Moti, property developer, cries foul, threatens legal action

denies looking forward to juicy profits while property investor loses r8.8m deposit.


luxury property developer zunaid moti, at the centre of a controversial deal with investec bank over more than r1bn in debt, has taken issue with a realestateweb article involving a property investor who wants his multi-million rand deposit back.

the article, written by a realestateweb reporter and published in the citizen newspaper's citibusiness section, was based on a radio interview with alec hogg, editor-in-chief of realestateweb's parent company moneyweb, and included comment from investec bank.

in a lawyer's letter, threatening high court action, moti denied, among other things, that:

* he looked "set to score" from a liquidation application while a big investor in a sandton property development will lose his multi-million rand deposit;

* he "came across as unrepentant" about the matter; and

* he is looking forward to "some juicy profit share" later.

realestateweb stands by the opinions and facts in its article. however, in the interests of fairness and transparency, the full radio transcript is published here:

zunaid moti interview: uncut
was the r8.8m ‘restructured'?
alec hogg: zunaid moti is the chairman of the abalengani group, one of the more colourful entrepreneurs in the property. zunaid, today the daily dispatch reported that 85 grayston drive developments, one of your companies, was provisionally liquidated by the grahamstown high court yesterday. i guess there would be people who are seeing this as the first domino to fall.
the background to this is that a gentleman called vivien natasen gave you r8.8m as a deposit. it was supposedly for the development of the project. the project didn't go forward. he wants his money back, and you haven't been able to give him the money back. now this company has been liquidated. what does it mean for the whole abalengani group?

zunaid moti: well, it's one of the properties that's owned in the group. it's a relatively insignificant group. there's a number of properties, including the nondela development. it's really insignificant in number as well as value.

alec hogg: you obviously are a high-roller, because investec's got bonds of r53m over the .... it's not insignificant in most people's eyes.

zunaid moti: it is not r53m-odd. i think the intention was to develop the property with natasen. he gave us a deposit, he couldn't come up with the balance of the money. we restructured him. the property was never developed, and if never developed he was going to become a shareholder.

alec hogg: so was he going to be putting in the money to develop the property?

zunaid moti: he was supposed to pay us quite a substantial amount of money for part of the development.

alec hogg: according to the court papers he was only going to buy one of the floors.

zunaid moti: one of the floors, ja. i think that was about r40m, something like that. he couldn't come up with the balance. we restructured him. we didn't develop the property, only the first and second bond were registered. in order for the bank to develop the property they need to register mortgages.

alec hogg: where has all that money gone to?

zunaid moti: the money hasn't been drawn down, certainly. it was registered with the intention of taking development funding. i think on the property there is about a r30m debt outstanding.

alec hogg: according to the court papers, investec have two bonds over it, one of r40m and one of r13.6m.

zunaid moti: sure.

alec hogg: where is that money?

zunaid moti: well, the bonds were registered in anticipation of the development of the property. sometimes when a bank registers a bond on a property it doesn't mean you've got facility down. so the debt outstanding is not near the r54m mark.

alec hogg: so why not repay this guy his deposit of r8.8m?

zunaid moti: ja, you know, the simplicity was that if we ever ended up in a situation where we weren't developing it because he defaulted on the payment, he would become a percentage partner in the property as a second course. he then got the agreement cancelled in court - in other words the judge went against us. the matter is on appeal. if he loses the appeal he'll get nothing of the transaction itself. but instead, investec and ourselves, we didn't defend the liquidation because it's not in our interest.

alec hogg: but zunaid, the guy gave you nearly r9m as a deposit to build something. it wasn't built. can't you give him the money back, or what happened to it?

zunaid moti: remember, the guy also took an obligation to pay us r40m.

alec hogg: on top of that?

zunaid moti: ja. in total for the floor. if he doesn't pay or put up guarantees, how do we develop the property?

alec hogg: you needed him to give you the money to develop the property.

zunaid moti: not at all. in a development you certainly need a certain amount of sales before you go and develop a property. when you are a tenant here you would understand that. and as soon as the guy defaulted on the arrangement certainly we didn't want to give him a roukoop deal - we said become a percentage partner in the property because you've defaulted and we'll restructure you. instead of doing that, which is probably the amicable solution to it, he decided to adopt an aggressive approach which obviously we won't entertain.

alec hogg: he said in court papers, mr natasen, that the property is only worth r12m. is that about accurate?

zunaid moti: no, i think that's inaccurate. be that as it may, even if it was worth r30, which is the bank debt, he's not going to get anything behind the liquidation.

alec hogg: so he's going to get nothing out of it?

zunaid moti: no, i don't think so. i think it's just foolish of him to go on the liquidation, but strategically it suits ourselves.

alec hogg: what's happening with your whole group, because investec did do a restructuring? there's a billion rand worth of debt apparently outstanding.

zunaid moti: ja, we've done a great restructure. it's an amicable solution for the bank and ourselves. it doesn't require us to dispose of the portfolio. instead investec are putting a lot of expertise, as well as they are managing the portfolio to develop it into something quite significant. and then the upside is trapped in the developments themselves, which we would share with the bank. so this is a once-off issue that has come up. it's something we won't obviously be put into a corner over.

alec hogg: it's ring-fenced, it's got nothing to do...?

zunaid moti: it's ring-fenced. there's no issue. i'm sure you've spoken to the bank. the bank feels the same way. it doesn't affect our deal. banks like this ... far and few to find where they can restructure that type of money, i'm sure you know, in these type of times. obviously they stand by us, even under the circumstances of this application. investec could have responded. they were one of the respondents in the application. strategically it didn't make sense to us. the liquidation allows us as secure creditors and bank and ourselves to recoup our moneys and move on.