Johannesburg – Investors in controversial property syndication group Sharemax's Zambezi Retail Park and The Villa shopping centre projects will be excluded from any benefits flowing from the group's potential reverse listing into Bonatla Property Holdings [JSE:BNT]
Bonatla announced on Tuesday it will not consider these centres as part of a possible acquisition of Sharemax's portfolio.
For investors in The Villa and the Zambezi Retail centre, the future of their investment remains unclear. Ownership of the centres has not been transferred to Sharemax from the developer Capicol, and the monthly interest payments investors have become accustomed to over the past year have stopped.
According to financial adviser Carel Weeber - himself a Sharemax an investor - the scheme has been disappointing.
"I won't market it any more," he said. "These investments work well only when everyone is receiving their money."
However, he said Bonatla's choice to exclude the centres from its bid will work in favour of people who invested in Sharemax's other syndications.
"Now the other shopping centres won't have to prop up these two; they can focus on looking after themselves," he said. "This was a good move, the other buildings can go on with business now."
According to Weeber, the future of Zambezi and its ownership is uncertain, but Pretoria's buying power will justify its existence. "It's a good centre, shoppers will use it."
Sharemax's board accepted Bonatla's provisional offer this month to buy the property companies in the Sharemax group for R4.95bn.
Reports in Finweek since February have raised concerns over the way Sharemax's latest syndications, the Zambezi Retail Park and The Villa in Pretoria, were financed, with investors funding a portion of costs in return for interest payments generated from tenants.
Up until August investors received these payments, despite the fact the centres were still being built and not trading. However, this week Capicol entered into an agreement with Sharemax in terms of which it will go ahead with the two centres on its own.
Investors in the centres no longer receive interest, but Capicol has promised to resume paying them an income if it receives funding of R1.15bn to complete The Villa.
A property expert who declined to be named said the Bonatla announcement was a blow to investors who had poured their life savings into The Villa and Zambezi.
He said the listing issue seemed to him to be a cheap publicity stunt to keep investors content.