High growth opportunities through Trematon’s casino shares sale

Arnold Shapiro
Trematon Chief Executive, Arnold Shapiro.

– Capital to be re-invested in high-growth opportunities across other business platforms.
– Disposal in line with diversification strategy and focus on actively managed investments that are undervalued with potential to unlock a higher internal rate of return.
– Trematon subsidiary, CML to retain the balance of the remaining development land and all of the commercial income producing assets at the Club Mykonos Resort.

JSE listed Trematon Capital Investments Limited today announced that it has entered into negotiations to sell its 29.64% shareholding in West Coast Leisure Proprietary Limited to Tsogo Sun Holdings Limited for a consideration of R190 million.

Trematon’s interest is held through its wholly owned subsidiary, Club Mykonos Langebaan Proprietary Limited WC Leisure holds the West Coast casino license operated by Tsogo Sun at the Mykonos Casino in Langebaan on the Cape’s west coast. The sale will be by way of a share repurchase.

Trematon Chief Executive, Arnold Shapiro commented:

“The Mykonos Casino has proven to be an excellent investment for the group. We have however been working for some time on diversifying the concentration risk in our portfolio”.

“Club Mykonos will become a smaller part of Trematon’s net asset value but remains a significant investment. Also, the remaining parts of Club Mykonos which we retain will be under our direct
management control whereas we had a passive, minority interest in the casino.

“The casino is a very good and stable business but we felt that it would be best to sell the asset and redirect the cash into investments which would generate better IRR’s”.

“The transaction will create liquidity at the centre, providing cash to deploy in our education business and other opportunities. This is in line with our active investment approach focused on extracting superior internal rates of return from undervalued assets by redeveloping or re purposing them to reach their full potential.”

The entire resort currently consists of 361 residential units with development potential for further holiday units and/or standalone homes and commercial property.

This announcement follows shortly after Trematon entering into an agreement to acquire a R614 million portfolio from Redefine Properties Limited.

The acquisition comprises seven key office, retail, industrial and mixed use assets located in strategic, high-potential nodes predominantly across the Western Cape province and will be effected through Trematon’s 67% owned subsidiary, Aria Propety Group.

Post the successful conclusion of the transaction, ARIA will boast 21 assets and an additional 90 000 m2 of gross lettable area (GLA) in its portfolio. Tenants include blue chip national operators such as Standard Bank, Bidvest, Engen, Foschini, Clicks, Virgin Active, Shoprite, Truworths, Capitec, KFC, Beares and Ackermans.

Trematon provides equity market investors the chance to access high-growth opportunities alongside management that would otherwise be out of reach. Its strong balance sheet and deep business networks in the Western Cape provides the Company with a competitive advantage and the flexibility to acquire high-potential but undervalued opportunities.

Apart from its investment in the iconic Club Mykonos Resort through its wholly-owned subsidiary CML, Trematon has commercial real estate interests held through its subsidiary ARIA and is also invested in residential real estate through the wholly-owned Resi Investment Group and various joint venture partners. Other investments include Generation Education, an education business which, in time, is expected to become the fifth major area of operation.

The Company has a proven track record of investing in undervalued assets and turning them around to deliver superior returns. The upgrading of Club Mykonos Resort has turned it into a premier tourist destination; the development of Boulevard Park in joint venture with Faircape outside the Cape Town CBD has transformed it into a prestigious blue-chip office park; and several distressed partially-complete residential units in the Western Cape have been redeveloped and reinvigorated. Northgate Island was redeveloped and re purposed from a failed and vacant shopping mall into an A-Grade office park set on the corner of the N1 Highway and Koeberg Road in Milnerton, in the Northern Suburbs of Cape Town.

Read more here: SENS Trematon 14th November 2016