Two major Johannesburg shopping malls, previously valued at R700 million, will fall under the auctioneer's gavel following the high-profile liquidation of various entities controlled by property moguls, the Theodosiou brothers.

"The brothers Tony, Dimitri and Sedrick, achieved notoriety for building shopping malls without the required council permission," said Auction Alliance on Monday.

In April 2007, the City of Johannesburg was granted two court orders, which the brothers ignored, to stop extensions of the well-known Lonehill Shopping Mall without council permission.

In a landmark decision in the Johannesburg High Court in 2007, Judge Ivor Schwartzmann handed the brothers a three-month suspended sentence, R20,000 in fines and warned them they would be jailed if they did not "immediately cease" with the unapproved construction of the Lonehill Mall.

"At the time, irate Lonehill residents and the Johannesburg City Council hailed the court order as a victory to stop unlawful commercial property development in prime residential suburbs," said Auction Alliance.

The Johannesburg-born brothers, who traded under the name Universal Property Professionals, were involved in retail and commercial property development for more than three decades, but incurred massive debt when they developed and renovated two regional shopping malls and other developments around the country.

In October 2008, Absa Bank brought an application to liquidate Immobili Retail Investments, which owns the 30,000m? Lonehill Shopping Centre, and also applied to liquidate Bel Air Mall, which owns a 20,000m? mall on Malibongwe Drive in North Riding.

According to Auction Alliance, the bank, which was owed more than R900 million and accruing interest at R11 million per month, brought a 4,000 page liquidation application in the Pretoria High Court.

A lengthy two-year legal spat between the bank and the developers ensued after the provisional liquidation order was granted. The brothers then brought an application to have Absa's applications set aside.

With outstanding debt at more than R1 billion, the liquidation of the group of companies is among the largest liquidations in South African corporate history, matched only by the R900 million Macmed liquidation in 1999, the R1 billion collapse of the Retail Apparel Group in 2002 and the LeisureNet liquidation with debts of R1 billion, Auction Alliance said.

"In terms of failed property developments, it is the largest outstanding debt owed to a single bank and is larger than Philken Commercial Property Developments, which owed banks more than R700 million."

According to auctioneers, there has been significant interest in the two cash-generating centres, and since the liquidation application the centres have in fact appreciated in value due, in part, to lower interest rates and the liquidators, who have taken control of tenants and rental income.

"The Bel Air Mall, which was constructed for more than R300 million, lost tenants, particularly on its upper floor, but it is a modern and attractive centre on a busy corner intersection and is anchored by a large Superspar, a Clicks and other national tenants," said Auction Alliance director Shaie Zindel.

It has also been rumoured that Virgin Active, which rents a site in the Lonehill Mall, will be opening in the newly built North Riding centre, but that has been neither denied nor confirmed by the liquidators.

"The Lonehill Mall is well let and enjoys massive local demand with many national tenants including Pick n Pay, Woolworths, CNA and Virgin Active - and the centre has been extensively renovated since 1999 and may include an adjacent office block complex," Zindel added.

The auction would take place on March 30 at The Hilton Hotel and bidders from around the world were expected to attend, said Auction Alliance.

Source: I-Net Bridge