Battle looms as Delta eyes Orthotouch assets
A battle is brewing over the Delta Property Fund’s agreement to acquire some of the properties owned by Orthotouch in a deal valued at more than R500 million.
The deal, announced on Tuesday, will see the real estate investment trust buy the property management company’s assets in the Free State and Mpumalanga for R507 million, garnered in debt and shares. The transaction is expected to come into effect in August.
Investors did not like news of the agreement, sending Delta’s stock tumbling 1.12% on the JSE on the day. It fell a further 0.57% on Thursday.
Orthotouch, headed by Nic Georgiou, is facing litigation from investors, who sank R4.6 billion into property syndicate companies – Highveld Syndication 15 to 22 – created around some of the company’s assets.
Attorneys acting on behalf of Highveld’s shareholders have approached the courts to certify class actions for more than 9 000 investors in eight of the syndicate companies, who claim Georgiou did not transfer any property listed in the syndicates’ share prospectuses to the investment vehicles. This, they claim, was despite receiving the full amount from investors.
In 2011, all of the syndicate companies – excluding Highveld 19, which was liquidated – were placed into business rescue, with properties belonging to three of the syndicates transferred to Orthotouch.The rescue plan saw Orthotouch buying 78 of the syndicates’ properties for a combined R5.2 billion.
Marina Verdoes of Theron & Partners, attorneys for a group of investors, said: “If any actions by Orthotouch infringe upon the rights of the Highveld Syndication investors for whom we act, the necessary legal action will be taken.”