Johannesburg - The likelihood of the V&A Waterfront getting into the hands of South African property companies is extremely slim.

Market rumours suggest that one of the largest shareholders, Dubai World, will be unable to get refinancing from local banks this month. Insiders however reckon that the other major shareholder, London & Regional (L&R), is keyed up to exercise its pre-emptive right if Dubai World should be forced to sell.

The two companies together own about 75% of the V&A, while the remainder is held in a trust by an empowerment group.

The refinancing of Dubai World's loan facilities is uncertain at this stage because these facilities at a consortium of South African banks, including Investec and Absa, lapse on March 31. The banks are silent on whether they will consider restructuring the loans against the background of the global credit crunch.

Meanwhile the property sector is speculating that the financial institutions are concerned about Dubai World's ability to meet its financial obligations.

A source close to the property claims that the silence on the banking front is largely because the situation has degenerated into a sovereign issue. "It's a sensitive subject because it involves the Dubai government's inability to finance its assets," he told Sake24.com.

Dubai World is the holding company that manages a portfolio of ventures and projects on behalf of the Dubai government.

The view is, however, that L&R has pockets that are deep enough to pay a premium for the prize property. It is one of the largest private property companies in Europe, with investments worth over €9bn in more than 10 countries.

The bright development plans for the V&A, worth billions of rands, have not materialised since the L&R Consortium acquisition in 2006.

The consortium snapped up the V&A in 2006 for R7.3bn in the face of keen South African buyers, such as Growthpoint and Old Mutual.

As to the current value of the property, Erwin Rode, property valuer and economist at Rode & Associates, says: "The V&A generates an income stream in rand, but its value is probably partly determined by foreigners via the exchange rate."

- Sake24.com

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