Call for Safari directors to go
Directors criticised over share price collapse and governance concerns
A group of shareholders has called for the resignation of most of the directors of shopping centre owner Safari Investments, saying they refused for four months to tackle its 45% share price slide and alleged poor governance in relatedparty deals.
A group of shareholders has called for the resignation of most of the directors of shopping centre owner Safari Investments, saying they have refused for four months to tackle the 45% share price slide at the company as well as allegedly poor governance around related-party deals.
Safari owns shopping centres that serve lower-income consumers mostly in and around Tshwane.
Minority shareholders Chris Logan of Opportune Investments and Albie Cilliers of Cilandia Capital said Allan Wentzel, the lead independent director at Safari, must step down and allow two newly appointed independent directors to clean up the company in the interests of all its shareholders and not just its management.
They called for Wentzel’s resignation on Monday night in a series of e-mails.
The new directors are Etienne Swanepoel and Tinus
Slabber, who were appointed in November with the assistance of Bridge Fund Managers, the largest institutional shareholder of Safari with an 18% stake.
Logan and Cilliers have been trying to get Safari, a real estate investment trust (Reit), to tell them why it turned down a takeover bid from unlisted Community Property (ComProp) valued at R5.90 a share.
Safari’s board had instead been in favour of a R4.30-ashare bid from mall owner Fairvest, but this deal was subsequently called off.
The two shareholders asked Safari’s board at its annual general meeting (AGM) in August to explain why it would not consider ComProp.
But the board, including CEO Dirk Engelbrecht, declined to answer any questions.
Chris Segar of Ivy Asset Management, analyst Nic Krige and other parties have also been calling for Safari to explain related-party transactions worth R1.8bn from 2013 to 2019, between Safari Investments and Fanus Kruger’s Safari Developments.
Kruger is the son-in-law of Francois Marais, the founder and former CEO of Safari Investments.
One of the biggest gripes of the shareholders is that Kruger’s company took no development risk over Platz Am Meer, a shopping centre and residential complex in Swakopmund in Namibia, which it developed with numerous construction overrun costs between 2014 and 2016. This was despite Safari saying in its prelisting statement that development losses would never be suffered by the Reit.
Instead, all of the losses have been borne by Safari Investments. The company’s annual reports for 2014, 2105 and 2016 show that as much as R681m of shareholder funding was provided to the mall project.
This was even though Safari said in its 2016 annual report that Platz Am Meer had an estimated project value of R640m. It opened in October 2016 and was valued at R547m. But in the Reit’s results in the six months to September 2019, Platz Am Meer was valued at R283m.
Paul Stewart, CEO of Bridge Fund Managers, said that Safari needed to mitigate conflicts of interest.
When asked if he would resign from the board, Wentzel referred Business Day to Engelbrecht, who acts as Safari’s official spokesperson.
“Safari’s board is in the process to make changes to its board composition in order to further strengthen the board, which will ensure the execution of its strategy to grow a specialised retail fund focused on the lower-income market in SA,” said Engelbrecht.
Engelbrecht said the company would terminate its related-party transactions.
“In this regard we have already terminated and internalised the property management and leasing functions previously outsourced.”
He said the relationship with Safari Developments would effectively end with the completion of the redevelopment of the Nkomo Village shopping centre in Pretoria.