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Nova properties auctioned off

Board still needs to accept offers.

Five properties of Nova Property Group, the rescue vehicle of the failed Sharemax investment scheme, were auctioned off on Thursday in Johannesburg.
 
The properties attracted collective bids of R78.25 million, which was significantly lower than the collective valuations of R147.5 million reflected in Nova’s 2018 annual financial statements (AFS).
 
The sale of four of the five properties was not previously communicated to debenture holders.

Read: Nova plans to sell another five properties
 
The details of the auction appear in the table below. The vacancy rates were disclosed in information packs distributed at the auction:

Property

Vacancy rate

2018 AFS valuation

Auction price

Carletonville Centre

29%

R51.9m

R18.25m

Shoprite Secunda

18.3%

R24.7m

R17m

Secunda Plaza

44.3%

R17.1m

R15m

Carnival Centre

24%

R21.4m

R8m

Athlone Park

74%

R32.4m

R20m

 

 

R147.5m 

R78.25m

Ari Ben, chief executive officer of Auction Inc, who auctioned off the properties, said in response to questions that there is “strong interest in all the centres from around the country, with bids coming in from the floor and telephonically”.

He confirmed that reserve prices were set for the properties and that Nova had three days to accept or reject the offers. He did not want to disclose the reserve amounts and added that the names of the purchasers could not be disclosed.

Moneyweb sent questions to Dominique Haese, Nova’s CEO, asking whether Nova would accept the offers or not, but she did not respond.

Nova has, however, broken off all communication with Moneyweb.

The auction of Carletonville Centre:

Closure of bank accounts

The auction follows Standard Bank’s decision to close Nova’s bank accounts late last year, and the resignation of Charles Rembe as a non-executive director and chairman of the audit committee of the company. Standard Bank did not disclose the reasons for closing the bank accounts. Nova now banks with Absa.

Qualified audit and concerns about property valuations

The vacancy rates disclosed in the auction documentation don’t reflect the assumptions made in Nova’s 2018 AFS. The AFS was qualified by auditor Nexia SAB&T who raised concerns about the assumptions used to value the properties and whether Nova could continue to operate as a going concern.

The AFS states that the valuations for Shoprite Secunda and Secunda Plaza were based on purchase offers Nova received from third parties. These offers were obviously declined.

The assumptions for the valuation of the other three properties in the 2018 AFS appear in the table below:

Property

Long-term vacancy rate

Net income

Valuation

Auction price

Carletonville Centre

5%

R4 778 098

R51.9m

R18.25m

Carnival

Centre

5%

R2 152 207

R21.4m

R8m

Athlone

Park

10%

R3 382 506

R32.4m

R20m

In the information packs on these properties, which were distributed at the auction, the following information appears:

Property

Vacancy rate per AFS

Net income

Variance from AFS net income assumptions

Carletonville Centre

29%

R2 262 282

-R2 515 816

Carnival

Centre

24%

R1,639,140

-R513 067

Athlone

Park

74%

R3 057 372

-R325 134

The achieved net income is significantly less than the assumptions used in the AFS.

Nova has previously suspended correspondence with Moneyweb. The response below was sent to Moneyweb in November 2016.

Dear Mr van Niekerk,

It is regrettable that our efforts in engaging Moneyweb openly, constructively and in a bona vide fashion has not been reciprocated. In response Moneyweb has chosen to publish articles without prior reference to us, and in breach of your undertaking to allow us to see and comment on the articles first, which articles twist the facts, articulate a number of inaccuracies and untruths and seek to slander and defame the Nova Group and its directorate. We are considering our position and our rights in this regard are reserved.

It has become clear to us that any information that is provided by us to Moneyweb, will be twisted and used out of context for the purpose of further negative reporting of and concerning the Nova Group and its directorate and given that no further productive purpose would be served in engaging with Moneyweb, the Nova Group has decided to break off all forms of communication with Moneyweb. We will accordingly no longer respond to questions Moneyweb pose to us, requests for commentary on proposed articles or for that matter to any articles that Moneyweb might publish, subject of course to a reservation of the right to deal with any matter Moneyweb might publish, in a court of law.

Please ensure, should you elect to publish anything further regarding the Nova Group and any of its functionaries, that you include in such publication our above position, verbatim.

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Nett asset value per the AFS will show a net shortfall taking the return of the auction into account. Then there is the costs of the auction to be taken into account and if the valuation which the directors did on Zambesi and The Villa. So the scheme has for all intent collapsed and is insolvent. The question remains what will be done with the money received to pay running costs i.e. directors salaries etc. or will the debenture holders do something to get persons appointed to protect the last bundle of cash.

Ultimately the investor’s funds invested over time of some R4 billion is gone.

With situations like the, salaries always come first.
Unfortunately.

“The Board still needs to accept these offer.”

You kidding me? Connie and Dominic (‘the Board’)will, of course accept these – R78MILLION SMACKEROOS TO SPEND FOR THEM.

My question has always been, and still is…Which related (to the directors) party is attempting to buy these properties for a few cents on the rand?

Especially if any of these offers are accepted, Moneyweb should please do some deep digging…

This is why i do not invest in REITS , these people play fast and loose with investor’s cash , not to mention living large even when they lose buckets of cash.
Shopping centres and office space is a bum investment, just look at what is happening in the US they closing stores by the thousands.

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