By Ian Fife        
  
Property Partners, the Cape-based developers and private equity financiers are the most likely buyers of Melrose Arch, following the cancellation of the R1,27bn sale to the Atlantic Corporate Finance property consortium led by Colin Barnard. 

The FM understands that a new sale agreement has been signed.  Cavaleros property group were the second-highest bidders, at R1,07bn, for Sentinel-owned Melrose Arch. 

"But we have heard nothing from Sentinel," says Cavaleros MD Penny Karpodinis.

"One of our directors was told at a Sapoa cocktail party two weeks ago that Property Partners has bought it." 

Property Partners CEO Stuart Chait will not be drawn on the sale. 

"We have restricted our property development to the Cape," he says.

 "Outside the Cape we are financiers.

We never discuss our clients' business, even if they're not doing business." 

But Property Partners make sense as the buyers.

They are one of four main contenders for the property.

The others are Cavaleros; Madison, on behalf of its listed funds Hyprop and Redefine; and listed property unit trust Sycom.

Madison and Sycom are unlikely to have offered more than R1bn for Melrose Arch as it would dilute earnings for shareholders in the short term.

Property Partners' equity stakeholders would be prepared to take a longer view and exceed Cavaleros's price. 

Karpodinis says Property Partners are not usually investors in large existing properties, they normally back new developments.  But Chait is an experienced mixed-use developer.

He cut his teeth on projects like Cape Town's Dunkley Square and Victoria Junction as a partner in Newport Property Group, and Tyger Falls in Tyger Valley and Silver Mine on the South Peninsula as a founding partner in BEE property group Mvelaphanda. 

Melrose Arch could be the first step as his private equity partners - many of them offshore investors - move from Cape Town to Johannesburg. 

They would be prepared to outbid the established players, taking the view that a strategic foothold in Johannesburg will always pay in the long term.

They will also give Sentinel the kind of price that was almost impossible to achieve from a substantial buyer a year ago.