PROPERTY: Seeing The Value In Canal Walk
Recent Western Cape Business News
RETAIL inclined property company Hyprop must be pleased as punch about the reassuring performance of the Canal Walk shopping centre at Century City.
In the year to end December Canal Walk increased its property revenue 14% to R388 million and pushed up its distributable earnings by roughly the same margin to R276 million in the year to end December 2010.
Outgoing Hyprop CEO Mike Rodel said that given the continued tough retail environment in 2010 Hyprop delivered in line with expectations - benefiting from completed extensions at Canal Walk.
He said Canal Walk continued to benefit from increased footfall, boosted in part by the new Boulevard Shopping project.
Rodel added that the centre underwent an extensive lease renewal cycle and was successful in achieving good growth in a demanding economic environment.
Perhaps the most intriguing statistic in the Hyprop results is the fact that the valuation of Canal Walk has grown from R4 billion at the end of 2009 to R4.6 billion at the end of 2010.
That’s a figure that needs to be put in context.
CBN readers may recall that in mid-2003 Hyprop effectively doubled the size of its largely Johannesburg-based investment portfolio by acquiring 80% of Canal Walk from Nedbank for R1 billion. The well known East Rand businessmen, the Ellerine Brothers, snapped up the other 20% for R116 million – meaning that seven years ago Canal Walk was worth just over R1.1 billion.
In effect, the value of Canal Walk has more than quadrupled in seven years – which is not a bad achievement considering that back in 2001/02 there were many pundits that thought that Cape Town had sufficient shopping centre capacity and that Canal Walk could be a dud.
What is more astounding is that since acquiring Canal Walk, Hyprop has probably generated around R1.4 billion in property income from the property. That’s a helluva return on a R1 billion investment, and certainly suggests that anyone wanting to buy Canal Walk from Hyprop would need to fork up a lot more than the official R4.6 billion valuation.
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