Irish developer Frank Gormley’s flagship property development in Cape Town’s central business district is to be sold off to help pay his multimillion euro debts, according to South African media.
Mr Gormley's Howard Eurocape property development company was one of the driving forces behind the regeneration of Cape Town's city centre, which fell into disrepair in the 1990s at the end of apartheid, but has since become an example of how South Africa's urban areas can be revitalised.
Building reputation
The company opened for business in Cape Town in 2003 and was responsible for the development of hotels and residential sites, including the luxury 500 million rand (€34 million) Taj Hotel, near parliament.
But by far its biggest and most prestigious project was the nearby landmark mixed use property, the Mandela Rhodes Place, which was finished in 2005 and takes up two full city blocks. It cost an estimated R1 billion to build.
The development in the old city area comprises 180 studio apartments on its first-floor level and above, while the ground floor is home to boutiques, bars, bistros and restaurants. There are also offices and a garage with 330 parking bays.
Howard Eurocape also owned a number of other plots of land across the city that it was planning to develop prior to the economic downturn.
Prior to establishing Howard Eurocape, Mr Gormley, an accountant from Dublin, had a 30 per cent stake in the UK property investment company Howard Holdings, which he reportedly sold in 2006 for about €500 million.
According to Mr Gormley’s Howard Eurocape website profile, after divesting he took “around €1 billion of property with him throughout Ireland, the UK, central Europe and South Africa”.
His projects in Cape Town initially went well, but according to BusinessDay newspaper yesterday, Howard Eurocape ran out of money due to the global credit crunch in 2008 and was unable to service its mortgage debts. In 2012 Anglo Irish Bank Corporation was granted a provisional sequestration and liquidation order by the Cape Town high court against Mr Gormley and the Mandela Rhodes Place holding company, as the bank was allegedly owed R219 million at that time.
Leave to appeal denied
Mr Gormley requested leave to appeal the court’s sequestration order, but this was denied last week. The ruling was delivered at the same time as liquidators Wallace Trust invited tenders for Mandela Rhodes Place’s commercial space, said
BusinessDay
.
Interested buyers have until July 11th to submit offers. However, the sale does not include the apartments. Several investors are said to have shown interest in the commercial space, comprised of about 8,300m².
