Share

Lifeline for 7 property syndications

Johannesburg - A business rescue manager has been appointed for seven of the eight property syndications managed by the last big property syndication manager, PICvest.

PICvest was previously known as PIC.

It appears to be a desperate attempt by the directors of the property syndications to prevent liquidation.

A circular with this news was sent by the syndication company's board of directors to the financial advisers that marketed shares in the syndications.

About R4.5bn is currently invested in the syndications administered by PICvest.

Hans Klopper of Independent Trustees, which also trades as Corporate Recovery Advisors, has been asked to act as business rescue manager.

The new Companies Act provides for this type of business rescue, giving companies in difficulty the opportunity to put their businesses in order without liquidators breathing down their necks.

An application for liquidation has already been lodged against one of the syndication companies and the proposed business rescue is clearly simply a plan to ward off similar applications against the other companies.

It is clear that investors - who have already had to see the income promised them by the syndications virtually halved - have started to worry whether they will ever see their money again. One investor has already followed the liquidation route.

How successful the business rescue plan will be is yet to be seen. The fate of the investors lies not in the hands of the companies’ management, but with controversial property developer Nic Georgiou.

The PICvest syndications operated in collaboration with Georgiou, who operates what is probably the largest private property company in the country.

The syndications' properties were all bought from Georgiou and not only did he promise investors a guaranteed return (usually 10% to 12%), but also that he would buy the property back after five years at a guaranteed price.

But earlier this year he informed investors that he was voiding the agreement and that they would receive a return of only 6.5%. This was closer to real market conditions.

The reason given was that the South African Reserve Bank had indicated that his business model, like that of Sharemax, contravened the Banks Act. It was alleged that the transaction could not proceed as long as the sword of Damocles was hanging over the syndications should they be proved illegal.

The proposal was made to investors that the assets of eight different syndications, as they currently were, were being combined into a single entity and everyone would own shares in a portfolio theoretically worth about R5bn.

The new company, Ortotouch Ltd, would buy the properties in all the syndications at the syndicated value. He would also add another R500m worth of unsecured property to the portfolio.

These transactions, however, would have to be approved by the Securities Regulation Panel and the Competition Commission. It appears that the approval process has hit a snag because not all players are in agreement.

Meanwhile there is no sign of any action from the Reserve Bank. It therefore seems that the future of PICvest’s funds is still shrouded in uncertainty and that Georgiou may still be pulling the strings.

The properties in the last four syndications have still not been transferred to the investors and there are many versions as to why this hasn't happened yet.

Georgiou frequently made loans to the first syndication companies - ostensibly to subsidise the returns promised - when the actual rental income was no longer sufficient.

At this stage it appears that the board of directors continues to hope that some agreement can be reached with Ortotouch which will protect investors’ interests, and that the business rescue scheme is simply an attempt to keep the wolf from the door.

Meanwhile investors have to be satisfied with the reduced income, as well as no immediate prospects of getting their money back.

None of the PICvest directors responded to telephone messages. 

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.05
-0.8%
Rand - Pound
24.04
-0.6%
Rand - Euro
20.56
-0.4%
Rand - Aus dollar
12.37
-0.2%
Rand - Yen
0.13
-0.8%
Platinum
899.20
+0.3%
Palladium
999.25
-0.3%
Gold
2,209.51
+0.7%
Silver
24.55
-0.4%
Brent Crude
86.09
-0.2%
Top 40
68,080
+0.6%
All Share
74,278
+0.5%
Resource 10
56,967
+2.4%
Industrial 25
103,572
+0.3%
Financial 15
16,456
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders