Transnet looks to dispose of landmark Carlton Centre and Durban Station precincts

State-owned logistics and ports operator Transnet is to dispose of 15 immovable commercial properties that are not part of core assets under its ownership.

These include:

The historic Carlton Centre in the Johannesburg CBD spanning 28 291m² (land size, not overall gross lettable area);
The 47 192m² Durban Station precinct, which is home to retail giant Mr Price’s national head office and the rail station managed by the Passenger Rail Agency of South Africa (Prasa)
The 26 900m² 1 Anchor Way property in the Cape Town CBD’s prime Foreshore area
The Bloemfontein Golf Course and Club house;
The land on which the Umlazi Mega City mall is built (JSE-listed SA Corporate Real Estate own the building on leased land).
Ten other properties around the country [see full list lower down].

Transnet confirmed the disposal plan in a government gazette filing on Monday.

Read:
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In accordance with applicable legislation, governance protocols, and intergovernmental asset management principles, all national government departments, provincial government departments, municipalities, state-owned companies (SOCs), and other public entities must be afforded “the first right of refusal to express interest in acquiring, utilising, leasing, or otherwise taking transfer of the said properties for public sector purposes”.

This means government departments, SOCs, and public entities have 30 days to file written submissions to express interest in buying or leasing the properties before opening the sale to the public.

A detailed schedule of the 15 properties

Source: Transnet

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Carlton Centre precinct

Construction of the Carlton Centre precinct began in the early 1960s and was completed in 1973. At 223m high, the Carlton office tower is among the top three tallest buildings on the continent.

The precinct consists of:

The office tower (68 000m² of office space);
The busy shopping mall;
Skyrink ice rink; and
The Carlton Hotel.

The office building has not been occupied since Transnet vacated the building before the Covid pandemic. The Carlton Hotel, once a five-star hotel that host international stars and presidents, has not operated in over three decades and is in a derelict state.

Listen: Is there a future for the Carlton Centre?

Transnet’s first attempt to sell the 50-storey Carlton Centre building was in 2007.

In 2022, Transnet Property – the property division of Transnet SOC Limited – issued two requests for information to the market to gauge investor appetite for its redevelopment plan of two prime properties: Carlton Centre in Johannesburg and 1 Adderley Street Precinct in Cape Town (which is not part of the latest proposed disposal).

Attempts to revive or sell these and other properties under its banner have largely been unsuccessful, with credible private developers not keen to partner with Transnet following the state capture years.

This was part of its corporate strategy to optimise its portfolio and strengthen the state-owned entity’s balance sheet.

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After a number of bailouts granted to Transnet by National Treasury, government took a hard stance on the logistics operator and other SOEs.

National Treasury issued Transnet with a multi-billion rand guarantee facility in late 2023, which came with strict conditions that require the entity to divest non-core assets, reduce its cost structure, and explore alternative funding models for infrastructure and maintenance.

Read:
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View from the ‘Top of Africa’ – the 50th Floor of the Carlton Centre, May 2013. Image: AdobeStock

Carlton Centre shopping mall, December 2008. Image: Nadine Hutton/Bloomberg

Carlton Centre shopping mall, February 2024. Image: Leon Sadiki/Bloomberg

While the government gazette filing by Transnet on the disposals highlighted that government departments, local municipalities or other state-owned enterprises would have “first right of refusal” to try to acquire or lease the properties, there are some instances where current leaseholders will have that option. This is likely applicable to both state and private players.

For instance, Prasa may well opt to buy the Durban Station property, which has a rail station as well as retail, hotel and office space linked to it. It is unclear why Transnet still owns the property, when Metrorail (now Prasa) split from the Transnet group around two decades ago.

Durban railway station from the top of Moses Mabhida Stadium, 22 June 2011. Mr Price’s head office is part of the white buildings on the top left of the photo. Image: Hansueli Krapf on Wikimedia here.

In a brief response to Moneyweb, SA Corporate Real Estate CEO Rory Mackey confirmed the group has a lease in place for the land on which its Umlazi Mega City shopping centre is built.

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“I can advise that, together with our joint-venture partner, we have a right of first refusal on any offer that Transnet wishes to accept in respect of the sale of the land leased to us and we would at that time consider exercising our right,” he said.

Commenting on the move by Transnet, Galetti Corporate Real Estate CEO John Jack said the Cape Town properties, especially in the Foreshore, are likely to receive strong interest from private developers.

He pointed out major developments in the Foreshore, such as Amdec’s Harbour Arch, and The Rockefeller.

“The Foreshore property [1 Anchor Way] is perfect for development and you will see a lot of activity from the big developers… This site is a key access point to that node,” he added.

Jack cautioned that while government departments, local municipalities or other state-owned enterprises would have first right of refusal on the Transnet properties up for disposal, many simply do not have the money to purchase these properties. He said it would be in Transnet’s interest to secure higher prices from the private sector.

On the Carlton Centre property, Jack said it “sits at the top of the eastern boundary of the Ghandi Square development” – led by private developer and Joburg CBD investor Gerald Olitzki.

“It would need an operator like that to fill up the buildings properly,” he added, noting that properties in the CBD are largely “made up of many smaller tenants” unless the building is occupied by a government department.

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