ORION REAL ESTATE LIMITED (ORION) was originally founded by Franz Gmeiner in 1991 with the purchase of a high rise office building in downtown Johannesburg.
Over the years, the company evolved and grew by acquisition and the reverse listing in 2005 on the Johannesburg Stock Exchange (JSE) main board. In November 2019, Orion delisted from the JSE and relisted with ZAR X via a virtual Zoom listing on 23 April 2020.
The migration to ZAR X stock exchange opens a new chapter in the history of Orion Real Estate. From inception the company has as its core business activities the investment in Commercial, Industrial, Retail and Hospitality properties. Orion’s business model also has a core element of its management philosophy the concept of in-sourcing. This means where at all possible the company executes all aspects of property management in-house.
The services delivered in-house are:
- Property Rental Administration
- Space Management
- Finance and Accounting
- Project Management
- Security Services
- Cleaning Services
- Repair and Maintenance Services
- Tenant Installations (TI)
- Health and Safety compliance
- Executive Business Coaching
- Team Coaching
- Industrial Relations (IR)
- Human Recourses (HR)
- Training & Development
The business model is further built on a multi-category properties strategy Although this may seem to contradict the mainstream notion of focussing on one property sector, operating in more than one sector is a major hedging strategy in the event of one sector encountering a downward cycle. The current world wide COVID-19 pandemic is proving our strategy to be the correct one.
Furthermore, the business model furthermore has as core element, the acquisition of existing structures with a proven cash flow and then to enhance this cash flow via upgrades, redevelopment, repurposing and improvement of tenant mix. As and when opportunity arises Orion will dispose of a property realising a capital gain and then re-invest the net proceeds into the next redevelopment and/or acquisition. Since Orion is a Real Estate Investment Trust (REIT) it is exempt from capital gains taxes as per sections 1 and 25 of the Income Tax Act.
Continually increasing the size and value of the portfolio is one of the key business drivers of the business coupled with a conservative gearing or borrowing strategy.
In terms of REIT legislation REIT’s may borrow up to 60% of their portfolio value. At Orion our internal benchmark is to limit our borrowings to only 50% of value (LTV). Currently our LTV = 14%, which is way below our own set benchmark and sets the scene for acquisitions via mortgage loans. The currently unencumbered properties will be utilised to leverage such acquisitions.