More bad news …
for investors in the Sharemax syndications
AFTER THE PAST three months – during which the “new” Sharemax passed on increasingly more information to its investors – the tragic news is becoming glaringly clear: the mire is far deeper than initially feared. Of the 19 so-called income projects – that is, existing buildings that have been reported on for months and where only the actual net rental is being paid to investors – it’s clear the seven, perhaps even nine, will have to be urgently put in an “incubator”.
Bonatla’s Niki Vontas, who looked at the possibility of making an offer for the Sharemax group last year, created that term. The need for an incubator indicates a seriously ill patient. Even under the best conditions the chances of survival are pretty slim.
The currently pathetic state of some of its shopping centres and other buildings – a state of decay would perhaps be a better description – also confirms Sharemax’s so-called property management team was quite simply incompetent and directionless over the past five years. Investors in the following syndications – the latest interest return for each is given – should be concerned: very concerned. Not only is your interest income now a fraction of the cross-subsidised return of a few months ago, the time has also come to forget about the old or new directors’ fine words. At best, you’ve probably already lost 75% of the value of your investment. The incubator cases are:
The three new “self-appointed” directors of the Sharemax syndications – probably under the guidance of economist Dawie Roodt – definitely don’t have the knowledge or experience to save these centres. The existing Sharemax property team has already shown it can’t do it. What we need is someone like Niki Vontas, but more likely a liquidator or auctioneer who will sell the property/ies at auction and make an end of the matter.
Investors in the 12 other income properties – now regularly reported on – on average receive about half the interest they were accustomed to in the past. There’s very little likelihood of this improving much over the near future. Many of the properties are marginal cases anyway, and what they need especially now is excellent
DAWIE ROODT Looking for a miracle
management – which isn’t available. The possibility of someone getting his money back soon is extremely unlikely. Remember the two so-called offers last year for the Sharemax properties – Bonatla’s and Realcor’s – were all on paper. No cash.
Prospects for investors at the two major ones – Zambezi Mall (R750m) and The Villa (R1 500m) – look even worse. The arbitrator, Advocate Johan Louw, decided late last year that investors in Zambezi Retail Park still owe the developer, Capicol, another R65m. Capicol, in turn, apparently owes the builder, WF Kroon, around R65m.
Zambezi Mall’s new directors will probably have to approach an ordinary bank for an advance of the R65m – perhaps R100m if the necessity for roadworks is added – on the strength of a first mortgage. There’s just one problem and that is the honest and sustainable interest income from the shopping centre is probably insufficient to service an advance of R100m. The bad news for investors is that the chances are slim of them ever earning interest on their Zambezi investments. And if it’s sold at a liquidation auction there won’t be much capital left for those investors who came via the Sharemax route.
As for the big one – The Villa, the R3 000m plus development that finally caused the Sharemax house of cards to collapse – it’s a fine ruin, right next to an operating waste dump. It doesn’t even have any tourism value.
The final group of Sharemax products, about which little is said these days, is its so-called capital projects, such as the planned golf estate called The Bay near Hartbeespoort Dam.
Fortunately, the failure of those investments has no effect currently on investors. After all, they were promised interest of 20%/year – but only payable after five years, or even much longer. This group of investors have probably accepted by now that their capital is completely lost. Write it off as soon as possible.