South African property giants in African Land deal

The JSE has been ‘robbed’. The Johannesburg stock exchange has been robbed of an opportunity to register a new property fund; a real estate investment trust; that is promising to emerge into an African retail property giant. The same applies to the Lusaka Stock Exchange (LuSE).

That may be the conclusion of some, following an announcement early today that South African property giants Hyprop Investments and Attacq have reached an agreement to acquire African Land Investments for about R900 million. Before this African Land Investments, which owns the Manda Hill Shopping Centre in Lusaka, Zambia, was talking about listing on the JSE and LuSE. That talk has halted. The announcement said “As a result (of the Hyprop/Attacq proposed acquisition), African Land will not proceed with its proposed listing on the JSE or LuSE.”

But then the JSE won’t be complaining because the African Investments assets and its growth prospects will still reside in the Johannesburg bourse. The two pursuers of the company Hyprop/Attacq are listed on the JSE. That may not be the case for LuSE but there is some sweetener in the proposed deal for Zambia.

Today’s announcement said “African Land will engage with Zambian authorities and investors with a view to providing Zambian investors with exposure to Manda Hill.”

The proposed deal comes as follows: Hyprop will acquire 87% of the issued shares in African Land for a consideration of R768 million.  Attacq will acquire 12.4% of the issued shares for a consideration of R110 million. Kevin Teeroovengadum, the CEO of African Land, will own 500,000 shares
in African Land. Teeroovengadum will be retained as CEO and African Land will continue as a separate property entity.

The potential of African Land is displayed in Manda Hill. “At 44,000m2, it is the first regional shopping centre in Zambia and the largest in sub-Saharan Africa outside of South Africa.”

The statement said African Land’s “strategic objective will be to grow the portfolio through well-considered acquisitions of predominantly existing retail properties in carefully selected areas offering above average rental returns within the sub-Saharan African region outside South Africa.”

Pieter Prinsloo, CEO of Hyprop said, “The acquisition is an attractive investment and complementary to Hyprop’s strategy of investing in high quality shopping centres across the African continent. African Land’s strategy of acquiring existing income-producing properties supports Hyprop’s strategy and will provide Hyprop with geographical diversification as well as further investment opportunities in Africa. The investment in African Land, together with Attacq, will also complement Hyprop’s existing partnership with Attacq in Atterbury Africa, which focuses mainly on new developments.”

Teeroovengadum said “This investment by Hyprop and Attacq demonstrates the strength of the African Land story and the growing stature of the sub-Saharan African real estate market. We are delighted to have attracted investors of this calibre; the expertise and networks that they bring will strengthen our efforts to meet African Land’s vision”.

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