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<p>AFTER MANY DELAYS, the new Zambezi Mall shopping centre north-east of Pretoria - into which investors put around R543m between January 2008 and March 2009 - opened last week. Capicol is the developer and Sharemax the promoter of the 30 000sq m shopping centre, which has been valued at more than R1bn. </p>
<p>Investors should be concerned about their future interest in Zambezi Mall. That's a personal opinion, based on the following: Prospectus No 10 of Sharemax Zambezi Retail Park Holdings, which opened on 1 December 2008 and closed on 1 March 2009, mentions an amount of R543m that's already been attracted by prospectuses one to nine. Some R439m of that was used to pay off the provisional buying price of R930m for the Zambezi Mall to developer Capicol. Prospectus 10 was meant to attract a further R126m, of which R100m would go to Capicol. </p>
<p>We don't know how much Prospectus 10 actually attracted, and neither Sharemax MD Willie Botha nor his legal representatives were prepared to answer our questions in that regard. </p>
<p>If the full R100m of Prospectus 10 - which was earmarked for the purchase price of Zambezi Mall - was attracted it would push Sharemax clients' interest in Zambezi Mall up to R539m, or 57% of the R930m buying price. If no new money was attracted their interest would be only 47%. </p>
<p>We assume the clients or investors recruited by Sharemax deposited R630m in Zambezi Retail Park Holdings. Some R500m of that was used to buy a 53,75% interest in Zambezi Mall. Of the remaining R130m, around R98m went to Sharemax for its costs and profits and R32m to a cash flow deficit fund, which will be used to supplement deficits in rental income over the first three years. Hopefully, Sharemax will soon inform investors of the actual figure it recruited as promoter of the project. Investors are certainly entitled to a detailed progress report. </p>
<p>Now Zambezi Mall has been officially opened investors will receive a "guaranteed" interest of 10% on their investment. To ensure that, the net rental income from Zambezi Mall must be at least R119m/year (53% of that is R63m, or 10%/year on R630m). According to Prospectus 10 the space available to be leased in Zambezi Mall is around 30 000sq m. In order to provide Sharemax's investors - with their 53% interest in the Mall - with an income of R63m/year, or just more than R5m/month, a net rental of almost R330/month/sq m and a gross income of at least R400/sq m is needed for the entire shopping centre. </p>
<p>We doubt whether that's feasible, especially in Zambezi Mall, which is situated on the weaker side of the Montana development region to the north of Pretoria. It would be relatively easy for Sharemax to allay such fears by simply sending a detailed newsletter to those invested in Zambezi Mall. That's the least they deserve after all the uncertainty about the world's financial markets over the past two years and the current uncertainty, especially regarding investments in new and even existing shopping centres. </p>
 
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