Balwin’s Brookes stands by strategic head office deal after media backlash
STEVE Brookes, the chief executive of Balwin Properties, yesterday stood by the strategic purchase of the group’s new head office as he revealed the mortgage per month would largely be paid for by the placement of Africa’s largest digital signboard on the side of their building.
Brookes in an interview yesterday cleared the air after there was a social media backlash with market participants questioning the capital outlay and “flashy” office. “I apologise to shareholders that we did not raise more awareness around the move.
“I believe we could have been more pro-active in telling this good story before the news announcement. We have learned a lesson. We have actually disclosed this move before, but people do forget,” the chief executive said.
Brookes said they had been pursuing the Melrose property for five years as it was in a great position and were happy that the deal came to fruition. “The prime reason for the move is we need more space,” he said, explaining that the company had outgrown its old headquarters in Bedfordview, with their 350 full-time employees.
The upmarket Melrose Arch property, in Johannesburg, was highly visible from the M1 motorway and a 6-Star green-rated, modern, Grade A+ or P-Grade Property.
“We are putting the biggest digital screen in Africa on the building and we have had a tremendous response that will generate a huge amount of revenue, which is phenomenal,” Brookes said, adding that a deal with a non-disclosure agreement (NDA) is being negotiated.
He could not disclose the financial aspects of this deal however, Brookes said the digital sign would be 65 metres long and seven metres high. Balwin would also advertise its own business on the board, a commercial win.
“So the overall branding exposure is massive on that building,” he said.
Last week Brookes disclosed that the property had a gross lettable area (GLA) of 7 341m² consisting of office space, exterior areas, common areas and storage space.
Balwin said it would initially occupy 2 500m² of the total GLA, with the balance available for lease by third parties at market-related rates.
Yesterday he said most of the space was already let. But the decision to buy the Melrose building was not just a financial one, Brookes said, as it was made with employee wellness in mind.
Balwin intended to rehabilitate the park opposite the property in order to create an area that could contribute to staff welfare in the group – a move that Brookes said had already received
community buy-in, with plans to also build outdoor exercise and sport facilities in the park in a safe space.
Brookes said: “My dream is to see our staff going to their lunchtime and sitting under a tree like they do in London or in New York, then coming back to work refreshed.”
Touching on the social media backlash, with some comments aimed at the company’s financial decision and its financial position, Brookes said he could not comment as the company was in a closed period.
Part of the social media backlash was due to buying the property and the capital allocation after Balwin last year issued new shares at a lower price, meaning that as a result there was less of a return for shareholders in the company.
Brooke could not rule out the company buying back shares ahead, but said this was up to Balwin’s board.
He also quashed any speculation that third parties were involved in the purchase of the building between Balwin Corlett and the Corlett Drive Trust, saying that its sponsor, Investec, went over the deal and there was “no related party in this”.
According to the JSE rules, a related party is a material shareholder, which is defined as any person or entity who holds or controls 10 percent or more of the votes in the listed entity.