Behind Steinhoff ’s luxury property
Apartment block in Cape Town is not part of company’s strategy to move into residential development.
Despite acquisitions that have broadened its offerings, Steinhoff hadn’t articulated a strategy to move into residential development and sales.
Steinhoff bought a high-end luxury apartment block jointly owned by ex-CEO Markus Jooste and Investec MD Bernard Kantor, late last year.
East West is in Mouille Point, in Cape Town’s Green Point.
The apartment block comprises six levels above ground floor, with each apartment occupying an entire floor, besides the fifth and sixth floor which comprises one duplex penthouse apartment. Each apartment (besides the penthouse) enjoys floor sizes of about 340m2, according to the estate agent Moneyweb spoke to.
Prices start at R35 million. The 678m2 penthouse apartment is listed for sale on the Seeff and Pam Golding websites for R88 million. The apartments were listed for sale in February.
According to Windeed, the erven on which the apartment block was built was bought by Greggaleighk for R39 million in 2008. In 2014, the land was bonded by Investec Bank for R105 million. The sectional scheme was registered in December 2016.
In 2009, Kantor became Greggaleighk’s sole director, and remains a director, according to Windeed. In August and September 2017, Greggaleighk added Steinhoff Secretarial Services as its company secretary and changed its financial year-end to end September, in line with that of Steinhoff. It also added new directors to its board, including Steinhoff Properties’ MD.
According to 2017 court documents filed in the Western Cape High Court, in a matter between Investec, Absa bank, Sanlam and Mayfair Speculators and Holdings, Mayfair Holdings (Jooste’s investment vehicle) furnished a balance sheet, listing an investment in Greggaleighk with a R33.5 million carrying value. This implies Jooste was a shareholder in the company that developed the apartment block and sold it to Steinhoff.
At end November, days before Jooste resigned as Steinhoff CEO, Greggaleighk changed its name to EastWest Real Estate Investments. Steinhoff told Moneyweb its property division had acquired a 70% stake in the company late last year but wouldn’t disclose the amount invested:
“At the time it was the strategy of the division to build up a diverse commercial, industrial and residential property portfolio. As part of the current restructuring initiatives in the group, the holding of this property is reconsidered.”
So, what’s going on? Jooste and Kantor go way back. They became co-owners and directors of Klawervlei Stud Farm and Cape Thoroughbred Sales, assets Jooste owned via Mayfair Speculators.
Both served as Phumelela Gaming and Leisure directors. Investec lent Mayfair Speculators as much as R250 million according to 2017 court documents. Jooste was invited to become Investec Equity Partners board chair in 2017, by CEO Andy Leith.
The board includes senior Investec executives: CEO Stephen Koseff, FD Glynn Burger, Leith and Kantor.
The ownership of a company by Jooste and Kantor that developed and sold a luxurious high-end residential development to Steinhoff seems to deviate far from previous strategies articulated. Was this conflict of interest disclosed to the board and did Steinhoff shareholders get value for money?