Letter to Investors

PFCbiz small logoPersonal Financial Consultants

Creating wealth ... personally
Registration No. 2001/007491/07
7 Lakeview Crecent, Kleinfontein Officepark Benoni ** P O Box 14149, Bredell, 1623
Tel 011 027 9975** Fax 086 660 9153
Financial Service Provider Registration Number : 738
e-mail : This e-mail address is being protected from spambots. You need JavaScript enabled to view it ** http//www.pfcbiz.com

Dear Investor,

The global economic recovery from 2008/2009 recession remains a stop start affair. This ebb and flow of global sentiment played out drastically in 2012 within the commercial property market. Comments from national property experts regarding the 2012/2013 year are as follows;

“Research shows that Landlords are likely to face a difficult year as they cope with rising costs on the one hand and an income squeeze on the other. Nevertheless investors are recognising that the time to re-enter the property investor sector is starting to look positive.” CEO of Broll Property Group

“South Africa has shortage of quality assets for sale in the investment market as matured funds are holding on to prime assets.” Jones Lang LaSalle’s latest report.

These comments might seem negative, and optimistically good news all in one but these challenges was enthusiastically taken on by the new management. New management were severely challenged with rising vacancy rates, poorly performing market rentals, explosive operating costs and more so poorly maintained properties.

Proud, yet humble we hereby report as follows since our official takeover as new management in February 2012.

 

Rentals and Earnings

By concentrating on better recovery on rentals, scrutinising new tenants, limiting electricity and water loss, correcting lease recoveries, implementation of rental increases on time, diligent charging of lease fees, and more, the team managed to decrease vacancy rate and increasing income throughout the portfolio.

The latest rent rolls for November 2013 can be viewed as a PDF file on the website.

Financial health

View the financial reports for the year ended February 2013 on the website.

Achievements

  1. General Maintenance issues that lead to tenant grumbles and non-payment of rent were addressed;

-       Minor electrical / plumbing concerns

-       Roof leaks and waterproofing

-       Air-conditioning and ventilation

-       Toilets and public sanitation addressed

-       General waste areas clean-ups and upgraded done

  1. Leasing requirements/tenant scrutinising and tenant mix were done with serious analysing.
  2. Staffing efficiency and HR issues professionally addressed.
  3. Constructive and diligent accounting with aging analysis checks and recovery.
  4. Finalisation of major legal claims against the companies.
  5. Effective System implementation that monitors Shareholders status and information.
  6. Successful submission of the Memorandum of Incorporation of all companies to CIPC.

Management changes

One of the strategic changes in the management structure is the effectively utilising the decision making rights and abilities of all members of the Board to contribute to effective management in all divisions of the group. For the past season the directors have been working together as a team making informed decisions with caution, measuring up the risks and the benefits for the shareholders.

The Audit committee’s contributions to the welfare and management of the group are well respected and saluted, with all strategic financial decisions made overseen by the board since new management took over.

Outlook

In presenting our objective to the Shareholders as management we need to be realistic as well. In the position we took over the companies it is not impossible and but idealistic to guarantee tip top companies by the end of financial year 2013. We are hence committed to set definite goals for financial year end 2014 subject to the availability of capital for tenant installation and revamps.

The following objectives will be pursued.

  • To pay interest of at least 9% to the shareholders on all companies loan accounts.
  • To bring all building up to standard with above average valuations thus securing capital growth.
  • To minimise vacancy rate to less than 10% of the total lettable area.
  • To reduce aging on outstanding rental by 25%.
  • To complete selected major re vamps before end 2014.

Investment activities

During the past year we were not able to review new investments into any of the companies but due to economic pressure and various deceased estates most of the companies have linked loan share available for sale. As first right of refusal we would like to make these shares available to our current informed investors.

All of the companies are in urgent need of capital to finalise all planned revamps. These revamps are a definite requirement for future growth. Management is investigating the opportunity to issue additional shares at a premium to cover the costs of these revamp

Managing Director

 

Address

Physical Address
7 LAKEVIEW CRESENT
KLEINFONTEIN OFFICE PARK
BENONI

Postal Address
P O Box 14149
Bredell
1623

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