A visitor to Sharemax’s The Fern shopping centre in Dainfern would be forgiven for thinking it’s an investment disaster. The centre has a shabby appearance, there is no anchor tenant, and less than half of the shops are occupied.
This may be of some concern for the many investors who bought into The Fern when it was sold to them by Sharemax in 2008. Especially when one considers that the complex has a mortgage of R28m – obtained from Nedbank fixed at 14%, 3.5 percentage points above the prime interest rate – which bleeds the syndication company of more than R300 000 in interest alone each month.
The Fern was sold to investors as a five-year capital growth plan, which means they do not receive any income for the period of their investment. When The Fern was sold to investors it was projected that they would receive a return of 20% per year. More.