One of Durban and Cape Town’s pre-eminent inner city regeneration property developers, Urban Lime, is on the verge of collapse after it fell behind on its loan repayments with banking giant Standard Bank – a dispute that will now see its CEO liable to pay the lender more than R110-million.
Urban Lime owns and manages a sizable property portfolio in two of South Africa’s hottest tourist destinations, Durban and Cape Town.
Some of its properties in Durban include the popular Florida Road, where mega hip hop star AKA was slain last year.
According to the company’s website, the developer has acquired and redeveloped 13 properties on Florida Road.
Its founder and CEO Jonny Friedman has previously indicated his property group has invested more than R3-billion “in turning around buildings and precincts”.
It is this investment that is now at risk in the long running dispute with one of the group financiers, Standard Bank, Africa’s largest bank by assets.
This is after the Western Cape High Court this week ruled that Friedman is liable to pay the R110-million in arrears, plus interest for the group’s debt towards Standard Bank. This because he has signed surety papers for the group.
Urban Lime owes Standard Bank about R357-million.
The bank wrote to Friedman in July last year informing him the group had defaulted on its debt.
“We have been instructed by our client to notify you (as we hereby do) that in the exercise of our client’s rights in terms of clause 2.19 of the agreement, the agreement is hereby and immediately cancelled, and the full amount of the loan, in the amount of R 370 296 379.85 (is immediately due and payable,” reads the letter.
The judge said the bank acted within the perimeters when it called in the loan and that Friedman is liable to pay the R110-million guarantee he signed up for when the company took the loan.
“Standard Bank acted within its rights in terms of the contract at all times, and accordingly, there can be and is nothing problematic about it executing acceleration and cancellation in the same letter,” the judge ruled.
“In conclusion, I am of the view that Standard Bank proved that at the date of the launch of this application Friedman was indebted to it under the guarantee in the amount claimed.”
Urban Lime also owns several properties in Cape Town, including the historic Church Square precinct.
