Johannesburg - Sharemax’s biggest property syndications have been saved from possible liquidation.
But investors in The Villa and Zambezi Retail, two large shopping centres to the east of Pretoria, should prepare themselves for not receiving the promised income or all their capital back.
Besides, these investors will have to wait up to 20 years for their money.
This is after the High Court last week approved the proposed schemes of arrangement for The Villa and Zambezi, thus avoiding possible liquidation of the buildings – which would have had catastrophic consequences for the investors.
The schemes of arrangement will be presented to investors and creditors for approval, after which they have to be finally ratified by the court.
Dawie Roodt, one of the independent directors of the property companies in the Sharemax stable, said investors should prepare themselves for a loss of income and capital.
In the case of Zambezi, investors’ money will be repaid over a period of 15 to 17 years. During this time they will earn no income and full repayment of their capital cannot be guaranteed.
Repayment of their money will be based on the net rental income earned from the building, and will end as soon as investors have received back 130% of the original amount they invested.
The total repayment to investors would therefore be at most R983m, representing 130% of the original R688m invested.
In terms of the scheme, for the first 10 years investors will receive 70% of the net income from Zambezi. By then, if the full amount has not been repaid, the scheme will continue for another two years. For the next five years investors will be paid 30% of the net income.
Similar detailed information for The Villa is not yet available.
In terms of the approved scheme of arrangement for The Villa, the building will be completed when the necessary finance can be obtained.
At this stage it is unclear how much money is required for The Villa’s completion, but sums of R800m to R1.6bn have been mentioned.
Roodt said the scheme of arrangement for The Villa has been drawn up in such a way that it can be modified should a better plan for the half-completed building be found.
Repayments to investors will start as soon as The Villa is completed and an income earned. These repayments could then, as in the case of Zambezi Retail, also take place over an extended period.
Roodt said the scheme of arrangement for so-called income plans for other Sharemax syndications had also been approved by the court.
The buildings from which investors in the income plans receive money are healthy, and investors ought to get their capital back, said Roodt.
The scheme of arrangement for the so-called growth plans for buildings yet to be developed still has to be approved by the court.
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