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

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 from 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, literally right on the promenade looking out across the Atlantic towards Robben Island and within walking distance of the V&A Waterfront.

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

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

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.

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 our 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 quite 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) 

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.

So could it be, given the relationship between Markus Jooste and Bernard Kantor, that the acquisition of this development by Steinhoff was an agreement between friends, using Steinhoff’s money?

Bernard Kantor declined to comment.

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