PIC confirms talks for V&A Waterfront

Posted On Tuesday, 14 December 2010 02:00 Published by eProp Commercial Property News
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Victoria & Alfred Waterfront in Cape Town could be back in South African hands after the Public Investment Corporation confirmed yesterday it was in talks to buy it back.

Jay PadayatchiSA’s real estate crown jewel, the Victoria & Alfred (V&A) Waterfront in Cape Town, which was sold four years ago by Transnet for R7bn to foreign buyers, could be back in South African hands after the Public Investment Corporation (PIC) confirmed yesterday it was in talks to buy it back.

Analysts yesterday welcomed speculation that SA’s largest listed property group, Growthpoint Properties , was joining the PIC as a potential buyer of the V&A Waterfront for about R10bn.

But Catalyst Fund Managers’ investment manager, Paul Duncan, warned about the high price tag the two were likely to pay for the "trophy" property asset.

"While this is good news for a listed property company to buy this asset, we should not be blinded by the trophy asset. I think the price should be reflective of the income returns investors are likely to get from investing their hard-earned capital," he said.

Mr Duncan said that although the V&A Waterfront remained a "good" asset for retail and institutional investors, Growthpoint and the PIC should not overpay for it.

"The V&A Waterfront is not a listed entity and it is difficult to determine whether the R10bn price is fair because we don’t have information on how much income return it is giving back to investors," he said.

The PIC’s real estate investment GM Wayne van der Vent, said the PIC had not secured a transaction yet. "We have always been involved in the V&A Waterfront discussions since day one, four years ago. We have never left those negotiations."

After denying last week that it was part of a consortium to buy the V&A Waterfront, Growthpoint said yesterday that it was in talks that could affect the price of its shares.

The V&A Waterfront is seen as SA’s single most valuable property asset. It was sold in September 2006 to London-based property moguls Ian and Richard Livingstone through their London & Regional Properties, along with the United Arab Emirates investment firm Dubai World.

But Absa , which is rumoured to be part of a bid with Growthpoint and PIC, yesterday denied its involvement, saying : "Absa is not a party in the buying or selling of the Cape Town Waterfront."

Absa CEO Maria Ramos was involved in the sale of the property while she was CEO of Transnet.

There has been talk of tension between the Livingstones and Dubai World, with clashes over the scale and pace of new investment in the property .

Meago Asset Management portfolio manager Jay Padayatchi said yesterday that although details of the deal remained "sketchy", this would be good news for the country.

"This means SA’s crown jewel will be back in South African hands. Whether Growthpoint and the PIC are overpaying for it will be clear once details become available," Mr Padayatchi said.

He said the Livingstones and Dubai World bought the V&A Waterfront four years ago at a yield of 6% and it did not make sense for South African investors at the time.

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