MARC HASENFUSS: A shallow pool of buyers

The broader Saldanha Bay area chafes. Too many painful memories of steep dunes, shoulder-scouring sandbags, saluting strict sentinels — and those damned sand sharks. Since my three months’ basic training at SAS Saldanha in the late 1980s I have avoided as many Weskus excursions as I can.

But now I feel the need to revisit the area’s central leisure precinct, Club Mykonos Langebaan (CML), if only because a few Trematon shareholders may be rubbed up the wrong way about proposals to sell this iconic Mediterranean sprawl at a noticeable discount to its last stated value. The proposed buyer of CML is a management consortium headed by current Trematon CEO and former top asset manager Arnold Shapiro.

Shareholders clamouring for Trematon to unlock value and return capital quickly might be in two minds about the proposed deal. I suspect long-time shareholders — those who have received a collective 235c a share in dividends since 2021 — might view developments more pragmatically. On the other hand, newer shareholders who bought in at a deep discount to NAV after the big dividend distributions might be a tad miffed at a perceived value shortfall.

First a bit of history. It was probably in about 2008 that Trematon started accumulating shares in CML, which then owned a 29.6% stake in Tsogo Sun’s Mykonos casino. A couple of years later Trematon pitched an offer at 200c a share to buy out the remaining minorities in CML.

Initially it garnered 16.7-million shares, and the roughly R33m bought the group a much larger stake of 81.7% in CML (which was later increased to 100%). The casino stake was sold to Tsogo for R190m in 2016 (a great deal, seen in hindsight). With the casino stripped out, CML has been a solid rather than spectacular investment for Trematon. The record will show that in financial 2021 Trematon carried CML at a value of R162m.

Casual observers of the property market might have expected that number to have grown markedly in the subsequent years. The Western Cape, and in particular the coastal nodes, have seen spectacular growth in property value over the past five years. Property24 estimates that Langebaan real estate prices had, on average, risen from R1.5m to R2.3m between 2022 and 2025.

With the casino stripped out, CML has been a solid rather than a spectacular investment for Trematon

Anyone scanning Trematon’s annual reports — without context — would see the value of CML steadily decreasing over the years. By 2022 it was reflected as R126m, due mainly to “the write-down of investment properties and land values at the resort, sales of residential units as well as an increase in bank borrowings”. At the end of August 2025, CML’s value was reflected as R86m.

While this might seem like an incredulous decline in value over just four years, it must be noted that CML has been aggressively selling residential units into a strong market over the past handful of years. The R162m CML valuation from 2021 included the large Marina Edge development, CML’s highest-value development to date. This segment has subsequently been sold. These residential property sales are what underpinned the large distributions from Trematon, but this obviously also reduced the value of CML as a whole.

At this point, the bulk of the value in CML resides in commercial rental property such as the boatyard, the conference centre, retail outlets and restaurants. For the record, in financial 2025 CML increased revenue 7.5% to R67m. But there was an operating loss of R24m (compared with profit of R10m in 2024) after investment properties were written down by R28m. Trematon noted, nevertheless, that CML remained a stable cash generator and that the asset had seen “incremental improvements” with the addition of padel, pickleball and basketball courts.

There were no property sales during the financial year due to a lack of inventory. But Trematon did declare that a site plan had been submitted for a residential development planned for this year. This may require almost R30m in capital expenditure before any benefits flow through to Trematon.

It does seem that Shapiro, via the Variflex consortium, is stepping up at CML at a delicate juncture. But the purchase price of R70m, it could also be argued, already factors in much of the operational and development risk.

I’ll save you the arithmetic. The price tag represents an irksome 18.6% discount on the last valuation that Trematon accorded CML less than eight months ago. But, once again, context is important. Trematon argues that the fixed geographic footprint of the CML resort and the mature nature of its commercial operations offer limited prospects for meaningful organic growth.

What’s more, other potential buyers had looked but stepped away. Trematon confirmed it had “actively explored disposal opportunities”. The group added: “Since the sale of the casino interest, the group has engaged with multiple prospective acquirers through both formal and informal processes. No engagements yielded an offer that the board considered fair value ... nor sufficient certainty of execution.”

Trematon also maintains that CML is an operationally complex asset “with characteristics that materially limit the pool of prospective acquirers”. From what I can gather, two of the prospective buyers for CML were large gaming groups Tsogo Sun and Sun International. Like at RMB Holdings, another property-rich investment counter, the closing stages of the wind-down have proved tricky. I have some sympathy for the companies.

There might be merit in arguing that some investment companies face the prospect of realising assets at a discount simply because there is a limited pool of buyers for operationally and capital-intensive assets in a highly regulated and risky environment. The true valuation test — now that the CML price tag is in the open — will be whether a rival bidder suddenly emerges with a better offer.

Don’t hold your breath, though.