PROPERTY: Mykonos Properties An Issue
Recent Western Cape Business News
IT looks like Cape Town based investment company Trematon is going to have to exercise some patience in attempting to unlock value in the properties held by Club Mykonos Langebaan (CML).
Trematon owns 34.2% of CML, taking de facto control of the leisure company in late April last year when it exercised its control at the AGM to secure significant board influence.
Recently Trematon told its shareholders that it aimed “to play an active role in extracting maximum value for all CML shareholders over the next few years.”
That may not be so easy with the West Coast property market looking rather depressed of late.
According to statements issued with Trematon’s year to end August results, there is general satisfaction at the performance of CML’s 29.6% investment in the Mykonos Casino.
Trematon CEO Arnold Shapiro noted recently that while gaming revenues in the Western Cape had declined in 2008, the Mykonos Casino was undergoing a major refurbishment and was well placed to capitalise on any recovery in consumer spending.
In the half-year to end June Mykonos Casino managed gaming revenues of R56 million with operating profits coming in 7% lower at R24 million.
A R10 million refurbishment plan has been launched to improve the casino, and 22 slots have been added.
But Trematon’s big worry – in terms of unlocking underlying value at CML - is the commercial and rental properties. These properties generated net losses after the allocation of head office overheads.
Shapiro says the board is investigating ways to address this. “The vacant land and developed erven are well located in prime coastal locations. But the property market in the area is weak and the environment for developing or realising these properties is currently not optimal.”
Obviously property development under these circumstances will not exactly be prudent.
At this point it looks like Trematon will have to sit tight at CML for the foreseeable future and hope dividend flows from the casino remain strong.
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