PROPERTY: Canal Walk Strolls Through Recession
Recent Western Cape Business News
MEGA Cape Town shopping centre Canal Walk has shrugged off the squeeze on consumer spending late in 2008, pushing distributable income up 15% to R207 million in the year to end December 2008.
At the end of 2008 a mere 3 196 sq m of the 135 400 sq m shopping centre was vacant – a vacancy factor of just 2%.
Even more impressive is that Canal Walk, 80% owned by property investment group Hyprop, is still fetching, on average, rentals of R310 per sq m.
It would seem Canal Walk is in for another solid year with leases expiring on only 9 817 sq m worth of shopping centre space up. Perhaps 2010 will be more challenging with a far more hefty lease expiry of 51 903 sq m of retail space.
But Hyprop hardly seems concerned about a dramatic fall off in shopping patterns, and has committed R206 million to expand the retail area at Canal Walk. Around R115 million has already been spent on expanding Canal Walk by 15 541 sq m to accommodate Cape Union Mart, Golfer’s Club and @home.
Hyprop now values its 80% stake in Hyprop at R3.4 billion - a value independently accorded by Old Mutual Properties. The other 20% of Hyprop is held by the Ellerine Brothers, the founders of the furniture chain of the same name.
That would infer a value of R4.25 billion for Canal Walk – an astounding value considering that Nedbank sold the shopping centre for just R1.16 billion in 2003.
By CBN’s calculations Canal Walk has earned distributable income of more than R600 million over the last four years. That really is not a bad return for a R1 billion investment by Hyprop and the Ellerine Brothers.
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