Real Estate Investor Magazine South Africa February 2015 | Page 15

upfront

CASE
STUDY
Canal Walk
SA’s Greatest
Commercial
Property
Transaction of
modern times
The success of the Canal
Walk shopping centre
deal speaks for itself and
is documented as one of
the greatest and most
significant commercial
property transactions of
its time in South Africa.
From being a ‘White
Elephant’ haemorrhaging
cash and failing to reach
its potential for its current
owners BOE. Marc Wainer
saw the potential and
had the expertise and
determination to turn it
into a cash cow.
Situated midway on
the N1 between Cape
Town CBD and Bellville
Canal Walk mega mall
was purchased for R1,
155 billion by Hyprop.
Today Canal Walk is
valued at almost R8
billion in just over ten
years. The income was
R125 million in the first
year Hyprop took over
to over, to over R470
million in 2012 which
is significant growth in
anybody’s book.

2006
Madison lists on the JSE

www.reimag.co.za

Key Lessons learnt from Canal Walk
deal:
1. Move fast
If you make an offer, do it relatively fast
and put a time limit on it. The benefits are
threefold: firstly, it puts pressure on the
seller to accelerate proceedings; secondly, it
stops the seller from leveraging your offer
to get a higher offer from competitors;
and thirdly, it eliminates competitors who
have to run the gauntlet of compliance
and dithering boards.
2. Income is King
We could have got bogged down on
due diligence on Canal Walk for ages.
Instead, we focused on the future income
potential, which was enough to convince
us of the development’s value. We looked
at the building and made an evaluation
knowing that you will have to take some
risk on deal like this.
3. Work out the incentive
Try to figure out what it is either the buyer
or seller wants. When it comes to banks, a
clean deal is a top priority. When deciding
how aggressive to be with your pricing,
take into account all aspects available to
you.
4. Think for the seller
To make a deal happen out-