BoE tried three times to sell Cape Town's Canal Walk, SA's biggest retail centre. Now it's the turn of banking group Nedcor, new owner of the complex since it bought BoE.

"We have been inundated by potential buyers," says Nedcor's Martin Slabbert. "But many of these were agents or small developers." The problem with some of these bidders, he adds, is that their finance could fall through or they could delay the deal while they put together investor syndicates.

So Nedcor has decided to limit the sale to seven big investors that they have put on a short list. The price and terms will be negotiated with them.

How much will the winning bidder pay? The original development (controversial because of its size) cost R1,6-billion, and BoE wrote off about R200-million when it took over Monex, the developer. The best price BoE was offered - and rejected - is said to have been R1,1-billion by Liberty Properties in late 2001.

But since then Nedcor has probably written off a few hundred million rand more. And investors have become more bullish about property and are prepared to pay more for it.

Corpcapital property chief and property unit trust Hyprop director Wolf Cesman says retail yields generally are between 10,5% and 11,75%. "But the actual price now depends on vacancies, how much the current rents are and whether they are market-related. Income has almost certainly improved since BoE last negotiated with buyers."

These changes mean that Nedcor has a better chance of offloading a large noncore asset at an acceptable price.

The potential buyers no doubt include the usual suspects: listed property loan stock Hyprop, Growthpoint, Marriott/ Sycom, SA Retail and Grayprop, and possibly RMB Properties.

But some potential bidders are suspicious. Nedcor is a part of Old Mutual. They wonder whether this could be a pricing exercise to enable Old Mutual, one of the keenest developers and investors in super-regional retail centres, to swallow Canal Walk.

Financial Mail