Registered users can save articles to their personal articles list. Login here or sign up here

Revealed: Steinhoff’s foray into the ultra-luxurious Cape Town residential market

Bought from a company owned by Markus Jooste and Investec director Bernard Kantor.

At 13h30 South African time, updates were made to this article. For ease of reference, these have been highlighted in bold below. 

In an incredible turn of events, and following the implosion of the Steinhoff share price amid allegations that its previous CEO, Markus Jooste, had been manipulating the company’s financial statements, Moneyweb can reveal that Steinhoff bought a high-end luxury apartment block jointly owned by Markus Jooste and Investec director Bernard Kantor, late last year.

The development called “East West” is located at 51 Beach Road, Mouille Point, in the Green Point suburb of Cape Town, right on the promenade looking out across the Atlantic towards Robben Island and within walking distance of the V&A Waterfront.

Source: Google Maps

East West – located at 51 Beach Road, Mouille Point. 

Source: Private Property

The apartment block comprises six levels above ground floor (where a restaurant is located), with each apartment occupying an entire floor, with the exception of the fifth and sixth floor which comprises one duplex penthouse apartment that features its own wine cellar and pool.

Each apartment (with the exception of the penthouse unit) has different finishes and enjoys floor sizes of about 340 square metres with “wrap-around beautiful panoramic views of the ocean” according to the estate agent Moneyweb spoke to.

Prices for each of the five units available for sale – only the fourth floor has been sold – start at R35 million for the apartment on the first floor and work their way up. The 678 square metre penthouse apartment is listed for sale on both the Seeff and  Pam Golding websites for R88 million and looks simply incredible.

According to the description on the Private Property website: “The apartment oozes luxury and the finishes are of the utmost quality.”

A view of the penthouse

Source: Seeff Properties

The apartments were listed for sale in February this year.

According to information sourced from Windeed, the erven on which the apartment block was built was bought by a company called “Greggaleighk” (Pty) Limited for R39 million in 2008. In 2014, the land was bonded by Investec Bank for an amount of R105 million. The sectional scheme was registered on December 9 2016.

In 2009, the managing director of Investec, Bernard Kantor, became the sole director of Greggaleighk, and he remains a director to this day, according to Windeed. In August and September last year, the company added Steinhoff Secretarial Services as its company secretary and changed its financial year-end to end September, in line with Steinhoff’s own financial year-end. It also added new directors to its board, including the managing director of Steinhoff Properties.

According to court documents filed in the Western Cape High Court last year, in a matter between Investec, Absa bank, Sanlam and Mayfair Speculators and Holdings, Mayfair Holdings (an investment vehicle controlled by Jooste) furnished a balance sheet, which listed an investment in an associate called “Greggaleighk” with a carrying value of R33.5 million (see below). This implies that Jooste was a shareholder in the company that ultimately developed the apartment block and sold it to Steinhoff. 

A close up

At the end of November, mere days before the resignation of Markus Jooste as CEO of Steinhoff, the company changed its name to EastWest Real Estate Investments. In response to Moneyweb questions, Steinhoff admitted that it had acquired a controlling stake in the company late last year but would not disclose the amount invested:

“The Steinhoff property division acquired 70% of a company which owned the property in question.  The transaction was approved by the board of the Steinhoff property division. At the time it was the strategy of the division to build up a diverse commercial, industrial and residential property portfolio. As part of the current restructuring initiatives in the group, the holding of this property is reconsidered.”

This appears to be a surprising development. Despite an impressive list of acquisitions that have broadened the group’s offerings to include furniture, homeware, discount clothing, mattresses, logistics, financial services and fast-moving consumer goods, Steinhoff had not articulated a strategy to move into residential development and sales.

So, what exactly is going on here?

A little bit of history

Markus Jooste and Bernard Kantor go back a long way. Through their shared love of horse racing, Kantor and Jooste became co-owners and directors of Klawervlei Stud Farm and Cape Thoroughbred Sales, assets Jooste owned through his investment vehicle, Mayfair Speculators.

In addition, both Jooste and Kantor served as directors of Phumelela Gaming and Leisure, the listed horse racing and gaming company that stages and broadcasts most of the country’s horse races.

Bernard Kantor (centre) and Markus Jooste (right) 

Source: Sportingpost.co.za

Kantor’s admiration of Jooste was clear from an interview he did with Alec Hogg in 2016:

Alec Hogg: Your favourite executive who doesn’t work for Investec?

Bernard Kantor: They’re too many to mention but I’m a bit biased. I’m quite close to Markus Jooste. I think he’s unique. He has everything.

The relationship between Kantor, Jooste and Investec went further, though. Investec lent Mayfair Speculators as much as R250 million according to court documents filed last year. In addition, Markus Jooste was invited to join the board of Investec Equity Partners (IEP) in 2017 as chairman by chief executive Andy Leith. The board of IEP includes a roster of Investec’s most senior executives: CEO Stephen Koseff, finance director Glynn Burger, Leith, and Bernard Kantor.

Read: Mayfair Speculators still negotiating with banks

In the final analysis then, the ownership of a company by Jooste and Kantor that developed and sold a luxurious high-end residential development to Steinhoff seems to deviate far, far away from previous strategies articulated by the company. And how exactly was this conflict of interest managed? Was it disclosed to the board and did Steinhoff shareholders get value for money? 

Apart from the afore-mentioned statement from Steinhoff, the company did not respond to any other specific questions. Bernard Kantor declined to comment.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   37

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

It’s a lovely property and it’s worth every cent. I have great respect for Steinhoff when it comes to picking investments and preparing financial statements…. Them fellows have great taste and greater creativity.

And a particularly creative approach to governance

Agree fully! Great taste indeed!
Except perhaps in the photo Marcus could have picked a slightly less bulky jacket?

So your mate lends you money to develop an apartment block that you then sell to the company that you manage at a premium because no one else was willing to pay the price. This is corruption of the highest order. He really treated Steinhoff like his personal spazashop and the board allowed him to. The problem is most boards are stuffed with people whom the CEO want there and they serve at his behest

Usually if you smell a rat, there is a rat!
So. The buddy buddy network extends beyond Skelkembosch – doesn’t really prove anything.
But it does confirm that there is honor amongst thieves.

What an utterly stupid article. Nothing more to say.

Not. Steinhoff’s stated strategy didn’t include the residential market seemingly

Agree triple…, utterly pathetic. Seems like just a clickbait article.

It is my fervent hope that the companies I am invested in via UTs do NOT always stick to stated strategy and use opportunities when they arise.

Nimble is what we want not held down by a typed page somewhere.

Opportunities to buy assets from their chairman without disclosure or shareholder approval?

Sure! Opportunities that arise…..
Seems this particular one arose from the close bonds between two friends (with access to shareholder money…..)

I really don’t see what all the fuss is about!!!! What’s a couple hundred million between mates????

What about Markus Jooste’s 100% buyout of Nappy Pride that was owned by Loadstone Brands in his personal capacity.

He wants to take on AVI and Tiger after destroying so much of other people’s money.

As long as it remains a Steinhoff property, it sounds like a good investment. Depends on the return.

This seem too difficult to understand by many posters.

So what’s the fuss all about??

Get used to it, just like the ANC this can of worms will yield many more surprises.

Warren, surely you should be spelling out what this all “might” mean, if anything?

I presume you are implying that:

– Kantor and Jooste were involved privately in a Moille Point development now worth perhaps in the region (or more?) than the bonded amount (presumably the cost of the land and development)borrowed from Investec;
– It was then sold right before the proverbial hit the fan to Steinhoff;
– This was either to help Steinhoff (unlikely – it’s small change) or to help Jooste/Kantor in their personal capacities;
– So we’re looking for motive and we’re looking for fair value and legally completed transfer (check the deeds office?) and we’re looking for appropriate approvals from Steinhoff.

Can anyone help with this?

… what if the property was bought by Steinhoff (or one of its subsidiaries) at a price agreed by Jooste and Kantor and with funds effectively provided by Investec (through a loan secured with Steinhoff shares to give at an above-board appearance)? No that would be too farfetched!

But as long as values and approvals were all in order, so what? Yeah, it’s walking like a duck, but what we really need is it now to TALK like a duck.

Since Steinhoff money was used (by the friends), Steinhoff must now get it’s money back! There are more urgent uses for the money than fancy apartments…. like paying off debt. Can this apartment turn a profit after such a short period?

Just thinking, was he going to move Poppie into the top floor here…….

…or is the top floor his hide-out?
Maybe the reason he bought it? He may have guessed what was coming for him down the line and bought the multi-floored building to be able to duck (from floor to floor) parliamentary committees’ henchmen…LOL

When are these crooks joining Zuma in the docks?

Mmm I think there are much bigger issues at stake with Steinhoff than buying an apartment block that is a rounding error on its balance sheet. For instance the fact that its whole property portfolio is now valued at 50% of its previous value. A EUR2bn hit if memory serves. Is a EUR5m investment material in that context?

EUR5m is as relevant as noticing smoke before the fire.

The materiality of this, the Wiese payments and the deals with all the chommies’ spv’s to get the debt off balance sheet and fix the accounting “problems” is the same – a seeming complete disregard for governance and shareholders by the company transacting with directors or their closest friends – never it seems with the company’s interests first, and seemingly in disregard for perception or reality of governance requirements, JSE rules and or the Companies Act. Can Kantor, Wiese, Investec, the directors of Steinhoff Properties etc really ALL claim blissful ignorance and pin this all on Markus??

The worst thing in this article is Markus’s dress sense. Is he wearing his dad’s jacket?

In my opinion the real story is in the prices. Sure, the Atlantic Seaboard is in demand BUT who would pay R35 million for an apartment directly above a restaurant with all that implies. This knocks on to the rest of the prices which are simply over the top

Not likely … would require buyers with deep pockets.

The restaurant makes perfect sense … no need to cook; simply take the lift downstairs and get your take-out. they thought of everything!!

One imagines that the Related Party section of Steinhoff when it eventually publishes AFS may be several pages long…

This deal was days before Jooste’s bombshell aka the “Bolt from the Blue”. In other articles, Wiese dealt hundreds of millions with Steinhoff, also just before The Bolt. It would be fascinating to get hold of, and trace back ALL the large share sellers in the weeks before The Bolt

Investec should probably also take a close look, going back to the sale in 2008 when a lot of distressed properties were called up

It always astounds me that people that already have made a “comfortable” amount will throw away their reputations for another R50m scheme. Me, I just assume that this was how they made their other money all along. Really sad for the families if they are innocent

Makes sense

Every picture says a thousand words..old boys club = white monopoly capital

“Unique” 😉

This article is telling as it is probably a formula used many times. Markus buys an asset and then sells it at an inflated price to Steinhoff.

How do you think the property book became to be so over-valued?

I wonder if these transactions were reported to the dozey-Board?

Anyone else think Kantor obtaining financing from Investec fishy?

Not fishy at all: he HEADS UP Investec…
So in SA corporate governance context, it’s almost logical.

Investec is a notoriously corrupt bank … just follow News Week for some incredible stories; almost too outrageous to be true, but true nevertheless.

When the corporate sector saw what government got away with, it seemingly decided to follow on its footsteps never thinking that Zuma would be dethroned, but he was, and now the chickens are coming home to roost.

Jail the whole lot, I say. Or better still, put them up against a wall to face a firing line.

Load All 37 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2