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Tuesday 29 March 2011
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Old Mutual blamed for losses TERESA FISCHER
S
EVERAL ex-tenants of Old Mutual’s West End Mall in Pinelands are considering taking legal action against the company to recover millions of rands they allege they lost as a result of Old Mutual’s broken promises. The company converted part of its head office into the Old Mutual West End Mall, which opened in June 2007. These tenants say that by the end of 2009, most of the tenants – including the anchor tenant, Spar – had been forced to shut their doors. Former investors say they bought into an upmarket concept modelled on Cavendish Square, also owned by Old Mutual. Tenants were responsible for all the shop fittings in the building, which started out as an empty shell. But, according to tenants, the mall was doomed from the outset because the mall was not zoned for public trade. Shops depended entirely on the company’s 8 000 employees, which was not enough to sustain their businesses. Gavin Maggott, owner of the Spar that traded there, says he was repeatedly told the mall was close to opening for public trade, but that this was a misrepresentation. “They were hushing things up. Meanwhile I was accumulating debt.” He says the Spar lost R5 million in less than two years. Maggot says his application for a health certificate was refused as Old Mutual also did not have the correct retail licence for a shop of its size. Another tenant, who asked not to be named, maintains that all the tenants were led to believe the mall would shortly open to public trade. Then “the song started changing”, she says, and the company denied they had ever claimed to be a public mall. “We were led up the garden path,” she adds, say-
ing they chose Old Mutual, owners of successful malls such as Willowbridge, because “they know what they are doing”. She estimates that each tenant who was forced to close lost at least R1 million. One such tenant says he will shortly lose his house. Other complaints include insufficient control of the tenant mix that resulted in shops operating in competition with each other. Mughtar Parker, Old Mutual South Africa corporate property manager, maintains tenants were aware that Old Mutual had applied for rezoning of the mall and that this application was in process. He says that Old Mutual did not make representations to prospective tenants that municipal re-zoning of the property was imminent. He says: “Old Mutual understands that the tough economic conditions, amongst other factors, have put pressure on spending patterns by consumers, impacting particularly on the smaller traders and their turnovers.” As a result Old Mutual granted a number of concessions to the original tenants over a period of time. These include a rental concession where six months rental was waived, all tenants’ rental was reduced by 20% for the duration of their leases and during the festive season (December and January), and rentals were reduced to 10% of turnover. Many shops decided to close over the festive season as a large percentage of their staff were not working. Parker adds that Old Mutual has created various exhibitions to increase footfall, and offered free advertising space in the weekly electronic staff letter. “Old Mutual has treated each tenant’s situation on its own merits, and has repeatedly shown ourselves willing to engage with the tenants and accommodate their needs as far as possible,” says Parker. Parker adds: “With regards to arrear rental amounts due by certain tenants, Old Mutual has entered into confidential settlement agreements as opposed to
REGAL: Simphiwe Dana epitomised the elegance of jazz when she performed on Saturday afternoon at the 12th Cape Town International Jazz Festival. Dana, the winner of seven South African Music Awards (SAMA) for her two albums “Zandisile” (2004) and “The One Love Movement on Bantu Biko Street” (2006), was one of the over 40 local and international acts that presented a sizzling array of jazz at the Cape Town International Convention Centre on Friday and Saturday. Photo: Lulama Zenzile taking legal action. As such, we cannot provide further comment as it will be in breach of our agreement with these tenants.” Parker says that due to the nature of some stores (for example stationery outlets that sell gifts and cards), a certain degree of crossselling is a normal practice in all retail environments. Regarding Spar’s health certificate, Parker says this issue has no bearing on Old Mutual and suggests this be addressed by Spar. He concludes: “Despite the tough economic environment, several of the initial tenants are still trading successfully and new tenants have also taken up space.” But Maggot says he is only aware of four of the original shops that are still open, adding that others have been taken over by new owners. Parker says four of the 23 shops are currently vacant. Three of these have been allocated to new tenants. Wayne Houghton of the Pinelands Residents and Ratepayers Association (PRRA) says that in its application for the development of the “mall”, Old Mutual did not motivate for a public shopping centre, but express-
ly stated that the upgrade and modernisation of the facilities was primarily to provide amenities for the increasing members of staff. He says if it was their intention to build a public mall, their application certainly did not clearly motivate for this. He adds: “There is unfortunately some acrimonious history between Old Mutual and its Pinelands neighbours, as there has been a perceived track record of the life insurer either subversively or unwittingly performing unilateral developments and activities without the proper public consultation, which by law is required with the residents. Unfortunately in some cases, whilst certain promises or “gentlemen’s agreements” had been made, it is felt that most of those were never honoured and this history of behaviour has resulted in poor relationships with many of the affected Pinelands residents.” He adds the residents were therefore suspicious when Old Mutual made the application for the development of the “mall”. Houghton says the PRRA is aware that certain Pinelands residents are still objecting to the development. Traffic and parking issues are the major concerns.
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