Homeowners assume control at Pinnacle Point

A resort with a tarnished reputation is now attracting local and foreign investment.

CAPE TOWN – Sound property management at Pinnacle Point Beach and Golf Resort has negated the unlawful actions of the Pinnacle Point Resorts Company, liquidated in 2011. The Home Owners Association continues to assert its authority in assuring buyers of an attractive investment proposition.

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Plans are afoot for the Pinnacle Point Beach and Golf Resort Homeowners Association (HOA) to take control of all matters concerning property owners by the end of this year. Negotiations with the liquidators of the bankrupt developer, Pinnacle Point Resorts Company have reached advanced stages, says HOA General Manager Carl Van Der Linde.

Negative public perception due to the liquidation process had to be corrected. “Public confusion arose when Pinnacle Point Golf and Beach Resort was incorrectly perceived to be the initial developer, named Pinnacle Point Resorts,” says Van der Linde.  In addition poor company management resulted in a deteriorating golf course and an accumulation of outstanding levies owed by the developer and speculative buyers of undeveloped land.

Investors are assured that the golf course is in pristine condition, and that outstanding levies have been collected both from property owners and the liquidators. Growing investor confidence at the estate is evident as homeowners are investing in second and third properties, with 13 new houses currently under construction.  

Individual property ownership was not compromised when the listed Pinnacle Point Group was declared insolvent by the Cape High Court in November 2011. Those who suffered financial losses were shareholders of the listed entity and its subsidiary company as well as the original developer of the estate, Pinnacle Point Resorts.

However the stories of investments that went south tarnished the reputation of the entire resort. For instance four separate retirement funds invested in the development. These funds were misappropriated. Private investors who acquired shares worth millions, and residents who purchased the now defunct Platinum Club membership at R500 000 each are scheduled to know the final outcome of their losses by the end of August.

The owner of Cape Point Vineyards Sybrand van der Spuy is one private investor who has been vocal about his investment: “The Platinum Club Membership was nothing but a fraudulent Ponzi Scheme,” he says. “A R50m plus investment was meant to fund promissory privileges ‘in perpetuity’ but never reached the safety of an amortisation account.” 

The problems at the estate, in the view of property owners, grew because three out of five trustees on the board of the HOA were appointed by the developer. After the liquidation the developer’s interests and the home owners interests were not aligned and the property owners were perpetually out-voted.

This situation is being rectified. The management of the golf course and clubhouse was transferred to the HOA in September 2011. The process for the official transfer of these properties to the HOA is currently underway, says Van der Linde.

He says although a HOA chairman has been appointed, the liquidator currently retains majority voting rights. However negotiations between liquidator and homeowners association have been finalised, and various agreements are in place to finalise the record of decision of the estate. A new memorandum of incorporation will be in place by December 2013.

This will empower the nominated homeowners to manage the affairs of the estate through the HOA, as was seen with Clarens Golf and Trout Estate, also part of Pinnacle Group.  

Property values

Throughout the process property investment at Pinnacle Point has continued slowly. “What has been damaging throughout the liquidation process is altered public perception among prospective buyers and tenants,” says architect and professional developer Wouter Erasmus, whose firm Arte Property Developers has developed 16 houses on the estate, including his own. “Until now the rights of shareholders and not property owners have been advanced. These legal complexities have been resolved.”

Despite these challenges, and thanks to the sound financial management of the HOA, the estate is attracting investment from local and foreign investors.

“The home owners association has stabilised affairs at the estate and the golf course,” says Keith Murray, Pam Golding Properties Area Principal for Mossel Bay. “This is adding to the longevity of this development.”

Provincial Heritage Site

The discovery of human remains and archaeological artefacts at a series of caves on the resort saw Pinnacle Point declared as a Provincial Heritage Site. Following negotiations with the local heritage community the Home Owners association has been appointed as official managers of the site.

Application has been made for Pinnacle Point to achieve World Heritage status.

Source:  MoneyWeb

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