to stabilise Calgro’s cash flow during these difficult economic times through various debtor and progress draw recoveries, which enabled the company to support itself without having to sell off any of its assets.
A decision was also taken to suspend work on various developments, which resulted in additional costs.
Insurance claims of R16.4 million were recovered from Sasria related to illegal land invasions.