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Redefine set to ‘sell’ Nigerian office tower stake

Deal expected to be secured via a share-swap with Growthpoint Investec African Properties.

Redefine Properties is in advanced discussions to ‘sell’ its 37.1% stake in the landmark Oando Wings office towers development in Nigeria’s largest city, Lagos, to Growthpoint Investec African Properties (Giap).

But South Africa’s second-largest real estate investment trust (Reit) is not expected to do a cash sale. Instead, Redefine is set to get shares in Giap in return for its stake in the Oando Wings property, which is jointly owned by RMB Westport. This was revealed in Redefine’s pre-close presentation last week.

The Oando Wings office towers development in Lagos, Nigeria. Picture: Oando PLC Youtube Channel

Redefine’s rival and SA’s largest Reit, Growthpoint Properties launched Giap as a pan-African real estate investment business with joint-venture partners Investec Asset Management a few years ago, however Giap only started making acquisitions this year.

Read: Growthpoint-Investec African JV secures its first two deals

Like fellow South African Reits Hyprop and Attacq, which have invested in countries such as Nigeria and Ghana, Redefine has seen its property investment in Nigeria being hit by impairments in recent years.

Value of stake has plummeted

Redefine acquired the 37.1% stake in the Oando Wings development as part of its acquisition of JSE-listed capital growth fund Pivotal in 2016. In 2017 the stake was valued at around R800 million, but Redefine confirmed to Moneyweb last week that the stake is now worth around R453 million.

It has been looking to dispose of its stake in the development since then.

Read: Hyprop finalises Zambian mall sale to Growthpoint Investec African Properties

“Talks with Giap are proceeding. This is not a cash sale and we are negotiating what share we will get in the African fund as part of this deal,” Redefine CEO Andrew König confirmed in an interview with Moneyweb. He would not comment further on the planned deal.

Thomas Reilly, the London-based managing director of Giap, also tells Moneyweb that “negotiations are continuing” to acquire the Oando Wings property. “No deal has been signed yet and we are in talks with both Redefine and RMB Westport. We hope to finalise some sort of deal within the next few months.”

The right skills

He says Oando Wings is a landmark office property on the ‘right’ side of Lagos. “While it has some leasing issues, it is a top office property asset. We believe that at Giap we have the right asset management skills to make this property work.”

Thomas Reilly, MD of Growthpoint Investec African Properties.
Picture: Supplied

Reilly adds: “There’s not much more detail I can share on this planned deal just yet, except to say that we are talking about a possible share transaction with Redefine. If it is secured soon, it will be our first office property acquisition.

“However, this is one of several deals we are currently negotiating. We have already secured the acquisition of Achimota Retail Centre in Ghana and the Manda Hill Shopping Centre in Lusaka, Zambia.”

He says Giap is looking at further acquisitions in Ghana, Kenya, Nigeria, Zambia and Morocco. “We are most likely set to add further properties in Ghana and Nigeria next, as it doesn’t help to just have one or two properties in the region. We need critical mass to be relevant in the market. By the end of the year, Giap is aiming to have around $500 million in property investments deployed.”

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