His hunger to own
He called the boom, but some of his JCI-funded deals raise questions
Mining company JCI is selling off Brett Kebble's property portfolio to settle debt even as it scours the country to find more assets. But it emerges that Kebble also dumped some of his properties in a cash-strapped frenzy before he was murdered in September last year.
Kebble made liberal use of JCI's assets to buy what most people took to be his private properties. The FM understands that most of the properties still held after Kebble's death, plus JCI's two Johannesburg buildings - at 28 Harrison and 84 Fox streets - have been sold for a little over R100m to an undisclosed consortium.
Kebble called the property boom with superb timing in 1999, when he set out on a buying spree of residential properties costing more than R60m. He used JCI as the vehicle to snap up nearly 30 houses, as well as residential land (see table on page 66).
His first purchase was 39 Klaassens Road, Bishopscourt, Cape Town, for which, according to the subscription website for the SA Property Transfer Guide, he paid R3,75m in February 1999. A fistful of Bishopscourt properties followed in quick succession in 2000: houses adjoining each other in Canterbury Drive (at R4,5m), Rhodes Drive (R2m) and Klaassens Road (R2m and R5,75m).
Then, in 2001, Kebble bought Monterey, one of Bishopscourt's grandest mansions, from Seardel's Aaron Searle for about R10m, and Melrose House, a mansion in Johannesburg, for R252 000, according to the 2004 annual report of Consolidated Mining Management Services. He bought property next to Melrose House in 2002 for R332 000.
That year he also launched a development company with Cape Town-based developers Newport Real Estate. It was his idea to operate it with Tokyo Sexwale as Mvelaphanda Properties (Mvelaprop). "He told his new partners that the company should prepare for an eight-year property boom," says one associate (like many of Kebble's former business partners, he didn't want the FM to put his name into an article that also carried Kebble's name). "He seems to have been spot on. He was also very generous, funding Mvelaprop's first venture with a R35m unsecured loan from JCI."
In 2003, Kebble bought three more houses in Bishopscourt, paying from R5m to R7,25m apiece. He also acquired 63 and 65 5th Avenue, Inanda, Johannesburg, for R6m to use as his personal home. And he bought 14 empty plots at Stonehurst, Mvelaprop's successful gated estate near Steenberg golf estate, winery and hotel in Tokai, Cape Town, for about R11m.
Mvelaprop was headed for great success - as was another of Kebble's listed entities, Rand Leases Properties, a low-cost housing company, which briefly dabbled in commercial property development in Illovo and Bryanston, Johannesburg. It sold out in 2003 to listed property fund Redefine for R350m in Redefine scrip - most of which it swapped for the Rand Leases Properties scrip that Redefine held. His timing couldn't have been worse: two years later, Rand Leases would have been sitting on priceless land zoned for development to meet the commercial property boom.
But Kebble's main interest seems to have been residential property, apparently to satisfy his hunger to own, rather than as part of a strategic business property holding. His tendency to buy up adjoining properties in high-priced suburbs indicates that he might have been aiming eventually to create a large estate for his own use.
Until 2004, he made it clear he was a buyer of property, not a seller. His unwillingness to sell paid off when one overseas buyer paid a record R12,5m for 18 Primrose Terrace, Bishopscourt, because he fell in love with its spectacular mountain view. This was less than a year after JCI had paid R5m for it.
But last year, Kebble dramatically turned from buyer to seller. "He was desperate for cash," says a former partner. The Klaassens Road property bought for R5,75m in 2000 went for a relative bargain price of R7,5m. Erf 17 Primrose Terrace was sold for R8,55m in July last year, at barely R1m more than Kebble had paid in 2003. He did well, however, with the sale for R10m of Melrose House.
He also sold the Inanda property, but the transfer and price are not yet recorded by the SA Property Transfer Guide. The buyer, another property developer, will consolidate it and build a new house on it.
Perhaps most telling in his cash crisis was the sale of his one-third holding in Mvelaprop. "He was desperate for money and the other Mvelaprop shareholders knew it," says the former associate. "In the end, Brett was happy to part with his shares for about one-eighth of their net asset value." A JCI spokesman says forensic auditors are still tracing properties. "Most of the ones identified have been sold," he adds, but he will not identify the buyers.
The FM understands the consortium has already sold on most of the residential properties, including Monterey, which alone must be valued at around R25m, not much less than JCI's plush head office at 28 Harrison Street, Johannesburg.
SA Property Transfer Guide also reveals some questionable deals. For instance, 2915 William Nicol Highway in Bryanston was bought for R2,4m in 2001 and sold to company MD Grant Fischer for R2,6m in 2004. Fischer did not take transfer until August last year, but sold it in April - last year, too - for R7m.
Why did JCI allow the transfer to linger so long? And how was Fischer able to sell the property for three times what he had paid for it a little over a year before? A JCI spokesman says the company bought a property in Houghton in 2000 for R525 000. This appears to be at 4a 13th Avenue. "But the record of the sale seems to have been obliterated from the deeds office," says the spokesman.
SA Property Transfer Guide shows deeds office records of the 1997 sale of portion 4 of the farm Modderfontein in Gauteng by Western Areas gold mine to Randfontein Estates mine for R52m. Yet Randfontein sold it to JCI subsidiary Tavland for R520 000 in 2000, which sold it on to Bambanani Fruits (Pty) for R1m in 2004. The March 2004 annual report of Consolidated Mines Management, which held assets for JCI, shows the property as being directly held by it at a cost of R4,56m. The report also shows Tavland as having assets of R12m.
Article by: Ian Fife - http://free.financialmail.co.za