Review of operations

Property: Heartland Properties

Heartland Properties was established early in 1999 when, as part of its Transformation Programme, AECI Limited increased its emphasis on realising value from land and property assets surplus to the Group's operational requirements. In its second full year of operation, the company made pleasing progress towards achieving this strategic objective.


Wayne Holder

Efforts continued to be concentrated on AECI's three largest, traditional sites: Modderfontein in Gauteng, Somerset West in the Western Cape, and Umbogintwini in KwaZulu-Natal. With a broad range of property products being made available to the market, development activities at all three sites made pleasing contributions to Heartland Properties' overall performance in 2000. Heartland has access to 3 000 hectares of strategically located land for development over the next 10 years.

Overall 2000 was a difficult year for the property sector, and developers and the building industry operated in an extremely flat market. As the year progressed some signs of growth began to emerge, first in the residential and industrial sectors and then in retail and office space. Heartland's spectrum of products ensured its ability to maximise growth opportunities in all sectors. The company is confident that, in the context of the government's disciplined fiscal policy, 2001 will present better opportunities and these will continue to be pursued vigorously.

With the closure of several AECI manufacturing operations in 1999 and 2000 additional buildings and land, previously occupied by and in support of manufacturing activities, became available. This led to the establishment of an Asset Management division, within Heartland Properties, tasked with optimising returns on relevant assets. This had the effect of reducing holding costs for the AECI Group whilst still maintaining properties at acceptable standards. At Modderfontein, in excess of 90 000 m2 suitable for commercial and retail use has been freed and more than 20 000 m2 of industrial space is available. In January 2001, Heartland extended this service to the Somerset West site where 60 000 m2 of space is now under management of its Asset Management division.

This site now offers industrial, commercial, retail and several residential opportunities. Longmeadow Business Estate, dubbed by the property industry as Gauteng's "Property Hot Spot", recorded exceptionally pleasing returns and is expected to make a significant contribution for some years to come. Thornhill and Lakeside, two residential estates, have been well received by the market. The projects comprise refurbished homes in well-established areas. They have contributed to the re-establishment of Modderfontein as a desirable residential node offering a desirable lifestyle.

The 230-hectare Greenstone Hill and Park development, between Modderfontein and Edenvale, was approved and work is scheduled to commence in the second quarter of 2001. Of the 200 hectares available for residential development, 30 hectares are already sold and tenants have been secured for 40 per cent of the 30-hectare commercial and retail sections.

Somerset West
Redevelopment of this site attracted significant interest and all four of the key projects being promoted by Heartland Properties recorded an increase in activity in 2000.

Somerset Ridge Residential Estate, with 720 sites, was sold by year-end. The balance of land available for this estate has been released and is expected to be sold out by mid-2001.

The Interchange, aimed at the light industrial market, attracted pre-sales in excess of 50 per cent of the total development, scheduled for 2001.

Demand for office space in the Helderberg Basin led to the establishment of The Links Office Park and 30 per cent of available space was taken up between the project's launch in October and year-end. Retail developments released in the last quarter had also been sold by year-end and additional, similar projects are being evaluated.

Activities at Southgate Industrial Park, where performance has been very disappointing in the past few years, showed some improvement. The property market in the greater Durban area, however, remains depressed and no major turnaround is expected in the short-term.

Executive Committee:

Wayne Holder (38)
Managing Director
Dip Project Management

Ralph Gruenbaum (58)
Finance Director

Len Larson (57)
Operations Director
NDT (Chem)


Pierre Rossouw (48)
General Manager Asset Management
B Comm

Kevin Thomas (47)
General Manager Property Development
BA (Hons) Econ


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