This will include a 129 room 5-star hotel encompassing a spa and wellness centre, a bar, restaurants and conference facilities as well as 12 high-end penthouse apartments which have all already sold for R123 million in aggregate.  There will also be 2 467m2 of retail and a 4-storey parking garage with 175 bays.  The development is due to be completed in June 2009 with the hotel opening in September 2009 to take advantage of Cape Town’s robust tourism industry.

Quantum Property Group CEO Gary Itzikowitz says: “While in the short-term Cape Town is a leading host city for the upcoming 2010 World Cup Soccer which bodes well for tourism, long-term prospects are sustainably stronger with the city continually being rated as one of the top ten cities globally to visit.”

He explains the revenue model for ‘15 on Orange’.  “The sale of the luxury apartments will generate once-off revenue of R107 million (after agents’ commission) and an estimated R24 million profit for QPG.  This will be bolstered by recurring revenue from operating the hotel in a joint venture with Protea Hotels, as well as rentals of retail space at R180/m2 to start, and income from the parking garage.”  Itzikowitz expects letting of retail space to yield an initial annual revenue of R5 million for the year starting September 2009, while the non-hotel parking bays should yield R1,5 million a year from September 2009 and escalate at around 8% a year from then.

Financial Director Mark Taitz points out that no revenue has been generated for the year just ended August 2008 as ‘15 on Orange’ is still under development.  “However, for the year ending August 2009 QPG’s revenue should reach R107,1 million with earnings estimated to be R387 million including the fair value adjustment from the revaluation of the property.”  He continues that in 2010 revenue is expected to amount to R94,3 million, derived from recurring revenue streams from operating the ‘15 on Orange’ hotel, retail centre rentals and parking fees, with earnings at R22 million.  He points out that this is based on projections relating only to the ‘15 on Orange’ site, “although the group is intending to grow its portfolio by then”. 

Cohen concludes the group is actively seeking further appropriate acquisition opportunities relating to property development, investment and trading.