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DEVELOPMENT: Long Shadows Over Boschendal


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THE R700 million question on Cape property watchers lips is whether former mining giant JCI and Kuwait-controlled leisure investment company IFA will be selling their respective stakes in iconic Franschoek wine farm Boschendal any time soon.

It seems, at this juncture, that a R700 million offer from an empowerment company has fallen by the wayside. Whether another offer is in the wings remains to be seen – and, more pertinently, whether there are other interested parties ready to fork out as much as R700 million.

CBN, in past editions, has debated the real value of Boschendal, which is currently undergoing a strenuous makeover to include retail and leisure components.

Back in October 2009 CBN calculated a value of just R200 million for Boschendal, based on a deal where IFA paid Citation Holdings R9.6 million for a 5.25% interest in Boschendal.

At that stage we noted that when IFA made its first foray into Boschendal (during mid-2006) the company paid R54 million for a 19.25% stake – which inferred a value of over R270 million for the property.

By mid-2010 the valuation had stretched considerably. That was when JCI, the biggest shareholder in Boschendal, indicated in its Net Asset Value statement a value of almost R400 million on its 62.7% stake in the property. That inferred a value of some R650 million for Boschendal.

CBN would imagine that JCI and IFA would have been delighted to see an agreement detailing an offer of R700 million for Boschendal on the table. Both companies would exit at a considerable profit, and both companies would get considerable breathing space on their respective balance sheets.

The only problem is that the prospective buyer – Cinmark – appears to be fluffing its lines.

At the time of going to press both JCI and IFA had warned that Cinmark, an empowerment company that appears to be based in Grabouw – had not provided a bank guarantee for the R700 million offer price.

That’s a pretty basic stipulation for clinching a deal, and it might be perceived as a tad amateurish not to have such a guarantee ready in such a major transaction.

Cinmark had until July 27 to produce this important document. The deadline was extended to July 29, but to no avail.

JCI and IFA now regard the agreement ‘null and void’ – although both parties appear to be holding the door open for Cinmark to have another tilt. Whether further discussions with Cinmark will yield anything positive remains to be seen. But there may be questions around whether Cinmark – which lists the Kleinmond Harbour Development and the Palmiet Caravan Park under its projects – really has the resources necessary to leverage a development the size of Boschendal.

At this point Cinmark – which claims on its website to be the “brainchild of 17 years of experience and skills in finance, trading, mining and SMME development” – remains a bit of a dark horse.

One has to remember that over and above the purchase price there will be considerable capital expenditure required to complete the Boschendal re-development – which includes an upmarket retirement village and a boutique hotel as well as a shopping centre, offices and apartments.

For JCI and IFA the Cinmark tilt could cut two ways. It could highlight the longer-term potential of Boschendal, or it could bring out the opportunists with offers that undercut the R700 million price tag.

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