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Tropical Paradise 320 (Pty) Ltd (Under Provisional Judicial Management) Masters Ref: T7751/09 better known as: *Chambers 2 & 3* Holding Company: northern Jungle Trading 104 (Pty) Ltd
Documents on File:
1. Notice of Motion 2. Court Order
1. There is amount of R 227 651 owed by Bluezone Property Investments (Pty) Ltd (in liquidation). 2. Bluezone Property Investments (Pty) Ltd (in liquidation) has a claim for Rent Roll and Administration of R 292 200 against the company. 3. The current account is held with FNB under acc number 62091295470 and is showing a zero balance. The Nedbank account is held under account number 901-591-7979 and has a credit balance of R 27 571.41 as on the 1st of March 2010. 4. The property’s vacancy factor is 46.77% as on end February 2010. 5. The arrear levies of the company has been reduced from R 741 445 to R 293 480.26 since the judicial management order. 6. The company’s arrear tax liability at 30 November 2009 is estimated at R 59 114. 7. Total Immediate Obligations of the company : R 425 909.82 8. The bond payment is R 161 256.80 month with bond account number 30096213 held with Nedbank. The outstanding bond balance as on the 5th of February 2010 amounts to R 10 861 871.90. The immediate payment due is R 828 412.20 9. It seems from documentation found in the offices of Bluezone Property Investments (Pty) Ltd (in liquidation) that the “loan” from the holding company was subordinated in favour of Nedbank. 10. No provisional judicial management fees have been charged or collected from the company, neither has the Master of the High Court granted any fees to be collect by the judicial managers as on date of this report
Forensic Auditors’ Report Findings The company was incorporated on 18 May 2005 under reference number 2005/015511/07. The company’s registered office appears to be that of its auditor, Loubser Du Plessis Incorporated, and is given as De Waterkant Building, 10 Helderberg Street, Stellenbosch. Hennie Lamprecht is given as the sole director.
The company sole asset of significance are certain sectional title units situated on the 2nd and 3rd floors of a office complex known as Tyger Valley Chambers 2, Bellville which it acquired in February 2007 at a cost of R 21 262 270. The properties was valued by J.T. Seyffert in February 2007 for R 26 600 000 and formed the basis of a syndication arrangement by Bluezone at a value of R 29 305 000.
In preparing the marketing document headed “Investor information for Acquisition and Syndication costs”, Bluezone disclosed the purchase price (excl Tenant Installation) as R 22 592 270, some R 1 330 000 higher than the actual purchase price.
The forensic auditors note that a commission of R 300 000 was paid to the Wico Trust (associated with Durandt van Zyl) and an amount of R 1 129 613 + Vat to Northern Spark Trading 254 (Pty.) Ltd, in which Paul Scheepers and Hennie Lamprecht have an interest. The directors’ interest as beneficiaries of these amounts was not disclosed to Investors.
THE PROPERTY SYNDICATION
The investment was geared to the extent of a mortgage bond by Nedbank for R 17 000 000, which had reduced to R 11 800 000 by February 2008 as investors’ funds were received. The balance of the funding requirement of R 17 352 000 was provided by a loan from the company’s holding company and ultimately by investors.
THE ADMINISTRATION OF THE COMPANY POST SYNDICATION
The company has suffered from having two non-performing tenants (One Vision Investments and Bluezone itself) which together, occupied 22% of the Gross Lettable Area. Innovation Worx did not renew its lease which expired in January 2010, leaving Totalgaz as the sole remaining tenant.
The company has rendered an income tax return up to the 2008 tax year. There is an amount due against the 2008 assessment of R 59 114 for which a final letter of demand was issued on 13 November 2009.
FINANCIAL POSITION · The Chambers 2 & 3 property has been valued by Messrs of Valuers & Appraisers at R 19 850 000. This resulted in a write down in the carrying value of the property of R 8 240 445
· Property management and administration expenses of 292 200 have been accrued
The company’s liabilities exceed its assets by R 8 861 069 (based on Messrers Valuers & Appraisers’ valuation) and is therefore insolvent.
Furthermore, the property is 46.77% unlet with Bluezone, Innovation Worx and One Vision Investment having vacated the building. The company is unable to meet its mortgage loan repayment, nor make any contribution to normal operating costs at its current rental income.
CONCLUSION
At present, the company is unable to meet its mortgage loan commitments and is R 667 155.40 in arrears.
The company is similarly unable to neither make any contribution to operating costs, nor meet its levy and other arrears of R 293 480.26 as at 19th of February 2010.
As there are no immediate prospects of finding new tenants, nor of raising fresh capital from investors, we would recommend that the property be put on the market immediately, failing which, the Judicial Managers should consider liquidating the Company, as the Company cannot be restored to profitability.
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