MyPE

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Why TNPA will NEVER Replace the Manganese Ore with a Waterfront

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The time has come for the public and the Transet National Port Authority to stop operating in a bubble and denying plain financial facts when it comes to the relocation of the Manganese Ore and Tank Farm facilities within the Port of Port Elizabeth.

THIS is why I say that the TNPA will never replace the Manganese Ore facility and Fuel Tank Storage facility with a Waterfront. This is also why we as a society need to look at this problem from a perspective of longevity for our Port of Port Elizabeth and the many people that earn a living there.

Any major financial decision revolves around money and the potential to make more therefrom. As a country we cannot rely on that magic money pot called ‘government’ to continually bail us out with no end in sight.

We know that the Baywest Mall is up for sale and that is a financial decision as the burden of debt on the parent company does not make their balance sheet look good at all. And, as the mall offers around the same size of lettable space as the proposed waterfront it would do us well to compare the Baywest Mall and the available (UNDEVELOPED) space in the on again off again Waterfront proposed for the Port of Port Elizabeth.

Lets take the Baywest Mall as an example:

Gqeberha’s Baywest Mall offers 90 000 square meters of space

Rebosis (the parent company) owns 5 such properties with a total lettable area of 291 073 square meters

Rebosis’ 2021 annual results show an average rental of R128.00 per square meter (down from R158 in 2018)

Average vacancy for the retail properties in 2021 was 9.8%. Closer to home the Baywest Mall vacancy stood at 10%.

Rebosis reported Property Income for the year 2021 as R1 643 Million across all of their properties in retail, office and industrial sectors..

Rebosis also reported a -9.1% decrease in value of their regional malls over 3 years.

Now lets look at what we know about Rentals in the TNPA and specifically the Algoa Bay Yacht Club:

In 2017 Transnet demanded a rental of R49 977.60 per month from the Algoa Bay Ycaht Club occupying 3 083 square meters of port land representing a rental of R16.21 per square meter for land and buildings. (See: ABYC Yacht Club Rental Increased by 310%)

The container park in the Port of Port Elizabeth is 22 Hectares (22 000 square meters) in size.

The available land earmarked within the Port of Port Elizabeth precincts for the Waterfront is approximately four times that size. This is the land comprising the Manganese Ore Dump, the fuel tank holding facility and the reclaimed land from there to the Baakens River mouth which presently incorporates Talhado Fisheries, PEDSAC, NSRI, NMBYC, Commercial Marine, Shop 17, Slipway, old Oyster Catcher Restaurant etc.

This then gives the TNPA around 88 000 Square meters of lettable LAND – please note that TNPA owns the land and has historically only let the land with the lessee being responsible for building on the land.

So, if we take the rental paid by ABYC in 2018 and increase that by a factor of 8% per annum we get a figure of R25.73 per square meter rental.

Lets ASSUME that the ABYC rental WAS at a discount of 75% (and we all know that it wasn’t BUT in the interests of BEING NICE to TNPA we will assume so).

That will then take the land rental figure to R102.89 per square meter.

Now we are getting somewhere…

Lets times the ‘new’ rental figure of R102.89 by 88 000 square meters of available space and we get a figure of R9 054 577,93 per month

Now turnover estimates from the Manganese Ore are in the region of R90 Million per month.

Please NOTE that we have not included turnover figures from the Tank Farm or existing buildings in the area – including those will make the actual monthly turnover figure significantly higher and lend even more credence to our position that a serious bucket load of money is required to make the waterfront a reality.

So, even at the highly inflated rentals for UNDEVELOPED land one can see that a Waterfront will NEVER replace the turnover currently being received by the TNPA for Manganese Ore.

And THIS is why I say that the TNPA will never replace the Manganese Ore facility and Fuel Tank Storage facility with a Waterfront!

Bottom Line:

  • TNPA’s present turnover JUST from Manganese Ore per month: R90 Million (estimated)

  • TNPA’s potential rental turnover from a 100% let Waterfront per month: R9 Million (on an undeveloped land basis only)

  • Potential turnover loss for TNPA: R81 Million

  • The Manganese Ore represents just ONE Tenant

  • The Waterfront potentially represents HUNDREDS of tenants.

Now even those people who have never looked at a balance sheet will NEVER choose to get rid of the Manganese Ore for a Waterfront! And, of course, our government employed administrators will find themselves hard pressed to manage hundreds of tenants as opposed to just one.

Related: Why R3 Million is the Magic Number (PER DAY) for the Much Proposed Waterfront

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.