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Trustco has high hopes for Herboth’s Blick, expects new development to contribute almost 70% of total value of all its property holdings

Trustco has high hopes for Herboth’s Blick, expects new development to contribute almost 70% of total value of all its property holdings

Trustco announced last week that it has obtained approval from the Ministry of Urban and Rural Development for the further development of the peri-urban estate, Herboth’s Blick. Despite the seemingly good news, the diversified insurance, investment, real estate and mining group’s share price on the Johannesburg Securities Exchange remained sticky, in fact falling by another 5% after the announcement.

Since the beginning of 2019, Trustco shares have taken back around 55% of their value, following the spectacular 100% appreciation in the fourth quarter of 2018. On Thursday 12 September, the share shed another almost 10% bringing it down to N$6.25, a level it has last seen in October 2018.

Following a spat between Trustco and investors earlier this year over adjustments to the so-called fair value of its properties, most notably the extensive tracts of undeveloped land it owns, Trustco was hoping that the announcement of another major project in its property development portfolio, will boost the lagging share.

Regarding the further development of Herboth’s Blick and its impact on the group’s balance sheet, Trustco stated in a SENS announcement “To unlock the future potential in land value, an application for the permission of the need and desirability to establish the new township was submitted to the [ministry] during the reporting period. It is estimated that the increase in fair value, once the new approval has been obtained would be significant.”

The application for township development was submitted to the ministry just over a year ago, and last week, 02 September, it was approved in principle.

“The provisional approval is subject to certain documentation to be compiled and a meeting to be held between the representative of the Issuer and the Local Authority within a 60 day period,” according to the SENS.

Citing comparable land values, Trustco said once developed, it will increase the value of the land from the current carrying value of N$30 per square metre to between N$1650 and N$2200 per square metre, depending on whether it is residential or commercial land. This will have an enormous impact on the value of the entire project.

“Upon final approval by the Minister for the Need and Desirability for Township establishment on the Herboth’s Blick development, a re-valuation of the property will be attended to as such approval will have a significant effect on the fair value of the property investments of the Issuer. This long term development comprises 68% of the total property land bank portfolio,” stated Trustco.


 

About The Author

Daniel Steinmann

Brief CV of Daniel Steinmann. Born 24 February 1961, Johannesburg. Educated at the University of Pretoria: BA, BA(hons), BD. Postgraduate degrees are in Philosophy and Divinity. Editor of the Namibia Economist since 1991. Daniel Steinmann has steered the Economist as editor for the past 28 years. The Economist started as a monthly free-sheet, then moved to a weekly paper edition (1996 to 2016), and on 01 December 2016 to a daily digital newspaper at www.economist.com.na. It is the first Namibian newspaper to go fully digital. Daniel Steinmann is an authority on macro-economics having established a sound record of budget analysis, strategic planning and assessing the impact of policy formulation. For eight years, he hosted a weekly talk-show on NBC Radio, explaining complex economic concepts to a lay audience in a relaxed, conversational manner. He regularly helps economics students, both graduate and post-graduate, to prepare for examinations and moderator reviews. He is the Namibian respondent for the World Economic Survey conducted every quarter for the Ifo Center for Business Cycle Analysis and Surveys at the University of Munich in Germany. He is frequently consulted by NGOs and international analysts on local economic trends and developments. Send comments to [email protected]

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