Property shocker: Old Mutual picks through the wreckage

Property asset manager asked to review deal that cost policyholders millions. Old Mutual has asked its property asset manager to review a real estate deal that cost its policyholders millions -and says it would like to "reduce the risk" of it happening again.

About two weeks ago, it was revealed on SAfm's Market Update with Moneyweb  that Old Mutual's property asset managers had rejected the highest bid for Nedbank Gardens (R120m) from Hyprop, only to sell it to Intaprop for less (R98m). Intaprop in turn sold a significant stake to Hyprop.

Millions were lost through the sale to a lower bidder of this Rosebank, Johannesburg, building, effectively owned by Old Mutual's policyholders.

Earlier Old Mutual's property asset managers issued a brief, unsatisfactory response when asked to explain the deal (click here to read the statement). Realestateweb - property news site in the Moneyweb group - subsequently made several requests for a more detailed response to answers about the deal.  

Old Mutual has not answered the questions.

However,  on Friday Old Mutual's "outgoing" boss (South Africa) Paul Hanratty said in a letter that the Old Mutual Life Assurance Company of South Africa (OMLACSA) "has come to the conclusion" that the property asset manager's sale process has "not achieved its well-intentioned objective".

"OMLACSA has requested OMIGPI (Old Mutual Investment Group Property Investments) to review this transaction in detail to determine if any remedial actions need to be taken regarding this transaction and what further steps need to be taken to reduce the risk of this sort of issue arising again."

Hanratty did not indicate whether any deadlines had been set for OMIGPI to report back to OMLACSA about the matter.

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