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Bugle Sales Talk Editorial

Bugle Sales Talk Editorial

Author: Andreas Wassenaar
Date: 2015-06-05
I am currently reading Marc Wainer's "Making my Marc - Lessons from a Life in Property." I remember having coffee several years ago with the late Ian Fife, one of South Africa's great property and financial journalists, at a Rosebank Mall coffee shop when Marc Wainer walked past and Ian introduced him as South Africa's leading property man. With hindsight I should have tracked and invested in Redefine then, which Marc Wainer has built into one of South Africa's leading Real Estate Investment Trusts with a current market cap of R44bn and growing. Redefine is currently only second to Growthpoint in terms of size. Marc Wainer is a long time business partner of Eric Ellerine, who I also had dealings with in Zimbali when they bought and sold a large development site.

I remember the Ellerines selling the site in 2005, which I negotiated at the time. They told me then that they were consolidating funds into a commercial investment they were participating in. Little did I know that this was the Canal Walk acquisition in Cape Town, which Marc Wainer had put together and had brought the Ellerine's in as equity partners. This transaction is described by Wainer has the single best commercial property transaction in South Africa over the past twenty years. No doubt there would be some players in the industry ready to challenge that claim, but needles to say, it was an incredible deal put together by Wainer as the relative underdog amongst the competing bidders for the property at the time.

Wainer closed the deal for Canal Walk at R1,155bn. It was Nedbank's proverbial White Elephant that Hyprop under Wainer's leadership transformed into a cash cow. Ten years after the transaction the property was valued at over R8bn and with annual income close to R500m.

The eight lessons learnt from the Canal Walk deal and described by Wainer in his book are summarized as follows: (1) Move Fast. If you make an offer, do it relatively fast and put a time limit on it. (2) Income is King. Commercial property transactions are all about generating income and the most important aspect of a due diligence is the defined (or anticipated) cash flow stream that can be generated from the property asset. (3) Work out the incentive. Determine what is most important to the seller (such as cash in a short period of time) and work that to your advantage. We experience this on a daily basis where cash offers trump conditional offers or offers with a mortgage bond requirement every time. As a buyer you should do your homework upfront and ensure you are pre-approved or know your exact debt raising capacity before embarking on negotiations. (4) Think for the Seller. Provide innovative solutions for a seller that even they may not have considered. Look for the win-win opportunities. (5) Look after the Tenants - especially the big ones. Find solutions for tenant's requirements and do not get bogged down in who is right or wrong. (6) One size does not fit all. Individual attention to the specific lease requirements for each tenant is important. Relationships with the key stakeholders are key. (7) Retailers seldom bear grudges. Your relationship is as good as your last deal. Retailers will pay for space as and when they need it. (8) Negotiate your fees upfront. In a property transaction deal with the commission upfront so that all parties know where they stand. Inexperienced brokers tend to leave this aspect to the end.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com